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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Royal Bank Of Scotland Group Plc | LSE:RBS | London | Ordinary Share | GB00B7T77214 | ORD 100P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 120.90 | 121.35 | 121.40 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From May 2019 to May 2024
TIDMRBS
RNS Number : 9427D
Royal Bank of Scotland Group PLC
30 October 2015
The Royal Bank of Scotland Group plc
Q3 2015 Results
Contents Page ============================================== ==== Introduction 1 Highlights 3 Analysis of results 11 Segment performance 18 Selected statutory financial statements 26 Notes 31 Appendix 1 - Additional segment information Appendix 2 - Go-forward Bank profile Appendix 3 - Income statement reconciliations ============================================== ====
Introduction
Presentation of information
Financial information contained in this document does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006 ('the Act'). The statutory accounts for the year ended 31 December 2014 have been filed with the Registrar of Companies. The report of the auditor on those statutory accounts was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Act.
In this document, 'RBSG plc' or the 'company' refers to The Royal Bank of Scotland Group plc, and 'RBS' or the 'Group' refers to RBSG plc and its subsidiaries. Some of the financial information contained in this document, prepared using Group accounting policies, shows the operating performance of RBS on a non-statutory basis which excludes own credit adjustments, gain on redemption of own debt, write down of goodwill and strategic disposals. RFS Holdings minority interest (RFS MI) was also excluded in the periods ended 30 September 2014. Such information is provided to give a better understanding of the results of RBS's operations.
RBS is committed to becoming a leaner, less volatile business based around its core franchises of Personal & Business Banking (PBB) and Commercial & Private Banking (CPB). To achieve this goal a number of initiatives have been announced which include, but are not limited to, the restructuring of Corporate & Institutional Banking (CIB) into CIB Go-forward and CIB Capital Resolution, the divestment of the remaining stake in Citizens, the sale of the international private banking business (the remaining Private Banking UK business is within the Go-forward Bank (Private Banking Go-forward)), the exit of Williams & Glyn (mainly within UK Personal & Business Banking (UK PBB)) and the continued run down of RBS Capital Resolution (RCR). Significant progress towards these exits is expected by the end of 2015. This document contains some information to illustrate the impact on certain key performance measures of these initiatives by showing the future profile of the bank (the 'Go-forward Bank') and the segments, businesses and portfolios which it intends to exit (the 'Exit Bank'). This information is presented to illustrate the strategy and its impact on the business and is on a non-statutory basis and should be read in conjunction with the notes attached as well as the section titled Forward-looking statements. Other than the change in treatment of Citizens described on page 2 there has been no change to the reportable segments in the period as a result of these initiatives.
Introduction
Citizens
On 31 December 2014 Citizens was classified as a disposal group and a discontinued operation: its aggregate assets were presented in Assets of disposal groups and its aggregate liabilities in Liabilities of disposal groups. Prior period results were re-presented.
From 3 August 2015, when RBS's interest fell to 20.9%, Citizens has been accounted for as an associate classified as held for sale. Citizens Financial Group is no longer a reportable segment; the non-statutory operating results and operating segment disclosures for all periods have been restated accordingly.
Statutory results
The condensed consolidated income statement, condensed consolidated statement of comprehensive income, condensed consolidated balance sheet, condensed consolidated statement of changes in equity and related Notes presented on pages 26 to 35 inclusive are on a statutory basis. Reconciliations between income statement lines on a non-statutory basis and a statutory basis are included in Appendix 3.
Contacts
For analyst enquiries: Richard O'Connor Head of Investor Relations +44 (0) 20 7672 1758 For media enquiries: RBS Press Office +44 (0) 131 523 4205 ==================================================== ====================
Analysts and investors conference call
RBS will hold an audio Q&A session for analysts and investors on the results for the quarter ended 30 September 2015. Details are as follows:
Hot Features
Premium
Date: Friday 30 October 2015
Time: 9.00 am UK time
Webcast: www.rbs.com/results
Dial in details: International - +44 (0) 1452 568 172
UK Free Call - 0800 694 8082
US Toll Free - 1 866 966 8024
Announcement and slides are available on www.rbs.com/results
Financial supplement
A financial supplement containing income statement and balance sheet information for the nine quarters ended 30 September 2015 is available on www.rbs.com/results
Highlights
The Royal Bank of Scotland Group (RBS) continues to deliver on its plan to build a stronger, simpler and fairer bank for both customers and shareholders; on track for 2015 targets.
-- Q3 attributable profit was GBP952 million, up slightly from
GBP896 million in Q3 2014. Restructuring costs remained high
at GBP847 million as the Go-forward Bank transforms, while litigation
and conduct costs were GBP129 million compared with GBP780 million
in Q3 2014.
-- Attributable profit included (in profit from discontinued operations)
the gain on loss of control of Citizens (GBP1,147 million).
The principal component of this gain was a reclassification
of foreign exchange reserves of GBP962 million to profit or
loss with no effect on RBS's net asset value.
-- Q3 operating loss(1) was GBP134 million, down from a profit
of GBP1,107 million in Q3 2014. Adjusted operating profit(2)
was GBP842 million (Q3 2014 - GBP2,054 million), after GBP126
million of losses relating to IFRS volatility, and GBP77 million
of CIB disposal losses.
-- Income was GBP596 million lower than in Q3 2014, principally
driven by a GBP394 million decline in Corporate & Institutional
Banking (CIB), reflecting its planned reshaping. Income pressures
were also seen in UK Personal & Business Banking (UK PBB)
and Commercial Banking where good loan volume growth was offset
by continued competitive pressure on asset margins.
-- Operating expenses, excluding restructuring costs and litigation
and conduct costs, were GBP152 million lower, with headcount
down and restructuring benefits feeding through to a lower
cost base.
-- Credit quality remained good, with net impairment releases
of GBP79 million, GBP768 million lower than the high levels
of releases recorded in Q3 2014.
-- Tangible net asset value per ordinary and equivalent B share
increased from 380p per share at 30 June 2015 to 384p per share
at 30 September 2015. This was largely driven by the attributable
profit for the period (less the impact of reclassified reserves),
together with underlying gains in foreign exchange reserves
reflecting the strengthening of the US dollar and the euro,
and gains in cash flow hedging reserves as swap rates decreased.
Good progress on 2015 targets
-- RBS remains well on track to achieve substantially all its priority
targets for 2015. The cost savings target for the year has already
been exceeded and strong improvements were recorded in the bank's
annual employee engagement survey.
Strategy
goal 2015 target Q3 2015 Progress
------------------- --------------------------------- ----------------------------------------
Strength Reduce risk-weighted assets GBP316 billion, a reduction
and sustainability (RWAs) to <GBP300 billion of GBP10 billion in the quarter
------------------- --------------------------------- ----------------------------------------
RCR exit substantially completed Funded assets down 83% since
initial pool of assets identified
------------------- --------------------------------- ----------------------------------------
Citizens deconsolidation Further sale in August 2015
takes holding to 20.9%; de-consolidated
for accounting purposes
--------------------------------- ----------------------------------------
GBP2 billion AT1 issuance Successfully priced US$3.15
billion AT1 capital notes (GBP2
billion equivalent)
------------------- --------------------------------- ----------------------------------------
Customer Improve NPS in every UK Year-on-year, significant improvement
experience franchise in NatWest Business Banking,
RBS Business Banking and Ulster
Bank Personal Banking (NI)
------------------- --------------------------------- ----------------------------------------
(MORE TO FOLLOW) Dow Jones Newswires
October 30, 2015 03:01 ET (07:01 GMT)
Simplifying Reduce costs by GBP800 million(3) Target exceeded by Q3 2015,
the bank target increased to >GBP900
million
------------------- --------------------------------- ----------------------------------------
Supporting Lending growth in strategic 4.6% annualised growth in the
growth segments >= nominal UK GDP first nine months of 2015 in
growth UK PBB and Commercial Banking
------------------- --------------------------------- ----------------------------------------
Employee Raise employee engagement Surpassed employee engagement
engagement index to within 8% of Global goal, up six points to within
Financial Services (GFS) three points of GFS
norm
------------------- --------------------------------- ----------------------------------------
Highlights
Building a stronger RBS
-- RBS is on track with its plan to build a stronger, simpler,
fairer bank for customers and shareholders.
-- Capital strength continued to build with the Common Equity Tier
1 ratio strengthening to 12.7% at 30 September 2015, up 40 basis
points from 30 June 2015 and 150 basis points from 31 December
2014. RBS's leverage ratio rose from 4.6% at 30 June 2015 to
5.0% at 30 September 2015, assisted by the successful issue
of US$3.15 billion (GBP2 billion) of Additional Tier 1 capital
notes in August 2015.
-- We continue to develop our technology capabilities to make it
simpler for us to serve our customers and for them to do business
with us. A new automated account-opening system is being rolled
out and will increase the efficiency of our onboarding processes,
reducing end-to-end account opening times by 50% for business
banking customers and 30% for Commercial Banking customers.
Our Pay on Your Mobile (PAYM) capability has been enhanced,
with customers now able to both send and receive payments. We
continue to simplify our core technology platforms with 245
applications decommissioned year-to-date.
-- We are seeking to build customer engagement with a market-leading
current account that enables customers to receive 3% cash back
on their household bills for a monthly account fee of GBP3.
The initial launch of the Reward account to existing private
and packaged account holders has attracted around one million
customers with the majority of these moving additional direct
debits to their RBS and NatWest accounts. We are also extending
our stand against teaser rates by offering three year fixed
rates on home insurance, breaking with insurance industry practice.
-- RBS delivered good support for both household and business customers.
UK PBB net mortgage lending totalled GBP3.8 billion in Q3 2015,
with a strong applications pipeline and gross lending up 42%
from Q3 2014 to GBP7.4 billion. Our flow market share in Q3
2015 was 12.1% of the UK market, compared with RBS's stock share
of 8.5%. Net new lending in Commercial Banking totalled GBP1.5
billion in the quarter with growth across most of the customer
segments. Further support was provided to small businesses with
the opening of three new business accelerator hubs in Brighton,
Leeds and Bristol in partnership with Entrepreneurial Spark:
seven hubs are now open.
-- Adjusted return on equity(4) in the Go-forward Bank on an annualised
basis for the first nine months of 2015 is estimated at 13%.
IFRS volatility had a minimal impact on the adjusted return
on equity during the first nine months of 2015.
Notes:
(1) Operating profit/(loss) before tax, own credit adjustments,
gain on redemption of own debt and strategic disposals. The
nine months and quarter ended 30 September 2014 are stated before
RFS minority interest.
(2) Excluding restructuring costs and litigation and conduct costs.
(3) Excluding restructuring costs and litigation and conduct costs,
write off of intangible assets and operating expenses of Williams
& Glyn.
(4) Calculated using operating profit after tax on a non-statutory
basis excluding restructuring costs and litigation and conduct
costs adjusted for preference share dividends divided by average
notional equity (based on 13% of average RWA equivalent (RWAe)).
Highlights
Accelerated run-down of the Exit Bank
-- RBS has maintained good momentum in the run-down of its Exit
Bank, with RWAs down by approximately GBP31 billion since the
start of 2015 to GBP141 billion at 30 September 2015.
-- RBS Capital Resolution (RCR) funded assets have fallen to GBP6.5
billion at 30 September 2015, down 83% since the initial pool
of assets was identified. This leaves it on track to achieve
its targeted 85% reduction in funded assets by the end of 2015,
a year ahead of schedule. Good progress was also recorded in
CIB Capital Resolution where RWAs were reduced by GBP6.7 billion
to GBP38.7 billion in Q3 2015 with the reduction since the start
of 2015 totalling GBP25.4 billion.
-- The sale of a further 109 million shares in August 2015 reduced
RBS's stake in Citizens to 20.9%. Following this significant
reduction in its voting interest RBS no longer controls Citizens
for accounting purposes and ceased to consolidate it, classifying
its remaining investment as an associate held for sale. Citizens
remains fully consolidated for regulatory capital purposes.
RBS continues to target a complete exit by the end of 2015,
subject to market conditions.
-- On a pro forma basis, assuming full deconsolidation of Citizens
credit and counterparty risk RWAs at 30 September 2015, RBS's
CET1 ratio would have been 16.2% and its leverage ratio 5.6%.
-- Williams & Glyn submitted its banking licence application to
the UK regulatory authorities in October 2015. RBS continues
to work towards its separation in the summer of 2016 and an
initial public offering by the end of 2016.
UK Government ownership
-- On 4 August 2015, HM Treasury sold 630 million RBS ordinary
shares, its first sale since its initial investment in 2008.
The sale of the 5.4% stake reduced HM Treasury's economic interest
in RBS to 72.9%.
-- On 8 October 2015, HM Treasury gave notice of its intention
to convert 51 billion B shares it held into 5.1 billion ordinary
shares, a move that helps normalise the ownership structure
of RBS. These new ordinary shares have now been admitted to
the London Stock Exchange. HM Treasury's economic interest in
RBS remains unchanged at 72.9%. The Dividend Access Share (DAS)
remains outstanding and may be retired at any time following
the payment of dividends amounting to GBP1,180 million (with
interest starting to accrue on this amount from 1 January 2016).
Highlights
Customer
RBS remains committed to achieving its target of being number one bank for customer service, trust and advocacy by 2020. In recent years, RBS has launched a number of initiatives to make it simpler, fairer and easier to do business with, and it continues to deliver on the commitments that it made to its customers in 2014.
We use independent surveys to measure our customers' experience and track our progress against our goal in each of our markets.
Net promoter score (NPS)
Customers are asked how likely they would be to recommend their bank to a friend or colleague, and respond based on a 0-10 scale with 10 indicating 'extremely likely' and 0 indicating 'not at all likely'. Customers scoring 0 to 6 are termed detractors and customers scoring 9 to 10 are termed promoters. NPS is established by subtracting the proportion of detractors from the proportion of promoters.
The table below lists all of the businesses for which we have a NPS for Q3 2015. Year-on-year, NatWest Business Banking, RBS Business Banking and Ulster Bank (Northern Ireland) Personal Banking have seen significant improvements in NPS.
Q3 2014 Q2 2015 Q3 2015 Year end
2015 target
----------------- ----------------------------- ------- ------- ------- ------------
Personal Banking NatWest (England & Wales)(1) 7 8 8 9
----------------- ----------------------------- ------- ------- ------- ------------
Royal Bank of Scotland
(Scotland)(1) -4 -10 -9 -10
----------------------------------------------- ------- ------- ------- ------------
Ulster Bank (Northern
Ireland)(2) -29 -11 -9 -21
----------------------------------------------- ------- ------- ------- ------------
Ulster Bank (Republic
of Ireland)(2) -19 -14 -15 -15
----------------------------------------------- ------- ------- ------- ------------
Business Banking NatWest (England & Wales)(3) -13 4 6 -7
----------------- ----------------------------- ------- ------- ------- ------------
Royal Bank of Scotland
(Scotland)((3) -26 -17 -12 -21
----------------------------------------------- ------- ------- ------- ------------
Commercial Banking(4) 10 10 9 15
------------------------------------------------ ------- ------- ------- ------------
Customer trust
(MORE TO FOLLOW) Dow Jones Newswires
October 30, 2015 03:01 ET (07:01 GMT)
We also use independent experts to measure our customers' trust in the bank. Each quarter we ask customers to what extent they trust or distrust their bank to do the right thing. The score is a net measure of those customers that trust their bank (a lot or somewhat) minus those that distrust their bank (a lot or somewhat).
Trust in the RBS brand in Q2 2015 was impacted by the IT incident on 17 June 2015, current quarter scores return to pre-incident levels.
Q3 2014 Q2 2015 Q3 2015 Year end
2015 target
------------------ ----------------------------- ------- ------- ------- ------------
Customer trust(5) NatWest (England & Wales)(1) 45% 48% 44% 46%
------------------ ----------------------------- ------- ------- ------- ------------
Royal Bank of Scotland
(Scotland) 8% -2% 11% 11%
------------------------------------------------ ------- ------- ------- ------------
Notes:
(1) Source: GfK FRS six month rolling data. Latest base sizes: NatWest
(England & Wales) (3392) Royal Bank of Scotland (Scotland) (545).
Based on the question: "How likely is it that you would recommend
(brand) to a relative, friend or colleague in the next 12 months
for current account banking?"
(2) Source: Coyne Research 12 MAT data. Latest base sizes: Ulster
Bank NI (305) Question: "Please indicate to what extent you
would be likely to recommend (brand) to your friends or family
using a scale of 0 to 10 where 0 is not at all likely and 10
is extremely likely"
(3) Source: Charterhouse Research Business Banking Survey, based
on interviews with businesses with an annual turnover up to
GBP2 million. Quarterly rolling data. Latest base sizes: NatWest
England & Wales (1289), RBS Scotland (429). Weighted by region
and turnover to be representative of businesses in England &
Wales/Scotland.
(4) Source: Charterhouse Research Business Banking Survey, based
on interviews with businesses with annual turnover between GBP2
million and GBP1 billion. Latest base size: RBSG Great Britain
(878). Weighted by region and turnover to be representative
of businesses in Great Britain.
(5) Source: Populus. Latest quarter's data. Measured as a net of
those that trust RBS/NatWest to do the right thing, less those
that do not. Latest base sizes: NatWest, England & Wales (925),
RBS Scotland (214).
Highlights
Outlook
The credit environment is expected to remain relatively benign, with modest underlying impairment charges. Competitive pressure on asset margins is likely to continue, with limited opportunities for offsetting deposit repricing. In addition, non-interest income from fee-related products remains subdued due to modest volume growth, and specific regulatory impacts such as the change in interchange fees in the cards business.
Our estimate of overall restructuring and disposal losses guidance for 2015 to 2019 remains unchanged. In the fourth quarter of 2015, we expect restructuring costs to remain high as we continue to implement our core bank transformation and disposal losses to be elevated within the overall guidance on disposal losses, although the timing and quantum of these losses are subject to market conditions.
Whilst legacy issues continue to be addressed, material further and incremental costs and provisions in respect of conduct and litigation related matters are expected, and could be substantially greater than the aggregate provisions RBS has recognised. The timing and quantum of any future costs, provisions and settlements, however, remain uncertain.
Highlights
Summary consolidated income statement for the period ended 30 September 2015
Nine months ended Quarter ended
========================== ======================================
30 September 30 September 30 September 30 June 30 September
2015 2014 2015 2015 2014
GBPm GBPm GBPm GBPm GBPm
===================================== ============ ============ ============ ========== ============
Net interest income 6,605 6,879 2,187 2,215 2,370
Non-interest income 3,545 5,131 860 1,354 1,273
===================================== ============ ============ ============ ========== ============
Total income 10,150 12,010 3,047 3,569 3,643
===================================== ============ ============ ============ ========== ============
Litigation and conduct costs (1,444) (1,030) (129) (459) (780)
Restructuring costs (2,317) (612) (847) (1,023) (167)
Other costs (6,783) (7,768) (2,284) (2,207) (2,436)
===================================== ============ ============ ============ ========== ============
Operating expenses (10,544) (9,410) (3,260) (3,689) (3,383)
===================================== ============ ============ ============ ========== ============
(Loss)/profit before impairment
releases (394) 2,600 (213) (120) 260
Impairment releases 400 682 79 192 847
===================================== ============ ============ ============ ========== ============
Operating profit/(loss) (1) 6 3,282 (134) 72 1,107
Own credit adjustments 424 (2) 136 168 49
Gain on redemption of own
debt - 20 - - -
Write down of goodwill - (130) - - -
Strategic disposals (135) 191 - - -
RFS Holdings minority interest - (35) - - (56)
===================================== ============ ============ ============ ========== ============
Operating profit before tax 295 3,326 2 240 1,100
Tax charge (294) (869) (1) (100) (277)
===================================== ============ ============ ============ ========== ============
Profit from continuing operations 1 2,457 1 140 823
Profit from discontinued operations,
net of tax (2) 1,451 437 1,093 674 117
===================================== ============ ============ ============ ========== ============
Profit for the period 1,452 2,894 1,094 814 940
Non-controlling interests (389) 11 (45) (428) 53
Other owners (264) (264) (97) (93) (97)
Dividend access share - (320) - - -
===================================== ============ ============ ============ ========== ============
Profit attributable to ordinary
and B shareholders 799 2,321 952 293 896
===================================== ============ ============ ============ ========== ============
Memo:
===================================== ============ ============ ============ ========== ============
Operating expenses - adjusted
(3) (6,783) (7,768) (2,284) (2,207) (2,436)
Operating profit - adjusted
(3) 3,767 4,924 842 1,554 2,054
===================================== ============ ============ ============ ========== ============
Key metrics and ratios
===================================== ============ ============ ============ ========== ============
Net interest margin 2.12% 2.09% 2.09% 2.13% 2.17%
Cost:income ratio 104% 78% 107% 103% 93%
(Loss)/earnings per share
from continuing operations
- basic (2.8p) 16.9p (0.9p) 0.2p 6.9p
- adjusted (4) (4.5p) 16.1p (1.8p) (0.9p) 6.5p
Return on tangible equity
(5) 2.4% 7.3% 8.8% 2.7% 8.2%
Average tangible equity (5) GBP43,538m GBP42,231m GBP43,403m GBP43,062m GBP43,536m
Average number of ordinary
shares and equivalent B
shares outstanding during
the period (millions) 11,503 11,333 11,546 11,511 11,384
===================================== ============ ============ ============ ========== ============
(MORE TO FOLLOW) Dow Jones Newswires
October 30, 2015 03:01 ET (07:01 GMT)
Notes:
(1) Operating profit/(loss) before tax, own credit adjustments, gain on redemption
of own debt, write down of goodwill and strategic disposals. The nine months
and quarter ended 30 September 2014 are stated before RFS minority interest.
(2) Refer to Note 2 on page 31 for further details.
(3) Excluding restructuring costs and litigation and conduct costs.
(4) Adjusted earnings excludes own credit adjustments, gain on redemption of
own debt, write down of goodwill and strategic disposals. RFS minority interest
was also a reconciling item for periods ended 30 September 2014.
(5) Tangible equity is equity attributable to ordinary and B shareholders less
intangible assets.
Highlights
Summary consolidated balance sheet as at 30 September 2015
30 September 30 June 31 December
2015 2015 2014
GBPm GBPm GBPm
================================================== ============ ======= ===========
Cash and balances at central banks 77,220 81,900 74,872
Net loans and advances to banks (1) 22,681 20,714 23,027
Net loans and advances to customers (1) 311,383 314,993 334,251
Reverse repurchase agreements and stock borrowing 51,800 67,606 64,695
Debt securities and equity shares 83,506 80,550 92,284
Assets of disposal groups (2) 6,300 89,071 82,011
Other assets 27,517 28,010 26,033
================================================== ============ ======= ===========
Funded assets 580,407 682,844 697,173
Derivatives 296,019 281,857 353,590
================================================== ============ ======= ===========
Total assets 876,426 964,701 1,050,763
================================================== ============ ======= ===========
Bank deposits (3) 30,543 30,978 35,806
Customer deposits (3) 346,267 342,023 354,288
Repurchase agreements and stock lending 43,355 66,362 62,210
Debt securities in issue 37,360 41,819 50,280
Subordinated liabilities 20,184 19,683 22,905
Derivatives 288,905 273,589 349,805
Liabilities of disposal groups (2) 6,401 80,388 71,320
Other liabilities 45,164 48,090 43,957
================================================== ============ ======= ===========
Total liabilities 818,179 902,932 990,571
Non-controlling interests 703 5,705 2,946
Owners' equity 57,544 56,064 57,246
================================================== ============ ======= ===========
Total liabilities and equity 876,426 964,701 1,050,763
================================================== ============ ======= ===========
Contingent liabilities and commitments 160,205 210,679 241,186
================================================== ============ ======= ===========
Notes:
(1) Excludes reverse repurchase agreements and stock borrowing.
(2) Primarily International Private Banking and the interest in associate in
relation to Citizens at 30 September 2015, Citizens and International Private
Banking at 30 June 2015 and Citizens at 31 December 2014.
(3) Excludes repurchase agreements and stock lending.
Highlights
30 September 30 June 31 December
Balance sheet related key metrics and ratios 2015 2015 2014
============================================= ============ ========== ===========
Tangible net asset value per ordinary and
equivalent B share (1) 384p 380p 387p
Loan:deposit ratio (2,3) 89% 92% 95%
Short-term wholesale funding (3,4) GBP17bn GBP25bn GBP28bn
Wholesale funding (3,4) GBP66bn GBP76bn GBP90bn
Liquidity portfolio GBP164bn GBP161bn GBP151bn
Liquidity coverage ratio (5) 136% 117% 112%
Net stable funding ratio (6) 117% 115% 112%
Tangible equity (7) GBP44,442m GBP43,919m GBP44,368m
Number of ordinary shares and equivalent
B shares in issue (millions) (8) 11,574 11,570 11,466
Common Equity Tier 1 ratio 12.7% 12.3% 11.2%
Risk-weighted assets GBP316.0bn GBP326.4bn GBP355.9bn
Leverage ratio (9) 5.0% 4.6% 4.2%
============================================= ============ ========== ===========
Balance sheet related key metrics and ratios
excluding Citizens (10)
============================================= ============ ==========
Liquidity portfolio GBP149bn GBP148bn
Liquidity coverage ratio (5) 139% 118%
Net stable funding ratio (6) 118% 112%
Common Equity Tier 1 ratio 16.2% 15.3%
Risk-weighted assets GBP248.7bn GBP261.5bn
Leverage ratio (9) 5.6% 5.1%
============================================= ============ ==========
Notes:
(1) Tangible net asset value per ordinary and equivalent B share
represents tangible equity divided by the number of ordinary
shares and equivalent B shares in issue.
(2) Includes disposal groups.
(3) Excludes repurchase agreements and stock lending.
(4) Excludes derivative collateral.
(5) On 1 October 2015 the LCR became the PRA's primary regulatory
liquidity standard; UK banks are required to meet a minimum
standard of 80% initially, rising to 100% by 1 January 2018.
(6) NSFR for all periods have been calculated using RBS's current
interpretations of the revised BCBS guidance on NSFR issued
in late 2014. Therefore, reported NSFR will change over time
with regulatory developments. Due to differences in interpretation,
RBS's ratio may not be comparable with those of other financial
institutions.
(7) Tangible equity is equity attributable to ordinary and B shareholders
less intangible assets.
(8) Includes 26 million Treasury shares (30 June 2015 - 26 million;
31 December 2014 - 28 million).
(9) Based on end-point CRR Tier 1 capital and revised 2014 Basel
III leverage ratio framework and the CRR Delegated Act.
(10) Assuming Citizens was fully divested at the carrying value at
30 September 2015 and excluding only credit and counterparty
risk RWAs.
Analysis of results
Nine months ended Quarter ended
========================== ===================================
30 September 30 September 30 September 30 June 30 September
2015 2014 2015 2015 2014
Net interest income GBPm GBPm GBPm GBPm GBPm
===================================== ============ ============ ============ ======= ============
Net interest income
RBS 6,605 6,879 2,187 2,215 2,370
- UK Personal & Business
Banking 3,460 3,474 1,170 1,147 1,198
- Ulster Bank 392 486 127 132 163
- Commercial Banking 1,673 1,520 565 562 521
- Private Banking 377 516 123 126 172
- Corporate & Institutional
Banking 518 595 142 174 230
- Central items 227 312 77 88 109
- RCR (42) (24) (17) (14) (23)
===================================== ============ ============ ============ ======= ============
Average interest-earning assets
RBS 415,463 436,876 413,778 417,248 431,863
- UK Personal & Business
Banking 129,422 127,101 131,299 128,569 127,896
- Ulster Bank 27,621 28,033 27,825 27,404 27,922
- Commercial Banking 78,559 74,611 79,689 78,880 74,339
- Private Banking 15,752 18,669 15,557 15,729 18,681
- Corporate & Institutional
Banking 63,634 83,821 48,612 69,437 83,903
(MORE TO FOLLOW) Dow Jones Newswires
October 30, 2015 03:01 ET (07:01 GMT)
- Central items 85,117 70,662 99,526 82,471 69,872 - RCR 15,358 33,979 11,270 14,758 29,250 ===================================== ============ ============ ============ ======= ============ Gross yield on interest-earning assets of banking business 2.92% 3.01% 2.84% 2.91% 3.04% Cost of interest-bearing liabilities of banking business (1.15%) (1.26%) (1.09%) (1.14%) (1.20%) ===================================== ============ ============ ============ ======= ============ Interest spread of banking business 1.77% 1.75% 1.75% 1.77% 1.84% Benefit from interest free funds 0.35% 0.34% 0.34% 0.36% 0.33% Net interest margin (1) RBS 2.12% 2.09% 2.09% 2.13% 2.17% - UK Personal & Business Banking 3.57% 3.65% 3.54% 3.58% 3.72% - Ulster Bank 1.90% 2.32% 1.81% 1.93% 2.32% - Commercial Banking 2.85% 2.72% 2.81% 2.86% 2.78% - Private Banking 3.20% 3.70% 3.14% 3.21% 3.65% - Corporate & Institutional Banking 1.09% 0.95% 1.16% 1.00% 1.08% - Central items 0.34% 0.52% 0.29% 0.41% 0.58% - RCR (0.37%) (0.09%) (0.60%) (0.38%) (0.31%) ===================================== ============ ============ ============ ======= ============ Non-interest income =============================== ===== ===== === ===== ===== Net fees and commissions 2,280 2,688 685 783 920 Income from trading activities 747 1,644 82 430 205 Other operating income 518 799 93 141 148 =============================== ===== ===== === ===== ===== Total non-interest income 3,545 5,131 860 1,354 1,273 =============================== ===== ===== === ===== =====
Notes:
(1) For the purposes of net interest margin (NIM) calculations, a decrease of
GBP12 million arising in Central items (nine months ended 30 September 2014
- GBP35 million; Q3 2015 - GBP4 million; Q2 2015 - GBP3 million; Q3 2014
- GBP7 million) was made in respect of interest on financial assets and
liabilities designated as at fair value through profit or loss. Related
interest-earning assets and interest-bearing liabilities have also been
adjusted.
(2) PBB NIM Q3 2015 was 3.23% and Q2 2015 was 3.29%. CPB NIM for Q3 2015 was
2.87% and Q2 2015 was 2.92%.
Analysis of results
Key points
-- Net interest income of GBP2,187 million was down GBP183 million from Q3
2014. While there has been good volume growth in some segments during the
quarter, average interest-earnings assets remain 4% lower than Q3 2014.
Higher yielding assets such as credit card balances and personal unsecured
loans have declined in volume, reflecting RBS's positioning in these products.
Good progress in the run-down of CIB Capital Resolution assets has amplified
the bank's excess liquidity position.
-- NIM for RBS of 2.09% continues to compress modestly, down 4 basis points
from Q2 2015 and 8 basis points from Q3 2014. RBS's previously reported
NIM included Citizens, whose exclusion results in a lower bank NIM.
-- In UK PBB, NIM declined by 4 basis points during Q3 2015, principally reflecting
more competitive front book pricing in combination with increased switching
from the standard variable rate book (15% of the overall mortgage book at
30 September 2015 compared with 23% a year earlier and 18% at the end of
Q2 2015).
-- Non-interest income totalled GBP860 million, down GBP413 million from Q3
2014. This was principally driven by the planned reshaping of CIB (down
GBP306 million) and reduced trading income and disposal gains in RCR (down
GBP144 million). Equity gains were also lower in Commercial Banking, which
had recorded significant disposal gains in previous quarters. Interchange
fee income in UK PBB remains under pressure.
-- Compared with Q2 2015, non-interest income was GBP494 million lower. This
included a movement of GBP331 million in volatile items under IFRS, which
represented a charge of GBP126 million in the quarter compared with a credit
of GBP205 million in Q2 2015.
Analysis of results
Nine months ended Quarter ended
========================== ===================================
30 September 30 September 30 September 30 June 30 September
2015 2014 2015 2015 2014
Operating expenses GBPm GBPm GBPm GBPm GBPm
===================================== ============ ============ ============ ======= ============
Staff costs 3,776 4,184 1,265 1,242 1,356
Premises and equipment 1,061 1,360 352 298 423
Other 1,338 1,418 477 481 396
Restructuring costs* 2,317 612 847 1,023 167
Litigation and conduct costs 1,444 1,030 129 459 780
===================================== ============ ============ ============ ======= ============
Administrative expenses 9,936 8,604 3,070 3,503 3,122
Depreciation and amortisation 608 724 190 186 261
Write down of intangible
assets - 82 - - -
===================================== ============ ============ ============ ======= ============
Operating expenses 10,544 9,410 3,260 3,689 3,383
===================================== ============ ============ ============ ======= ============
Adjusted operating expenses
(1) 6,783 7,768 2,284 2,207 2,436
===================================== ============ ============ ============ ======= ============
*Restructuring costs comprise:
- staff expenses 625 248 281 288 79
- premises, equipment, depreciation
and amortisation 705 244 375 42 52
- other 987 120 191 693 36
===================================== ============ ============ ============ ======= ============
Restructuring costs 2,317 612 847 1,023 167
===================================== ============ ============ ============ ======= ============
Staff costs as a % of total
income 37% 35% 42% 35% 37%
Cost:income ratio 104% 78% 107% 103% 93%
Cost:income ratio - adjusted
(1) 67% 65% 75% 62% 67%
Employee numbers (FTE - thousands) 92.4 93.3 92.4 91.6 93.3
===================================== ============ ============ ============ ======= ============
Note:
(1) Excluding restructuring costs and litigation and conduct costs.
Key points
-- Staff costs totalled GBP1,265 million, down GBP91 million or 7%, compared
with Q3 2014, principally driven by declining headcount. Premises and equipment
expenses were down GBP71 million from Q3 2014 as RBS's property portfolio
is managed down.
-- Adjusted operating expenses in the nine months ended 30 September 2015 totalled
GBP6,783 million, down GBP985 million or 13%, compared with the same period
of 2014. RBS expects to exceed GBP900 million of cost savings for the full
year. However, Q4 2015 will include the annual bank levy charge; in addition,
GBP190 million of accrual reversals were recorded in Q4 2014.
-- Restructuring costs totalled GBP847 million for Q3 2015, principally relating
to CIB (GBP637 million, including GBP276 million of property related charges)
and to Williams & Glyn separation (GBP190 million). Restructuring costs
in the first nine months of 2015 were GBP2.3 billion, approaching half of
the expected c.GBP5 billion of total restructuring costs from 2015 to 2019.
-- Litigation and conduct costs of GBP129 million were lower than recorded
in recent quarters and related principally to a charge in CIB in relation
to certain mortgage-backed securities litigation.
(MORE TO FOLLOW) Dow Jones Newswires
October 30, 2015 03:01 ET (07:01 GMT)
Analysis of results
Nine months ended Quarter ended
========================== ===================================
30 September 30 September 30 September 30 June 30 September
2015 2014 2015 2015 2014
Impairment (releases)/losses GBPm GBPm GBPm GBPm GBPm
================================== ============ ============ ============ ======= ============
Loan impairment (releases)/losses
- individually assessed (135) (321) (15) (105) (415)
- collectively assessed (8) 293 (13) (7) 16
- latent (380) (642) (64) (91) (450)
================================== ============ ============ ============ ======= ============
Customer loans (523) (670) (92) (203) (849)
Bank loans (4) (10) (4) - -
================================== ============ ============ ============ ======= ============
Total loan impairment releases (527) (680) (96) (203) (849)
Securities 127 (2) 17 11 2
================================== ============ ============ ============ ======= ============
Total impairment releases (400) (682) (79) (192) (847)
================================== ============ ============ ============ ======= ============
30 September 30 June 31 December
Credit metrics (1) 2015 2015 2014
==================================== ============ =========== ===========
Gross customer loans GBP322,957m GBP390,781m GBP412,801m
Loan impairment provisions GBP9,277m GBP11,303m GBP18,040m
Risk elements in lending (REIL) GBP14,643m GBP18,714m GBP28,219m
Provisions as a % of REIL 63% 60% 64%
REIL as a % of gross customer loans 4.5% 4.8% 6.8%
==================================== ============ =========== ===========
Credit metrics excluding Citizens
==================================== =========== =========== ===========
Gross customer loans GBP322,957m GBP328,821m GBP352,659m
Loan impairment provisions GBP9,277m GBP10,771m GBP17,504m
Risk elements in lending (REIL) GBP14,643m GBP17,474m GBP26,889m
Provisions as a % of REIL 63% 62% 65%
REIL as a % of gross customer loans 4.5% 5.3% 7.6%
==================================== =========== =========== ===========
Note:
(1) Includes disposal groups. Citizens is included in disposal groups at 30
June 2015 and 31 December 2014.
Key points
-- Loan impairment releases in Q3 2015 were GBP96 million compared with GBP849
million in Q3 2014.
-- Excluding Citizens, provision coverage increased from 62% at 30 June 2015
to 63% at 30 September 2015, largely reflecting the GBP2.8 billion reduction
in REIL, principally driven by RCR disposals.
Analysis of results
Selected credit risk portfolios
31 December 2014
30 September 2015 30 June 2015 (1) (1)
======================= ======================= =======================
CRA EAD CRA EAD CRA EAD
(2) TCE (2) (2) (2) TCE (2) (2) (2) TCE (2) (2)
Natural resources GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
=================== ====== ======= ====== ====== ======= ====== ====== ======= ======
Oil and gas 4,632 9,181 7,224 6,664 15,499 11,318 9,421 22,014 15,877
Mining and metals 1,397 2,516 1,934 1,717 2,914 2,543 2,660 4,696 3,817
Electricity 3,323 9,145 6,282 4,361 11,935 7,933 4,927 16,212 9,984
Water and waste 4,901 5,955 5,906 5,006 6,174 6,041 5,281 6,718 6,466
=================== ====== ======= ====== ====== ======= ====== ====== ======= ======
Natural resources 14,253 26,797 21,346 17,748 36,522 27,835 22,289 49,640 36,144
=================== ====== ======= ====== ====== ======= ====== ====== ======= ======
Commodity traders
(3) 884 1,239 1,355 1,136 1,835 1,996 1,968 2,790 3,063
Of which: natural
resources 662 915 922 706 1,083 1,197 1,140 1,596 1,852
Shipping 7,937 8,568 8,266 8,258 8,874 8,616 10,087 10,710 10,552
=================== ====== ======= ====== ====== ======= ====== ====== ======= ======
Notes:
(1) Prior period data excludes Citizens for comparative purposes: Citizens totals
for natural resources and shipping were 30 June 2015 - TCE GBP4.4 billion,
EAD GBP3.6 billion; 31 December 2014 - TCE GBP4.2 billion, EAD GBP3.4 billion.
(2) Credit risk assets (CRA) consist of lending gross of impairment provisions,
derivative exposures after netting and contingent obligations. Total committed
exposure (TCE) comprises CRA, securities financing transactions after netting,
banking book debt securities and committed undrawn facilities. Exposure
at default (EAD) is gross of credit provisions and is after credit risk
mitigation. EAD reflects an estimate of the extent to which a bank will
be exposed under a specific facility on the default of a customer or counterparty.
Uncommitted undrawn facilities are excluded from TCE but included within
EAD; therefore EAD can exceed TCE.
(3) Commodity traders represents customers in a number of industry sectors,
predominately natural resources above.
Key points
-- Oil and gas: total exposure has more than halved during 2015 and decreased
significantly during Q3 2015. This primarily reflected continued loan sales
and run-off across the CIB portfolio in Asia-Pacific and the US.
-- Mining and metals: the reduction in exposure during 2015 reflected proactive
management of more vulnerable sub-sectors. The majority of the exposure
is to large international customers and matures within five years.
-- Commodity traders: total exposure has more than halved during 2015 and is
primarily to the largest physical commodity traders, the exposure is predominantly
short-dated, collateralised and uncommitted facilities used for working
capital.
-- Shipping: exposure is in CIB Capital Resolution and RCR. The decrease in
exposure in Q3 2015 principally reflected sales in RCR.
30 September
2015 30 June 2015 31 December 2014
================= ================= ==================
Balance Total Balance Total Balance Total
sheet exposure sheet exposure sheet exposure
Emerging markets (1) GBPm GBPm GBPm GBPm GBPm GBPm
===================== ======= ======== ======= ======== ======== ========
India 1,952 2,456 1,680 2,225 1,989 2,628
China 1,588 1,651 2,358 2,510 3,548 4,079
Russia 953 1,028 1,618 1,709 1,830 1,997
===================== ======= ======== ======= ======== ======== ========
Note:
(1) Balance sheet and total exposures include banking and trading book debt
securities and are net of impairment provisions in respect of lending -
refer to the Country risk section of the 2014 Annual Report and Accounts
for detailed definitions.
Key point
-- Exposure to most emerging markets decreased in 2015 as RBS continues to
implement its strategy to withdraw from non-strategic countries. The drop
in Chinese exposure in Q3 2015 reflected corporate loan sales and reductions
in cash collateral due to reduced volumes of foreign exchange trading. Total
exposure to Russia has halved during 2015 and the reduction in Q3 2015 was
mostly due to corporate loan sales.
Analysis of results
Capital and leverage
ratios
End-point CRR basis (1) PRA transitional basis
==================================== ==================================
30 September 30 June 31 December 30 September 30 June 31 December
2015 2015 2014 2015 2015 2014
Risk asset ratios % % % % % %
============================== ============ ========= =========== ============ ======= ===========
CET1 12.7 12.3 11.2 12.7 12.3 11.1
Tier 1 13.3 12.3 11.2 15.5 14.3 13.2
Total 16.0 14.8 13.7 19.8 18.5 17.1
============================== ============ ========= =========== ============ ======= ===========
(MORE TO FOLLOW) Dow Jones Newswires
October 30, 2015 03:01 ET (07:01 GMT)
Capital GBPm GBPm GBPm GBPm GBPm GBPm ============================== ============ ========= =========== ============ ======= =========== Tangible equity 44,442 43,919 44,368 44,442 43,919 44,368 Expected loss less impairment provisions (1,185) (1,319) (1,491) (1,185) (1,319) (1,491) Prudential valuation adjustment (392) (366) (384) (392) (366) (384) Deferred tax assets (1,159) (1,206) (1,222) (1,159) (1,206) (1,222) Own credit adjustments 208 345 500 208 345 500 Pension fund assets (256) (250) (238) (256) (250) (238) Other deductions (1,478) (1,070) (1,614) (1,456) (1,047) (1,884) ============================== ============ ========= =========== ============ ======= =========== Total deductions (4,262) (3,866) (4,449) (4,240) (3,843) (4,719) CET1 capital 40,180 40,053 39,919 40,202 40,076 39,649 AT1 capital 1,997 - - 8,716 6,709 7,468 ============================== ============ ========= =========== ============ ======= =========== Tier 1 capital 42,177 40,053 39,919 48,918 46,785 47,117 Tier 2 capital 8,331 8,181 8,717 13,742 13,573 13,626 ============================== ============ ========= =========== ============ ======= =========== Total regulatory capital 50,508 48,234 48,636 62,660 60,358 60,743 ============================== ============ ========= =========== ============ ======= =========== Risk-weighted assets ============================== ============ ========= =========== ============ ======= =========== Credit risk - non-counterparty 237,800 245,000 264,700 237,800 245,000 264,700 - counterparty 26,900 27,500 30,400 26,900 27,500 30,400 Market risk 19,700 22,300 24,000 19,700 22,300 24,000 Operational risk 31,600 31,600 36,800 31,600 31,600 36,800 ============================== ============ ========= =========== ============ ======= =========== Total RWAs 316,000 326,400 355,900 316,000 326,400 355,900 ============================== ============ ========= =========== ============ ======= =========== Leverage (2) ============================== ============ ========= =========== Derivatives 296,500 282,300 354,000 Loans and advances 402,300 402,800 419,600 Reverse repos 52,100 67,800 64,700 Other assets 207,700 211,800 212,500 ============================== ============ ========= =========== Total assets 958,600 964,700 1,050,800 Derivatives - netting (280,300) (266,600) (330,900) - potential future exposures 82,200 83,500 98,800 Securities financing transactions gross up 6,600 6,200 25,000 Undrawn commitments 78,900 84,700 96,400 Regulatory deductions and other adjustments 500 2,000 (600) ============================== ============ ========= =========== Leverage exposure 846,500 874,500 939,500 ============================== ============ ========= =========== Tier 1 capital 42,177 40,053 39,919 ============================== ============ ========= =========== Leverage ratio % 5.0 4.6 4.2 ============================== ============ ========= ===========
Notes:
(1) Capital Requirements Regulation (CRR) as implemented by the Prudential Regulation
Authority in the UK, with effect from 1 January 2014. All regulatory adjustments
and deductions to CET1 have been applied in full for the end-point CRR basis
with the exception of unrealised gains on AFS securities which has been
included from 2015 under the PRA transitional basis.
(2) Based on end-point CRR Tier 1 capital and leverage exposure under the revised
2014 Basel III leverage ratio framework and the CRR Delegated Act.
Analysis of results
Key points
-- RBS's CET1 ratio strengthened to 12.7% at 30 September 2015, up 40 basis
points from 30 June 2015 and 150 basis points since the start of the year.
The increase was principally driven by a further reduction in RWAs, which
fell by GBP10.4 billion during Q3 2015. Excluding the impact of movements
in both US dollar and euro exchange rates, the RWA reduction would have
been GBP14.9 billion.
-- CIB Capital Resolution RWAs decreased by GBP6.7 billion from 30 June 2015
due to portfolio reduction of GBP7 billion, including further sale to Mizuho
of GBP1.3 billion and ongoing GTS exit activity of GBP1.5 billion, partly
offset by foreign exchange movements as sterling weakened against the dollar.
-- CIB Go-forward RWAs decreased by GBP3.3 billion from 30 June 2015 principally
due to a decrease of GBP2.2 billion in market risk RWAs.
-- RCR RWAs reduced by GBP2.0 billion from 30 June 2015 reflecting ongoing
disposal and run-off strategy.
-- The leverage ratio improved to 5.0% at 30 September 2015, up 40 basis points
from 30 June 2015, assisted by the successful issue of US$3.15 billion (GBP2
billion) Additional Tier 1 capital notes in August 2015 and reduced leverage
exposure driven by lower reverse repos and undrawn commitments.
-- On a pro-forma basis, assuming full deconsolidation of Citizens credit and
counterparty risk RWAs at 30 September 2015, RBS's CET1 ratio would have
been 16.2% and its leverage ratio 5.6%.
Segment performance
On 3 August 2015, RBS's interest in Citizens fell to 20.9% and Citizens Financial Group (CFG) ceased to be a reportable segment. The following segment disclosures have been restated accordingly. Refer to pages 2 and 31 for further information.
Nine months ended 30 September 2015
=========================================================================================
PBB CPB CIB
======================== ============================ =======
Ulster Commercial Private Central Total
items
UK PBB Bank Total Banking Banking Total (1) RCR RBS
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
========================================= ======= ====== ======= ========== ======= ======= ======= ======= ===== ========
Income statement
Net interest income 3,460 392 3,852 1,673 377 2,050 518 227 (42) 6,605
Non-interest income 920 190 1,110 871 248 1,119 1,243 (114) 187 3,545
========================================= ======= ====== ======= ========== ======= ======= ======= ======= ===== ========
Total income 4,380 582 4,962 2,544 625 3,169 1,761 113 145 10,150
========================================= ======= ====== ======= ========== ======= ======= ======= ======= ===== ========
Direct expenses - staff costs (694) (179) (873) (377) (209) (586) (461) (1,778) (78) (3,776)
- other costs (221) (54) (275) (166) (49) (215) (209) (2,294) (14) (3,007)
Indirect expenses (1,379) (196) (1,575) (657) (289) (946) (1,571) 4,139 (47) -
Restructuring costs - direct (5) (21) (26) (11) (1) (12) (404) (1,875) - (2,317)
-
indirect (72) (3) (75) (8) (83) (91) (1,258) 1,428 (4) -
Litigation and conduct costs (362) 6 (356) (59) (28) (87) (980) (21) - (1,444)
========================================= ======= ====== ======= ========== ======= ======= ======= ======= ===== ========
Operating expenses (2,733) (447) (3,180) (1,278) (659) (1,937) (4,883) (401) (143) (10,544)
========================================= ======= ====== ======= ========== ======= ======= ======= ======= ===== ========
Profit/(loss) before impairment
losses 1,647 135 1,782 1,266 (34) 1,232 (3,122) (288) 2 (394)
Impairment releases/(losses) 6 110 116 (42) (1) (43) 35 (47) 339 400
(MORE TO FOLLOW) Dow Jones Newswires
October 30, 2015 03:01 ET (07:01 GMT)
========================================= ======= ====== ======= ========== ======= ======= ======= ======= ===== ======== Operating profit/(loss) 1,653 245 1,898 1,224 (35) 1,189 (3,087) (335) 341 6 ========================================= ======= ====== ======= ========== ======= ======= ======= ======= ===== ======== Additional information Operating expenses - adjusted (2) (2,294) (429) (2,723) (1,200) (547) (1,747) (2,241) 67 (139) (6,783) Operating profit/(loss) - adjusted (2) 2,092 263 2,355 1,302 77 1,379 (445) 133 345 3,767 Return on equity (3) 26.2% 10.1% 20.7% 11.6% (4.5%) 9.6% (26.0%) nm nm 2.4% Return on equity - adjusted (2,3) 33.7% 10.8% 26.0% 12.5% 4.1% 11.4% (5.1%) nm nm 11.7% Cost:income ratio 62% 77% 64% 50% 105% 61% 277% nm nm 104% Cost:income ratio - adjusted (2) 52% 74% 55% 47% 88% 55% 127% nm nm 67% Total assets (GBPbn) 139.1 28.0 167.1 95.9 16.8 112.7 464.1 119.6 12.9 876.4 Funded assets (GBPbn) 139.1 27.9 167.0 95.9 16.7 112.6 177.4 116.9 6.5 580.4 Net loans and advances to customers (GBPbn) 132.5 20.6 153.1 91.6 13.5 105.1 50.8 0.4 4.3 313.7 Risk elements in lending (GBPbn) 3.0 4.0 7.0 2.2 0.1 2.3 0.2 - 5.1 14.6 Impairment provisions (GBPbn) (2.0) (2.3) (4.3) (0.8) (0.1) (0.9) (0.1) (0.1) (3.9) (9.3) Customer deposits (GBPbn) 152.9 19.2 172.1 98.9 29.1 128.0 47.8 3.7 0.9 352.5 Risk-weighted assets (RWAs) (GBPbn) 39.4 21.5 60.9 67.2 9.8 77.0 78.0 87.7 12.4 316.0 RWA equivalent (GBPbn) (4) 43.2 21.7 64.9 72.1 9.8 81.9 79.7 88.1 13.9 328.5 Employee numbers (FTEs - thousands) 25.6 4.2 29.8 6.0 2.7 8.7 2.8 50.6 0.5 92.4 ========================================= ======= ====== ======= ========== ======= ======= ======= ======= ===== ======== For the notes to this table refer to page 22. nm = not meaningful
Segment performance
Quarter ended 30 September 2015
==================================================================================
PBB CPB CIB
==================== ========================== =======
Ulster Commercial Private Central Total
UK items
PBB Bank Total Banking Banking Total (1) RCR RBS
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
========================================= ===== ====== ===== ========== ======= ===== ======= ======= ===== =======
Income statement
Net interest income 1,170 127 1,297 565 123 688 142 77 (17) 2,187
Non-interest income 289 87 376 265 81 346 295 (154) (3) 860
========================================= ===== ====== ===== ========== ======= ===== ======= ======= ===== =======
Total income 1,459 214 1,673 830 204 1,034 437 (77) (20) 3,047
========================================= ===== ====== ===== ========== ======= ===== ======= ======= ===== =======
Direct expenses - staff costs (238) (59) (297) (122) (66) (188) (139) (619) (22) (1,265)
- other costs (81) (21) (102) (56) (23) (79) (60) (777) (1) (1,019)
Indirect expenses (466) (70) (536) (224) (95) (319) (510) 1,380 (15) -
Restructuring costs - direct (5) (3) (8) (1) 2 1 (193) (647) - (847)
-
indirect (22) (3) (25) - (3) (3) (444) 476 (4) -
Litigation and conduct costs 2 (2) - - - - (107) (22) - (129)
========================================= ===== ====== ===== ========== ======= ===== ======= ======= ===== =======
Operating expenses (810) (158) (968) (403) (185) (588) (1,453) (209) (42) (3,260)
========================================= ===== ====== ===== ========== ======= ===== ======= ======= ===== =======
Profit/(loss) before impairment
losses 649 56 705 427 19 446 (1,016) (286) (62) (213)
Impairment (losses)/releases (11) 58 47 (15) (4) (19) 4 1 46 79
========================================= ===== ====== ===== ========== ======= ===== ======= ======= ===== =======
Operating profit/(loss) 638 114 752 412 15 427 (1,012) (285) (16) (134)
========================================= ===== ====== ===== ========== ======= ===== ======= ======= ===== =======
Additional information
Operating expenses - adjusted
(2) (785) (150) (935) (402) (184) (586) (709) (16) (38) (2,284)
Operating profit/(loss) - adjusted
(2) 663 122 785 413 16 429 (268) (92) (12) 842
Return on equity (3) 31.8% 14.1% 25.5% 11.7% 1.7% 10.5% (29.2%) nm nm 8.8%
Return on equity - adjusted (2,3) 33.1% 15.1% 26.7% 11.7% 1.9% 10.6% (9.1%) nm nm 15.8%
Cost:income ratio 56% 74% 58% 49% 91% 57% 332% nm nm 107%
Cost:income ratio - adjusted
(2) 54% 70% 56% 48% 90% 57% 162% nm nm 75%
Total assets (GBPbn) 139.1 28.0 167.1 95.9 16.8 112.7 464.1 119.6 12.9 876.4
Funded assets (GBPbn) 139.1 27.9 167.0 95.9 16.7 112.6 177.4 116.9 6.5 580.4
Net loans and advances to customers
(GBPbn) 132.5 20.6 153.1 91.6 13.5 105.1 50.8 0.4 4.3 313.7
Risk elements in lending (GBPbn) 3.0 4.0 7.0 2.2 0.1 2.3 0.2 - 5.1 14.6
Impairment provisions (GBPbn) (2.0) (2.3) (4.3) (0.8) (0.1) (0.9) (0.1) (0.1) (3.9) (9.3)
Customer deposits (GBPbn) 152.9 19.2 172.1 98.9 29.1 128.0 47.8 3.7 0.9 352.5
Risk-weighted assets (RWAs) (GBPbn) 39.4 21.5 60.9 67.2 9.8 77.0 78.0 87.7 12.4 316.0
RWA equivalent (GBPbn) (4) 43.2 21.7 64.9 72.1 9.8 81.9 79.7 88.1 13.9 328.5
Employee numbers (FTEs - thousands) 25.6 4.2 29.8 6.0 2.7 8.7 2.8 50.6 0.5 92.4
========================================= ===== ====== ===== ========== ======= ===== ======= ======= ===== =======
For the notes to this table refer to
page 22. nm = not meaningful
Segment performance
Nine months ended 30 September 2014
=========================================================================================
PBB CPB CIB
======================== ============================ =======
Ulster Commercial Private Central Total
items
UK PBB Bank Total Banking Banking Total (1) RCR RBS
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
======================================== ======= ====== ======= ========== ======= ======= ======= ======= ====== =======
Income statement
Net interest income 3,474 486 3,960 1,520 516 2,036 595 312 (24) 6,879
Non-interest income 1,031 140 1,171 859 299 1,158 2,663 (115) 254 5,131
======================================== ======= ====== ======= ========== ======= ======= ======= ======= ====== =======
(MORE TO FOLLOW) Dow Jones Newswires
October 30, 2015 03:01 ET (07:01 GMT)
Total income 4,505 626 5,131 2,379 815 3,194 3,258 197 230 12,010
======================================== ======= ====== ======= ========== ======= ======= ======= ======= ====== =======
Direct expenses - staff costs (705) (182) (887) (390) (227) (617) (666) (1,889) (126) (4,185)
- other costs (305) (55) (360) (176) (47) (223) (300) (2,644) (56) (3,583)
Indirect expenses (1,423) (187) (1,610) (598) (326) (924) (1,773) 4,386 (79) -
Restructuring costs - direct (8) 8 - (40) (2) (42) (44) (526) - (612)
-
indirect (76) (34) (110) (40) (8) (48) (163) 325 (4) -
Litigation and conduct costs (268) - (268) (50) - (50) (612) (100) - (1,030)
======================================== ======= ====== ======= ========== ======= ======= ======= ======= ====== =======
Operating expenses (2,785) (450) (3,235) (1,294) (610) (1,904) (3,558) (448) (265) (9,410)
======================================== ======= ====== ======= ========== ======= ======= ======= ======= ====== =======
Profit/(loss) before impairment
losses 1,720 176 1,896 1,085 205 1,290 (300) (251) (35) 2,600
Impairment (losses)/releases (227) 261 34 (43) 4 (39) 51 11 625 682
======================================== ======= ====== ======= ========== ======= ======= ======= ======= ====== =======
Operating profit/(loss) 1,493 437 1,930 1,042 209 1,251 (249) (240) 590 3,282
======================================== ======= ====== ======= ========== ======= ======= ======= ======= ====== =======
Additional information
Operating expenses - adjusted
(2) (2,433) (424) (2,857) (1,164) (600) (1,764) (2,739) (147) (261) (7,768)
Operating profit - adjusted (2) 1,845 463 2,308 1,172 219 1,391 570 61 594 4,924
Return on equity (3) 22.1% 16.2% 19.6% 10.4% 12.3% 10.7% (2.4%) nm nm 7.3%
Return on equity - adjusted (2,3) 27.6% 17.2% 23.6% 11.8% 12.9% 12.0% 2.2% nm nm 11.9%
Cost:income ratio 62% 72% 63% 54% 75% 60% 109% nm nm 78%
Cost:income ratio - adjusted
(2) 54% 68% 56% 49% 74% 55% 84% nm nm 65%
Total assets (GBPbn) 134.2 26.5 160.7 89.7 21.1 110.8 572.9 170.4 31.3 1,046.1
Funded assets (GBPbn) 134.2 26.3 160.5 89.7 21.0 110.7 274.9 168.1 17.9 732.1
Net loans and advances to customers
(GBPbn) 127.0 22.0 149.0 85.0 16.7 101.7 73.1 57.1 13.2 394.1
Risk elements in lending (GBPbn) 4.1 4.8 8.9 2.6 0.2 2.8 0.1 1.3 17.4 30.5
Impairment provisions (GBPbn) (2.7) (2.9) (5.6) (1.0) (0.1) (1.1) (0.2) (0.5) (12.6) (20.0)
Customer deposits (GBPbn) 146.0 19.7 165.7 87.0 36.2 123.2 57.1 58.4 1.2 405.6
Risk-weighted assets (RWAs) (GBPbn) 44.7 23.9 68.6 64.9 12.2 77.1 123.2 82.2 30.6 381.7
RWA equivalent (GBPbn) (4) 47.3 21.4 68.7 71.6 12.2 83.8 125.0 82.2 38.3 398.0
Employee numbers (FTEs - thousands) 25.0 4.5 29.5 6.8 3.4 10.2 4.0 48.8 0.8 93.3
======================================== ======= ====== ======= ========== ======= ======= ======= ======= ====== =======
For the notes to this table refer to page
22. nm = not meaningful
Segment performance
Quarter ended 30 June 2015
==================================================================================
PBB CPB CIB
==================== ========================== =======
Ulster Commercial Private Central Total
UK items
PBB Bank Total Banking Banking Total (1) RCR RBS
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
========================================= ===== ====== ===== ========== ======= ===== ======= ======= ===== =======
Income statement
Net interest income 1,147 132 1,279 562 126 688 174 88 (14) 2,215
Non-interest income 322 46 368 330 81 411 346 170 59 1,354
========================================= ===== ====== ===== ========== ======= ===== ======= ======= ===== =======
Total income 1,469 178 1,647 892 207 1,099 520 258 45 3,569
========================================= ===== ====== ===== ========== ======= ===== ======= ======= ===== =======
Direct expenses - staff costs (231) (60) (291) (126) (67) (193) (142) (585) (31) (1,242)
- other costs (69) (16) (85) (56) (14) (70) (71) (732) (7) (965)
Indirect expenses (463) (63) (526) (208) (96) (304) (521) 1,366 (15) -
Restructuring costs - direct - (18) (18) (10) (3) (13) (195) (797) - (1,023)
-
indirect (20) (1) (21) (7) (81) (88) (539) 648 - -
Litigation and conduct costs (10) 8 (2) (59) (26) (85) (373) 1 - (459)
========================================= ===== ====== ===== ========== ======= ===== ======= ======= ===== =======
Operating expenses (793) (150) (943) (466) (287) (753) (1,841) (99) (53) (3,689)
========================================= ===== ====== ===== ========== ======= ===== ======= ======= ===== =======
Profit/(loss) before impairment
losses 676 28 704 426 (80) 346 (1,321) 159 (8) (120)
Impairment (losses)/releases (9) 52 43 (26) 2 (24) (13) 2 184 192
========================================= ===== ====== ===== ========== ======= ===== ======= ======= ===== =======
Operating profit/(loss) 667 80 747 400 (78) 322 (1,334) 161 176 72
========================================= ===== ====== ===== ========== ======= ===== ======= ======= ===== =======
Additional information
Operating expenses - adjusted
(2) (763) (139) (902) (390) (177) (567) (734) 49 (53) (2,207)
Operating profit/(loss) - adjusted
(2) 697 91 788 476 32 508 (227) 309 176 1,554
Return on equity (3) 32.1% 9.9% 24.7% 11.3% (20.1%) 7.5% (33.0%) nm nm 2.7%
Return on equity - adjusted (2,3) 33.6% 11.3% 26.1% 13.7% 5.6% 12.7% (6.9%) nm nm 14.1%
Cost:income ratio 54% 84% 57% 52% 139% 69% 354% nm nm 103%
Cost:income ratio - adjusted
(2) 52% 78% 55% 44% 86% 52% 141% nm nm 62%
Total assets (GBPbn) 135.4 26.5 161.9 94.5 17.0 111.5 482.4 192.4 16.5 964.7
Funded assets (GBPbn) 135.4 26.4 161.8 94.5 16.9 111.4 211.1 189.7 8.4 682.4
Net loans and advances to customers
(GBPbn) 128.6 20.2 148.8 90.1 13.5 103.6 57.8 63.4 5.9 379.5
Risk elements in lending (GBPbn) 3.2 4.2 7.4 2.3 0.2 2.5 0.2 1.2 7.4 18.7
Impairment provisions (GBPbn) (2.1) (2.4) (4.5) (0.9) - (0.9) (0.1) (0.7) (5.1) (11.3)
Customer deposits (GBPbn) 151.0 18.7 169.7 97.0 29.8 126.8 49.2 65.8 1.0 412.5
Risk-weighted assets (RWAs) (GBPbn) 41.0 21.2 62.2 66.9 9.8 76.7 88.0 85.1 14.4 326.4
RWA equivalent (GBPbn) (4) 44.6 20.7 65.3 72.0 9.8 81.8 89.7 85.4 17.9 340.1
Employee numbers (FTEs - thousands) 25.4 4.2 29.6 6.2 2.7 8.9 3.1 49.5 0.5 91.6
(MORE TO FOLLOW) Dow Jones Newswires
October 30, 2015 03:01 ET (07:01 GMT)
========================================= ===== ====== ===== ========== ======= ===== ======= ======= ===== ======= For the notes to this table refer to page 22. nm= not meaningful
Segment performance
Quarter ended 30 September 2014
=====================================================================================
PBB CPB CIB
====================== ========================== =======
Ulster Commercial Private Central Total
UK items
PBB Bank Total Banking Banking Total (1) RCR RBS
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
========================================= ===== ====== ======= ========== ======= ===== ======= ======= ====== =======
Income statement
Net interest income 1,198 163 1,361 521 172 693 230 109 (23) 2,370
Non-interest income 345 51 396 290 98 388 601 (257) 145 1,273
========================================= ===== ====== ======= ========== ======= ===== ======= ======= ====== =======
Total income 1,543 214 1,757 811 270 1,081 831 (148) 122 3,643
========================================= ===== ====== ======= ========== ======= ===== ======= ======= ====== =======
Direct expenses - staff costs (236) (57) (293) (124) (76) (200) (179) (647) (37) (1,356)
- other costs (81) (20) (101) (54) (18) (72) (50) (833) (24) (1,080)
Indirect expenses (465) (61) (526) (196) (109) (305) (593) 1,448 (24) -
Restructuring costs - direct (2) - (2) - - - (22) (143) - (167)
-
indirect (63) (12) (75) (18) (7) (25) 6 98 (4) -
Litigation and conduct costs (118) - (118) - - - (562) (100) - (780)
========================================= ===== ====== ======= ========== ======= ===== ======= ======= ====== =======
Operating expenses (965) (150) (1,115) (392) (210) (602) (1,400) (177) (89) (3,383)
========================================= ===== ====== ======= ========== ======= ===== ======= ======= ====== =======
Profit/(loss) before impairment
losses 578 64 642 419 60 479 (569) (325) 33 260
Impairment (losses)/releases (79) 318 239 (12) 4 (8) 12 (1) 605 847
========================================= ===== ====== ======= ========== ======= ===== ======= ======= ====== =======
Operating profit/(loss) 499 382 881 407 64 471 (557) (326) 638 1,107
========================================= ===== ====== ======= ========== ======= ===== ======= ======= ====== =======
Additional information
Operating expenses - adjusted
(2) (782) (138) (920) (374) (203) (577) (822) (32) (85) (2,436)
Operating profit/(loss) - adjusted
(2) 682 394 1,076 425 71 496 21 (181) 642 2,054
Return on equity (3) 22.8% 47.1% 28.5% 12.3% 11.1% 12.2% (11.3%) nm nm 8.2%
Return on equity - adjusted (2,3) 31.5% 48.5% 35.0% 12.9% 12.5% 12.9% (0.8%) nm nm 16.0%
Cost:income ratio 63% 70% 63% 48% 78% 56% 168% nm nm 93%
Cost:income ratio - adjusted
(2) 51% 64% 52% 46% 75% 53% 99% nm nm 67%
Total assets (GBPbn) 134.2 26.5 160.7 89.7 21.1 110.8 572.9 170.4 31.3 1,046.1
Funded assets (GBPbn) 134.2 26.3 160.5 89.7 21.0 110.7 274.9 168.1 17.9 732.1
Net loans and advances to customers
(GBPbn) 127.0 22.0 149.0 85.0 16.7 101.7 73.1 57.1 13.2 394.1
Risk elements in lending (GBPbn) 4.1 4.8 8.9 2.6 0.2 2.8 0.1 1.3 17.4 30.5
Impairment provisions (GBPbn) (2.7) (2.9) (5.6) (1.0) (0.1) (1.1) (0.2) (0.5) (12.6) (20.0)
Customer deposits (GBPbn) 146.0 19.7 165.7 87.0 36.2 123.2 57.1 58.4 1.2 405.6
Risk-weighted assets (RWAs) (GBPbn) 44.7 23.9 68.6 64.9 12.2 77.1 123.2 82.2 30.6 381.7
RWA equivalent (GBPbn) (4) 47.3 21.4 68.7 71.6 12.2 83.8 125.0 82.2 38.3 398.0
Employee numbers (FTEs - thousands) 25.0 4.5 29.5 6.8 3.4 10.2 4.0 48.8 0.8 93.3
========================================= ===== ====== ======= ========== ======= ===== ======= ======= ====== =======
nm = not meaningful
Notes:
(1) Central items include unallocated transactions, principally Treasury AFS portfolio sales of GBP67
million loss in the nine months ended 30 September 2015 (nine months ended 30 September 2014
- GBP143 million gain; Q3 2015 - GBP2 million gain; Q2 2015 - GBP42 million loss; Q3 2014 - GBP73
million loss) and profit and loss on hedges that do not qualify for hedge accounting. Balance
sheet items for periods up to and including June 2015 include Citizens which was within assets
of disposal groups.
(2) Excluding restructuring costs and litigation and conduct costs.
(3) Segmental return on equity based on operating profit after tax adjusted for preference share
dividends divided by average notional equity (based on 13% of the monthly average RWA equivalents
(RWAe)).
(4) RWAe is an internal metric based on target CET 1 ratio of 13%, for all segments except RCR, set
at 10% at creation. RWAe converts performing and non-performing exposures into a consistent capital
measure comprising RWAs and capital deductions.
Segment performance
Key points
UK Personal & Business Banking
-- UK PBB operating profit of GBP638 million was up 28% from Q3 2014. Return
on equity in the quarter was 32%, compared with 23% in the prior year principally
due to lower litigation and conduct costs.
-- Mortgage activity strengthened further in Q3, with applications up 66% from
GBP6.2 billion in Q3 2014 to GBP10.2 billion and new business market share
of approvals increasing to 15%. Total loans and advances increased by GBP3.8
billion during the quarter, with total mortgage balances at 30 September
2015 up 6% compared with Q3 2014.
-- In Q3 our existing private and packaged current account customers were invited
to receive 3% cash back on their household direct debits, for free, until
the end of the year in advance of the launch of our new current account
range. Around one million customers are now enrolled in this free offer.
Those on the free offer can opt into the paid-for new product at the turn
of the year. The fee for this product will be GBP3 per account per month.
The new Reward current accounts launched on 12 October 2015 to non-packaged
and new customers.
-- Income trends were slightly weaker. Net interest margin was 4 basis points
lower than Q2 2015 and 18 basis points lower than in Q3 2014, largely driven
by the significantly increased proportion of lower margin secured lending
in the portfolio mix. New business mortgage margins have fallen as a result
of increasingly competitive pricing. Standard variable rate balances continued
to transfer to lower rate products and represented 15% of the mortgage book
at 30 September 2015 compared with 23% a year earlier. Non-interest income
was lower, reflecting reduced interchange fees on credit and debit cards,
reduced advisory income and the non-repeat of a GBP7 million profit on the
sale of NatWest Stockbrokers in Q3 2014.
-- Operating expenses were down 16% from Q3 2014, with minimal net conduct
expenses in the quarter. Staff costs were 1% lower, with headcount down
2%. The cost:income ratio was 56% compared with 63% in Q3 2014.
-- Credit conditions remained stable, with the charge from bad debt flows down
26% from Q3 2014. The net impairment charge of GBP11 million continued to
benefit from provision releases, though at lower levels than seen in the
first half of the year.
(MORE TO FOLLOW) Dow Jones Newswires
October 30, 2015 03:01 ET (07:01 GMT)
Ulster Bank
-- Improving economic conditions across the island of Ireland have contributed
to stronger new business volumes, particularly in the corporate and personal
mortgage segments. However, this has been offset by continued customer deleveraging
and the sale of a portfolio of buy-to-let mortgages. Balances also reflect
the weakening of the euro over the last year. Excluding the impact of euro
exchange rate movements, net loans and advances were down GBP0.2 billion
from Q2 2015. The low yielding tracker mortgage book reduced by GBP0.3 billion
to GBP9.4 billion with associated RWAs of GBP8.1 billion.
-- Operating profit of GBP114 million was down 70% from Q3 2014, which benefited
from materially larger net impairment provision releases.
-- The Q3 2015 results included a GBP23 million profit on the sale of the buy-to-let
mortgage portfolio, as well as a GBP24 million gain realised on the closure
of a foreign exchange exposure. Return on equity was 14%.
-- Income was flat against Q3 2014 as the income benefits from these one-off
items were offset by exchange rate movements and a lower return on free
funds. While deposit margins have improved steadily from Q3 2014, new business
lending margins have begun to tighten across the market.
-- Operating expenses have increased by GBP8 million from Q3 2014 with headcount
reductions partly offsetting the impact of higher pension costs and regulatory
levies. The cost:income ratio was 74%, slightly higher than Q3 2014.
-- Results benefited from a further GBP58 million release of impairment provisions,
compared with GBP318 million in Q3 2014. This reflects continued positive
trends on collections and Irish property prices albeit the pace of improvement
has slowed since Q3 2014.
Segment performance
Commercial Banking
-- Commercial Banking reported an operating profit of GBP412 million, up 1%
from Q3 2014. Return on equity was stable at 12%.
-- New business volumes in Q3 were strong, with net new lending of GBP1.5 billion
during the quarter. Further enhancements to Commercial Banking's lending
capability are expected with the launch of a new lending platform in Q4
2015.
-- Comparisons with prior periods are affected by a number of internal business
transfers, including the transfer to Commercial Banking of RBS International
(RBSI) from Private Banking on 1 January 2015 and the CIB UK corporate loan
portfolio on 1 May 2015(1,3) . The transfers of the Western Europe loan
portfolio and UK Transaction Services from CIB to Commercial Banking are
on track for completion in Q4 2015.
-- Total income was 2% higher than in Q3 2014, benefiting from increased loan
and deposit volumes combined with higher deposit margins partially offset
by lower asset margins. Non-interest income was lower, principally reflecting
lower equity gains.
-- Total expenses were up 3% from Q3 2014, reflecting higher indirect costs.
Staff costs were flat, with reduced headcount offsetting normal inflation
adjustments. The cost:income ratio was stable at 49%.
-- Net impairment losses increased GBP3 million, reflecting increased individual
charges and lower net provision releases.
Private Banking
-- Operating profit of GBP15 million was down 77% from Q3 2014. Return on equity
was 2%. Coutts remains an area of management focus.
-- The disposal of Private Banking International continues to make good progress,
with the sale of the European, the Middle East and Africa business, including
Switzerland, scheduled to close in Q4 2015 and the sale of the business
in the Far East scheduled to close next year.
-- On 1 January 2015, the RBSI business in Private Banking was transferred
to Commercial Banking. This transfer affects comparisons with prior periods(2,3)
.
-- Operating performance was adversely affected by financial market conditions
and also reflected the business transfer. Adjusting for this transfer, income
was GBP31 million lower principally as a result of hedging activities and
lower investment and transactional income.
-- Total expenses were 12% lower than Q3 2014 due to the transfer of the RBSI
business. The cost:income ratio was 91% compared with 78% in Q3 2014.
-- Assets under management were down GBP1.5 billion from Q2 2015 and GBP3.3
billion from Q3 2014, principally reflecting lower stock market valuations.
Corporate & Institutional Banking
-- The reshaping of the Go-forward business is proceeding in line with plans.
Funded assets fell by GBP23 billion during the quarter, including the GBP17
billion transfer(3) of the Short Term Markets Business to Treasury. The
business remains on track to achieve the previously disclosed income target
of GBP1.3 billion in the full year.
-- Adjusted operating loss for the first nine months of 2015 for CIB was GBP445
million compared with a profit of GBP570 million for the same period in
2014 and for Q3 2015 a loss of GBP268 million compared with a profit of
GBP21 million for Q3 2014, reflecting CIB's planned reshaping as income
declined and disposal losses were incurred.
Notes:
(1) The business transfers included: total income of GBP158 million
(nine months ended 30 September 2014 - GBP153 million; Q3 2015
- GBP49 million; Q2 2015 - GBP56 million; Q3 2014 - GBP54 million);
operating expenses of GBP67 million (nine months ended 30 September
2014 - GBP87 million; Q3 2015 - GBP21 million; Q2 2015 - GBP24
million; Q3 2014 - GBP29 million); net loans and advances to
customers of GBP4.7 billion (30 June 2015 - GBP4.5 billion;
31 December 2014 - GBP4.4 billion); customer deposits of GBP6.3
billion (30 June 2015 - GBP6.4 billion; 31 December 2014 - GBP6.5
billion); and RWAs of GBP4.4 billion (30 June 2015 - GBP3.8
billion; 31 December 2014 - GBP3.5 billion).
(2) The business transfer included: total income of GBP111 million
(nine months ended 30 September 2014 - GBP109 million; Q3 2015
- GBP35 million; Q2 2015 - GBP37 million; Q3 2014 - GBP40 million);
operating expenses of GBP64 million (nine months ended 30 September
2014 - GBP80 million; Q3 2015 - GBP20 million; Q2 2015 - GBP23
million; Q3 2014 - GBP27 million); net loans and advances to
customers of GBP2.6 billion (30 June 2015 - GBP2.4 billion;
31 December 2014 - GBP2.6 billion); customer deposits of GBP6.3
billion (30 June 2015 - GBP6.4 billion; 31 December 2014 - GBP6.5
billion); and RWAs of GBP1.9 billion (30 June 2015 - GBP1.5
billion; 31 December 2014 - GBP1.4 billion).
(3) Comparatives have not been restated.
Segment performance
Corporate & Institutional Banking
-- Adjusted operating profit in the Go-forward business for the first nine
months of 2015 was GBP125 million and for Q3 2015 a loss of GBP5 million.
Adjusted profit in the Go-forward business for the first nine months of
the year, excluding the Western Europe loan portfolio and the UK Transaction
Services business that will transfer to Commercial Banking in Q4 2015, was
broadly breakeven(1) .
-- Compared with Q2 2015, Go-forward income was flat, notwithstanding the seasonal
slow-down in client activity and uncertain market conditions. Rates and
Currencies were broadly in line with Q2 with some weakness in Credit, principally
due to lower levels of primary issuance. In line with the reduction in risk
and resources allocated to CIB, Go-forward income was down 28% compared
with Q3 2014.
-- The transfer to Commercial Banking of the CIB UK corporate loan portfolio
on 1 May 2015(2) and the transfer of the Short Term Markets Business to
Treasury on 1 August 2015 affects comparisons with prior periods.
-- Adjusted expenses for CIB were down GBP113 million compared with Q3 2014
to GBP709 million with staff costs down GBP40 million from Q3 2014 reflecting
a reduction in headcount. Restructuring costs were GBP637 million, down
slightly from GBP734 million the prior quarter as the business reshapes.
-- CIB Capital Resolution made good progress in Q3 2015, with the sale of North
American portfolios to Mizuho largely complete and a further APAC portfolio
sale announced to China Construction Bank Corporation. Disposal losses for
the quarter were GBP77 million.
-- A charge of $150 million (GBP95 million) was incurred in Q3 2015 in relation
to US mortgage-backed securities litigation, but overall litigation and
conduct charges were significantly lower than in Q3 2014.
-- RWAs were reduced by GBP10 billion during Q3 2015 and have fallen by GBP29
billion since 31 December 2014 (GBP26 billion excluding the impact of the
transferred businesses following the strategic changes announced in February
2015). The business has now achieved its previously announced target of
a GBP25 billion reduction in 2015 three months ahead of schedule. In the
Go-forward business RWAs of GBP39 billion as at 30 September 2015 include
GBP8 billion that will transfer out during Q4 2015 to Commercial Banking.
The steady state RWAs of the Go-forward business are expected to be around
GBP30 billion.
(MORE TO FOLLOW) Dow Jones Newswires
October 30, 2015 03:01 ET (07:01 GMT)
RBS Capital Resolution
-- RCR funded assets have fallen to GBP6.5 billion, down 83% since the initial
pool of assets was identified. RCR is targeting an 85% reduction by the
end of 2015, a year earlier than originally planned.
-- During Q3 2015 RWA equivalents fell by GBP4.0 billion to GBP13.9 billion,
driven by disposals and repayments. Disposal activity continues across the
portfolio, with 101 deals completed during Q3 2015 at an average price of
104% of book value.
-- An operating loss of GBP16 million was recorded in Q3 2015, compared with
an operating profit of GBP638 million in Q3 2014. This reflected significantly
reduced impairment releases as well as lower realisations on disposals and
fair value gains.
-- The net effect of the operating loss of GBP16 million and RWA equivalent
reduction of GBP4.0 billion (3) was CET1 accretion of GBP0.4 billion.
Central items
-- Central items not allocated represented a charge of GBP285 million compared
with a charge of GBP326 million in Q3 2014. This includes volatile items
under IFRS, which were a charge of GBP126 million in the quarter, in line
with Q3 2014 but a movement of GBP331 million compared with Q2 2015. A GBP190
million restructuring charge was incurred relating to Williams & Glyn.
Notes:
(1) The CIB segment is being restructured into CIB Go-forward and
CIB Capital Resolution elements. The split is subject to further
refinement.
(2) The business transfer from CIB to Commercial Banking was effective
from 1 May 2015. Comparatives were not restated and for the
whole period the financials of the UK large corporate business
were: total income of GBP47 million for the nine months ended
30 September 2015 (nine months ended 30 September 2014 - GBP44
million; Q3 2015 - GBP14 million; Q2 2015 - GBP19 million; Q3
2014 - GBP14 million); operating expenses of GBP3 million for
the nine months ended 30 September 2015 (nine months ended 30
September 2014 - GBP7 million; Q3 2015 - GBP1 million; Q2 2015
- GBP1 million; Q3 2014 - GBP2 million); net loans and advances
to customers of GBP2.1 billion (30 June 2015 - GBP2.1 billion;
31 December 2014 - GBP1.8 billion); and RWAs of GBP2.5 billion
(30 June 2015 - GBP2.3 billion; 31 December 2014 - GBP2.1 billion).
(3) Capital equivalent GBP400 million at an internal CET1 ratio
of 10%.
Selected statutory financial statements
Condensed consolidated income statement for the period ended 30 September 2015
Nine months ended Quarter ended
========================== ===================================
30 September 30 September 30 September 30 June 30 September
2015 2014 2015 2015 2014
GBPm GBPm GBPm GBPm GBPm
===================================== ============ ============ ============ ======= ============
Interest receivable 9,070 9,841 2,963 3,031 3,297
Interest payable (2,465) (2,965) (776) (816) (927)
===================================== ============ ============ ============ ======= ============
Net interest income 6,605 6,876 2,187 2,215 2,370
===================================== ============ ============ ============ ======= ============
Fees and commissions receivable 2,838 3,359 880 969 1,116
Fees and commissions payable (558) (671) (195) (186) (196)
Income from trading activities 1,045 1,688 170 545 238
Gain on redemption of own debt - 20 - - -
Other operating income 509 913 141 194 108
===================================== ============ ============ ============ ======= ============
Non-interest income 3,834 5,309 996 1,522 1,266
===================================== ============ ============ ============ ======= ============
Total income 10,439 12,185 3,183 3,737 3,636
===================================== ============ ============ ============ ======= ============
Staff costs (4,401) (4,432) (1,546) (1,530) (1,435)
Premises and equipment (1,380) (1,601) (635) (326) (475)
Other administrative expenses (3,096) (2,569) (730) (1,027) (1,212)
Depreciation and amortisation (994) (727) (282) (200) (261)
Write down of goodwill and
other intangible assets (673) (212) (67) (606) -
===================================== ============ ============ ============ ======= ============
Operating expenses (10,544) (9,541) (3,260) (3,689) (3,383)
===================================== ============ ============ ============ ======= ============
(Loss)/profit before impairment
releases (105) 2,644 (77) 48 253
Impairment releases 400 682 79 192 847
===================================== ============ ============ ============ ======= ============
Operating profit before tax 295 3,326 2 240 1,100
Tax charge (294) (869) (1) (100) (277)
===================================== ============ ============ ============ ======= ============
Profit from continuing operations 1 2,457 1 140 823
Profit from discontinued operations,
net of tax (2) 1,451 437 1,093 674 117
===================================== ============ ============ ============ ======= ============
Profit for the period 1,452 2,894 1,094 814 940
Non-controlling interests (389) 11 (45) (428) 53
Preference shares (223) (231) (80) (73) (91)
Other owners (41) (33) (17) (20) (6)
Dividend access share - (320) - - -
===================================== ============ ============ ============ ======= ============
Profit attributable to ordinary
and B shareholders 799 2,321 952 293 896
===================================== ============ ============ ============ ======= ============
Earnings/(loss) per ordinary
and equivalent
B share (EPS) (3)
Basic EPS from continuing and
discontinued operations 6.9p 20.5p 8.2p 2.5p 7.9p
Basic EPS from continuing operations (2.8p) 16.9p (0.9p) 0.2p 6.9p
===================================== ============ ============ ============ ======= ============
Notes:
(1) A reconciliation between income statement lines in the statutory income
statement above and the non-statutory income statement on page 8 is given
in Appendix 3 to this announcement.
(2) Refer to Note 2 on page 31 for further details.
(3) Diluted EPS from continuing operations and from continuing and discontinued
operations were less than basic EPS in the nine months ended 30 September
2014 (0.2p) and the quarter ended 30 September 2014 (0.1p). There was no
dilution in any other period.
Selected statutory financial statements
Condensed consolidated statement of comprehensive income
for the period ended 30 September 2015
Nine months ended Quarter ended
========================== ====================================
30 September 30 September 30 September 30 June 30 September
2015 2014 2015 2015 2014
GBPm GBPm GBPm GBPm GBPm
=========================================== ============ ============ ============ ======== ============
Profit for the period 1,452 2,894 1,094 814 940
=========================================== ============ ============ ============ ======== ============
Items that do qualify for reclassification
Available-for-sale financial
assets (95) 608 (50) (247) 79
Cash flow hedges (302) 455 408 (834) 207
Currency translation (1,177) (117) (604) (584) 616
Tax 106 (191) (38) 246 (31)
(MORE TO FOLLOW) Dow Jones Newswires
October 30, 2015 03:01 ET (07:01 GMT)
=========================================== ============ ============ ============ ======== ============
Other comprehensive (loss)/income
after tax (1,468) 755 (284) (1,419) 871
=========================================== ============ ============ ============ ======== ============
Total comprehensive (loss)/income
for the period (16) 3,649 810 (605) 1,811
=========================================== ============ ============ ============ ======== ============
Total comprehensive (loss)/income
is
attributable to:
Non-controlling interests 357 42 58 252 12
Preference shareholders 223 231 80 73 91
Paid-in equity holders 41 33 17 20 6
Dividend access share - 320 - - -
Ordinary and B shareholders (637) 3,023 655 (950) 1,702
=========================================== ============ ============ ============ ======== ============
(16) 3,649 810 (605) 1,811
=========================================== ============ ============ ============ ======== ============
Key points
-- The movement in available-for-sale financial assets in the nine
months ended 30 September 2015 reflects unrealised losses on
available-for-sale UK, US and Dutch securities, partially offset
by realised losses on available-for-sale bonds.
-- Cash flow hedging gains in the quarter largely result from decreases
in sterling and euro swap rates across the maturity profile
of the portfolio.
-- Currency translation losses for the nine months ended 30 September
2015 are predominantly related to the reclassification of foreign
exchange reserves on loss of control of Citizens and the strengthening
of sterling against the euro. In the quarter, the reclassification
losses were partially offset by gains from the weakening of
sterling against the euro and US dollar.
Selected statutory financial statements
Condensed consolidated balance sheet at 30 September 2015
30 September 30 June 31 December
2015 2015 2014
GBPm GBPm GBPm
================================================ ============ ======= ===========
Assets
Cash and balances at central banks 77,220 81,900 74,872
================================================ ============ ======= ===========
Net loans and advances to banks 22,681 20,714 23,027
Reverse repurchase agreements and stock
borrowing 15,255 20,807 20,708
================================================ ============ ======= ===========
Loans and advances to banks 37,936 41,521 43,735
================================================ ============ ======= ===========
Net loans and advances to customers 311,383 314,993 334,251
Reverse repurchase agreements and stock
borrowing 36,545 46,799 43,987
================================================ ============ ======= ===========
Loans and advances to customers 347,928 361,792 378,238
Debt securities 81,307 77,187 86,649
Equity shares 2,199 3,363 5,635
Settlement balances 9,397 9,630 4,667
Derivatives 296,019 281,857 353,590
Intangible assets 7,151 7,198 7,781
Property, plant and equipment 4,607 4,874 6,167
Deferred tax 1,434 1,479 1,540
Prepayments, accrued income and other assets 4,928 4,829 5,878
Assets of disposal groups 6,300 89,071 82,011
================================================ ============ ======= ===========
Total assets 876,426 964,701 1,050,763
================================================ ============ ======= ===========
Liabilities
================================================ ============ ======= ===========
Bank deposits 30,543 30,978 35,806
Repurchase agreements and stock lending 12,800 21,612 24,859
================================================ ============ ======= ===========
Deposits by banks 43,343 52,590 60,665
================================================ ============ ======= ===========
Customer deposits 346,267 342,023 354,288
Repurchase agreements and stock lending 30,555 44,750 37,351
================================================ ============ ======= ===========
Customer accounts 376,822 386,773 391,639
Debt securities in issue 37,360 41,819 50,280
Settlement balances 8,401 7,335 4,503
Short positions 20,108 24,561 23,029
Derivatives 288,905 273,589 349,805
Accruals, deferred income and other liabilities 14,324 13,962 13,346
Retirement benefit liabilities 1,955 1,869 2,579
Deferred tax 376 363 500
Subordinated liabilities 20,184 19,683 22,905
Liabilities of disposal groups 6,401 80,388 71,320
================================================ ============ ======= ===========
Total liabilities 818,179 902,932 990,571
Equity
================================================ ============ ======= ===========
Non-controlling interests 703 5,705 2,946
Owners' equity*
Called up share capital 6,984 6,981 6,877
Reserves 50,560 49,083 50,369
================================================ ============ ======= ===========
Total equity 58,247 61,769 60,192
================================================ ============ ======= ===========
Total liabilities and equity 876,426 964,701 1,050,763
================================================ ============ ======= ===========
* Owners' equity attributable to:
Ordinary and B shareholders 51,593 51,117 52,149
Other equity owners 5,951 4,947 5,097
================================================ ============ ======= ===========
57,544 56,064 57,246
================================================ ============ ======= ===========
The company's distributable reserves at 30 September 2015 were GBP16.6 billion (31 December 2014 - GBP17.5 billion).
Selected statutory financial statements
Condensed consolidated statement of changes in equity for the period ended 30 September 2015
Nine months ended Quarter ended
========================== ===================================
30 September 30 September 30 September 30 June 30 September
2015 2014 2015 2015 2014
GBPm GBPm GBPm GBPm GBPm
================================= ============ ============ ============ ======= ============
Called-up share capital
At beginning of period 6,877 6,714 6,981 6,925 6,811
Ordinary shares issued 108 118 4 56 21
Preference shares redeemed (1) (1) - (1) - -
================================= ============ ============ ============ ======= ============
At end of period 6,984 6,832 6,984 6,981 6,832
================================= ============ ============ ============ ======= ============
Paid-in equity
At beginning of period 784 979 634 634 979
Reclassification (2) (150) - - - -
Additional Tier 1 capital notes
issued 2,012 - 2,012 - -
================================= ============ ============ ============ ======= ============
At end of period 2,646 979 2,646 634 979
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================================= ============ ============ ============ ======= ============
Share premium account
At beginning of period 25,052 24,667 25,306 25,164 24,885
Ordinary shares issued 263 267 9 142 49
================================= ============ ============ ============ ======= ============
At end of period (1) 25,315 24,934 25,315 25,306 24,934
================================= ============ ============ ============ ======= ============
Merger reserve
At beginning and end of period 13,222 13,222 13,222 13,222 13,222
================================= ============ ============ ============ ======= ============
Available-for-sale reserve
At beginning of period 299 (308) 244 371 138
Unrealised (losses)/gains (108) 807 6 (153) (37)
Realised losses/(gains) 25 (314) (38) (43) 52
Tax 28 (40) (11) 65 28
Reclassified to profit or loss
on disposal of businesses (3) - 36 - - -
Reclassified to profit or loss
on ceding control of Citizens
(4) 9 - 9 - -
Transfer to retained earnings (43) (9) - 4 (9)
============ ============ ============ ======= ============
At end of period 210 172 210 244 172
================================= ============ ============ ============ ======= ============
Cash flow hedging reserve
At beginning of period 1,029 (84) 435 1,109 94
Amount recognised in equity 777 1,543 803 (524) 575
Amount transferred from equity
to earnings (1,021) (1,088) (316) (319) (368)
Tax 52 (114) (76) 169 (44)
Reclassified to profit or loss
on ceding control of Citizens
(5) (36) - (36) - -
Transfer to retained earnings 9 34 - - 34
============ ============ ============ ======= ============
At end of period 810 291 810 435 291
================================= ============ ============ ============ ======= ============
Foreign exchange reserve
At beginning of period 3,483 3,691 2,317 2,779 2,963
Retranslation of net assets (39) (96) 509 (1,042) 776
Foreign currency (losses)/gains
on hedges of net assets (150) (6) (188) 604 (161)
Tax (11) (26) 3 - (15)
Reclassified to profit or loss
on ceding control of Citizens (962) - (962) - -
Transfer to retained earnings (642) (390) - (24) (390)
============ ============ ============ ======= ============
At end of period 1,679 3,173 1,679 2,317 3,173
================================= ============ ============ ============ ======= ============
Capital redemption reserve
At beginning of period 9,131 9,131 9,131 9,131 9,131
Preference shares redeemed (1) 1 - 1 - -
============ ============ ============ ======= ============
At end of period 9,132 9,131 9,132 9,131 9,131
================================= ============ ============ ============ ======= ============
Notes:
(1) Non-cumulative dollar preference shares totalling $1.9 billion were redeemed
in September 2015. Upon redemption, share premium previously attributable
to preference shareholders was reclassified to ordinary shareholders.
(2) Paid-in equity reclassified to liabilities as a result of the call of RBS
Capital Trust IV in January 2015.
(3) Net of tax - GBP11 million charge.
(4) Net of tax - GBP6 million charge.
(5) Net of tax - GBP16 million credit.
(6) Includes GBP2,491 million relating to the secondary offering of Citizens
in March 2015.
Selected statutory financial statements
Condensed consolidated statement of changes in equity for the period ended 30 September 2015
Nine months ended Quarter ended
========================== ===================================
30 September 30 September 30 September 30 June 30 September
2015 2014 2015 2015 2014
GBPm GBPm GBPm GBPm GBPm
================================= ============ ============ ============ ======= ============
Retained earnings
At beginning of period (2,518) 867 (2,098) (2,416) 2,258
(Loss)/profit attributable
to ordinary and B shareholders
and other equity owners
- continuing operations (54) 2,497 (4) 111 887
- discontinued operations 1,117 408 1,053 275 106
Equity preference dividends
paid (223) (231) (80) (73) (91)
Paid-in equity dividends paid,
net of tax (41) (33) (17) (20) (6)
Dividend access share dividend - (320) - - -
Transfer from available-for-sale
reserve 43 9 - (4) 9
Transfer from cash flow hedging
reserve (9) (34) - - (34)
Transfer from foreign exchange
reserve 642 390 - 24 390
Costs of placing Citizens equity (29) (45) - - (45)
Redemption of equity preference
shares (1) (1,214) - (1,214) - -
Shares issued under employee
share schemes (57) (41) - (1) -
Share-based payments
- gross 24 26 14 6 18
- tax - - - - 1
Reclassification of paid in
equity (27) - - - -
================================= ============ ============ ============ ======= ============
At end of period (2,346) 3,493 (2,346) (2,098) 3,493
================================= ============ ============ ============ ======= ============
Own shares held
At beginning of period (113) (137) (108) (111) (136)
Disposal of own shares 5 1 - 3 -
================================= ============ ============ ============ ======= ============
At end of period (108) (136) (108) (108) (136)
================================= ============ ============ ============ ======= ============
Owners' equity at end of period 57,544 62,091 57,544 56,064 62,091
================================= ============ ============ ============ ======= ============
Non-controlling interests
At beginning of period 2,946 473 5,705 5,473 618
Currency translation adjustments
and other movements 2 (15) 65 (146) 1
Profit/(loss) attributable
to non-controlling interests
- continuing operations 55 (40) 5 29 (64)
- discontinued operations 334 29 40 399 11
Dividends paid (31) - - (20) -
Movements in available-for-sale
securities
- unrealised gains/(losses) 24 (6) 12 (45) (4)
- realised (gains)/losses (6) 74 - (6) 68
- tax (5) - - 16 -
Movements in cash flow hedging
reserve
- amount recognised in equity 32 - 11 9 -
- tax (4) - - (4) -
- amounts transferred from
equity to earnings
Equity raised (6) 2,537 2,232 46 - 2,117
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Equity withdrawn and disposals (24) - (24) - -
Loss of control of Citizens (5,157) - (5,157) - -
================================= ============ ============ ============ ======= ============
At end of period 703 2,747 703 5,705 2,747
================================= ============ ============ ============ ======= ============
Total equity at end of period 58,247 64,838 58,247 61,769 64,838
================================= ============ ============ ============ ======= ============
Total equity is attributable
to:
Non-controlling interests 703 2,747 703 5,705 2,747
Preference shareholders 3,305 4,313 3,305 4,313 4,313
Paid-in equity holders 2,646 979 2,646 634 979
Ordinary and B shareholders 51,593 56,799 51,593 51,117 56,799
================================= ============ ============ ============ ======= ============
58,247 64,838 58,247 61,769 64,838
================================= ============ ============ ============ ======= ============
For the notes to this table refer to the previous page.
Notes
1. Basis of preparation
The condensed consolidated financial statements should be read in conjunction with RBS's 2014 Annual Report and Accounts which were prepared in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board (IASB) and interpretations issued by the IFRS Interpretations Committee of the IASB as adopted by the European Union (EU) (together IFRS).
Accounting policies
There have been no significant changes to RBS's principal accounting policies as set out on pages 349 to 357 of the 2014 Annual Report and Accounts. Amendments to IFRSs effective for 2015 have not had a material effect on RBS's 2015 results.
Critical accounting policies and key sources of estimation uncertainty
The judgements and assumptions that are considered to be the most important to the portrayal of RBS's financial condition are those relating to pensions, goodwill, provisions for liabilities, deferred tax, loan impairment provisions and fair value of financial instruments. These critical accounting policies and judgments are described on pages 357 to 359 of RBS's 2014 Annual Report and Accounts.
Going concern
Having reviewed RBS's forecasts, projections and other relevant evidence, the directors have a reasonable expectation that RBS will continue in operational existence for the foreseeable future. Accordingly, the results for the period ended 30 September 2015 have been prepared on a going concern basis.
2. Citizens Financial Group
Citizens was classified as a disposal group on 31 December 2014 and its assets and liabilities from that date to 3 August 2015 have been aggregated and presented as separate lines in accordance with IFRS 5. Citizens was also reclassified as a discontinued operation in 2014 and comparatives for all periods re-presented accordingly.
In March 2015, RBS sold 155.25 million shares in Citizens and in April 2015, Citizens purchased 10.5 million of its shares from RBS.
In July 2015, RBS sold 86 million shares in Citizens to underwriters and sold an additional 12.9 million shares on 3 August 2015 through an over-allotment option in the underwriting agreement. Concurrently, Citizens repurchased 9.6 million shares from RBS. RBS now owns 110.5 million shares - 20.9% of Citizens' common stock.
Following these share sales, RBS no longer controls Citizens and has ceased to consolidate it for accounting purposes. On loss of control, RBS derecognised Citizens' net assets and recognised its retained interest in Citizens at fair value recording a gain (in discontinued operations) of GBP1.1 billion. Included in the gain is the reclassification of GBP1.0 billion previously recognised in other comprehensive income in relation to Citizens; principally foreign exchange translation differences. RBS's retained interest in Citizens qualifies as an associate and is classified as held for sale. Its fair value less costs to sell at 30 September 2015 was GBP1.6 billion.
Notes
3. Provisions for liabilities and charges
Regulatory and legal actions
==================================================
Other FX Other
customer investigations/ regulatory Property
redress
PPI IRHP (1) litigation provisions Litigation and other Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
============================= ===== ===== ========= =============== ========== ========== ========= =====
At 1 January 2015 799 424 580 320 183 1,805 663 4,774
Transfer - - - 50 (50) - - -
Currency translation
and other movements - - - (12) 1 (34) 94 49
Charge to income statement
(2) 100 81 279 334 27 517 390 1,728
Releases to income statement
(2) - (12) (14) - - (6) (138) (170)
Provisions utilised (202) (210) (146) (178) (1) (41) (181) (959)
============================= ===== ===== ========= =============== ========== ========== ========= =====
At 30 June 2015 697 283 699 514 160 2,241 828 5,422
Transfer - - - (65) - 65 - -
Currency translation
and other movements - - - 20 1 91 46 158
Charge to income statement
(2) - - 13 - - 125 511 649
Releases to income statement
(2) - - (4) - - (5) (77) (86)
Provisions utilised (84) (86) (70) - - (111) (131) (482)
============================= ===== ===== ========= =============== ========== ========== ========= =====
At 30 September 2015 613 197 638 469 161 2,406 1,177 5,661
============================= ===== ===== ========= =============== ========== ========== ========= =====
Notes:
(1) Closing provision primarily relates to investment advice and packaged accounts. (2) Relates to continuing operations.
There are uncertainties as to the eventual cost of redress in relation to certain of the provisions contained in the table above. Assumptions relating to these are inherently uncertain and the ultimate financial impact may be different from the amount provided. RBS will continue to monitor the position closely and refresh the underlying assumptions.
4. Litigation, investigations and reviews
RBS's 2015 interim results issued on 30 July 2015 included comprehensive disclosures about RBS's litigation, investigations and reviews in Note 16. There have been no material developments in these matters since the 2015 interim results were published other than those set out below.
Litigation
The charge in respect of mortgage-backed securities (MBS) related litigation was GBP0.1 billion (see Note 3) during Q3 2015, bringing the total charge for MBS related litigation claims and investigations for the nine months ended 30 September 2015 to GBP0.6 billion. Although RBS has established provisions with respect to MBS litigation, the final outcomes of such litigation and MBS related governmental investigations could result in the future outflow of resources in respect of such matters ultimately proving to be substantially greater than the aggregate provisions RBS has recognised.
Other securitisation and securities related litigation in the United States
The National Credit Union Administration Board (NCUA) is litigating two MBS cases against RBS companies (on behalf of US Central Federal Credit Union and Western Corporate Federal Credit Union). The original principal balance of the MBS at issue in these two NCUA cases is US$3.25 billion. In September 2015, in a third case brought by NCUA (on behalf of Southwest Corporate Federal Credit Union and Members United Corporate Federal Credit Union), the NCUA accepted RBS's offer of judgment for US$129.6 million, plus attorney's fees, to resolve the matter, which concerned US$312 million in MBS. RBS has paid to the plaintiff the agreed US$129.6 million.
Notes
4. Litigation, investigations and reviews (continued)
Credit default swap antitrust litigation
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As previously disclosed, certain members of the Group, as well as a number of other financial institutions, are defendants in a consolidated antitrust class action pending in the United States District Court for the Southern District of New York. The plaintiffs allege that defendants violated the US antitrust laws by restraining competition in the market for credit default swaps through various means and thereby causing inflated bid-ask spreads for credit default swaps. The RBS defendants have reached an agreement to settle this matter for US$33 million, subject to approval of the court. The settlement amount is covered by an existing provision.
FX antitrust litigation
As previously disclosed, RBS and RBS Securities Inc., as well as a number of other financial institutions, are defendants in class actions on behalf of US based plaintiffs that are pending in the United States District Court for the Southern District of New York. In August 2015, the original complaint asserting antitrust claims on behalf of plaintiffs who entered into Foreign Exchange (FX) transactions with RBS or other defendant banks was consolidated with several additional class action complaints filed on behalf of plaintiffs who transacted in exchange-traded foreign exchange futures contracts and/or options on foreign exchange futures contracts, which asserted both antitrust and Commodities Exchange Act claims. RBS and RBS Securities Inc. have settled all claims that are or could be asserted on behalf of the classes in the consolidated action, subject to approval of the Court. The total settlement amount (US$255 million) is covered by an existing provision. Other class action complaints purporting to be on behalf of US-based plaintiffs who engaged in FX transactions, including a complaint asserting Employee Retirement Income Security Act claims on behalf of employee benefit plans that engaged in FX transactions, name certain members of the Group as defendants.
In September 2015, certain members of the Group, as well as a number of other financial institutions, were named as defendants in two purported class actions filed in Ontario and Quebec on behalf of persons in Canada who entered into foreign exchange transactions or who invested in funds that entered into foreign exchange transactions. The plaintiffs allege that the defendants violated the Canadian Competition Act by conspiring to manipulate the prices of currency trades.
Investigations and reviews
Payment Protection Insurance
As previously disclosed, RBS is monitoring developments following the UK Supreme Court's decision in the case of Plevin v Paragon in November 2014. That decision was that the sale of a single premium PPI policy could create an 'unfair relationship' under s.140A of the Consumer Credit Act 1974 (the 'Consumer Credit Act') because the premium contained a particularly high level of undisclosed commission. The Financial Ombudsman Service (FOS) has confirmed on its website that unfair relationship provisions in the Consumer Credit Act and the Plevin judgment are 'potentially relevant considerations' in some of the PPI complaints referred to FOS. On 27 May 2015, the FCA announced that it was considering whether additional rules and/or guidance are required to deal with the impact of the Plevin decision on complaints about PPI generally. RBS is in active dialogue with FOS and the FCA on this issue.
On 2 October 2015, the FCA announced that it would issue a consultation paper by the end of 2015 on proposed rules and guidance about how firms should handle PPI complaints fairly in light of the Plevin decision and how the FOS should consider relevant PPI complaints. The FCA also intends to consult on the introduction of a time bar for handling PPI complaints.
Notes
4. Litigation, investigations and reviews (continued)
At this stage, as there remains considerable uncertainty regarding the application of the Plevin decision and the impact of any time bar, it is not practicable reliably to estimate the potential impact on RBS, which may be material.
UK personal current accounts/retail banking
As previously disclosed, on 11 March 2014, the Competition & Markets Authority (CMA) announced that it would be undertaking an update of the OFT's 2013 personal current account (PCA) review, in parallel with its market study into small and medium-sized enterprise (SME) banking. In July 2014 the CMA published its preliminary findings in respect of both the PCA and SME market studies. The CMA provisionally decided to make a market investigation reference (MIR) for both the PCA and SME market studies. On 6 November 2014, the CMA made its final decision to proceed with a MIR. On 22 October 2015 the CMA published a summary of its provisional findings and notice of possible remedies. The CMA has provisionally concluded there are a number of competition concerns in the provision of PCAs, business current accounts and SME lending, particularly around low levels of customer switching, resulting in banks not being put under enough competitive pressure, and new products and new banks not attracting customers quickly enough. The notice of possible remedies sets out 15 potential measures to address these concerns, including measures to make it easier for consumers and businesses to compare bank products, and requiring banks to help raise public awareness of, and confidence in, switching bank accounts. The MIR is a wide-ranging 18-24 month Phase 2 inquiry with the final report expected to be published in April 2016.
At this stage as there remains uncertainty around the outcome of this matter, it is not practicable reliably to estimate the potential impact on RBS, which may be material.
Notes
5. Recent developments
Conversion of B shares
On 8 October 2015, the company received a valid notice from HM Treasury to convert 51 billion Series 1 B shares of 1p each into 5.1 billion new RBSG plc ordinary shares of GBP1 each. The new ordinary shares were admitted to the Official List and to trading on the London Stock Exchange on 14 October 2015. HM Treasury's holding in the company's ordinary shares is currently 72.9%.
Finance Bill 2015 - 2016
The Finance Bill 2015 - 2016 was substantively enacted on 26 October 2015 and introduced a number of previously announced changes to the UK corporate tax system. In accordance with IFRS these changes will be accounted for in Q4 2015.
The most relevant measures include:
-- Cuts in the rate of corporation tax from 20% to 19% from 1 April
2017 and to 18% from 1 April 2020. Existing temporary differences
on which deferred tax has been provided may reverse at these
reduced rates;
-- A corporation tax surcharge of 8% on UK banking entities from
1 January 2016. This is expected to increase RBS's corporation
tax liabilities and vary the carrying value of its deferred
tax balances;
-- A reduction in the bank levy rate from 0.21% to 0.18% from 1
January 2016 and subsequent annual reductions to 0.1% from 1
January 2021; and
-- Making compensation in relation to misconduct non-deductible
for corporation tax.
As outlined in our 2015 Interim results, it is expected that these measures will increase the normalised tax rate to around 27% in the medium term and trending lower thereafter and the annual bank levy charge for 2015 is expected to be GBP280 million, projected to fall progressively to GBP150 million by 2019.
6. Exchange rates
The following table shows the principal exchange rates:
GBP1 = EUR Nine month average Quarter average Period end ================== ================== =============== ========== 30 September 2015 1.374 1.392 1.355 30 June 2015 1.385 1.411 31 December 2014 1.268 1.285 30 September 2014 1.232 1.260 1.285 ================== ================== =============== ========== GBP1 = US$ Nine month average Quarter average Period end ================== ================== =============== ========== 30 September 2015 1.532 1.549 1.514 30 June 2015 1.532 1.572 31 December 2014 1.582 1.562 30 September 2014 1.669 1.669 1.622 ================== ================== =============== ==========
7. Post balance sheet events
There have been no significant events between 30 September 2015 and the date of approval of this announcement which would require a change to or additional disclosure in the announcement.
Forward-looking statements
Certain sections in this document contain 'forward-looking statements' as that term is defined in the United States Private Securities Litigation Reform Act of 1995, such as statements that include the words 'expect', 'estimate', 'project', 'anticipate', 'believe', 'should', 'intend', 'plan', 'could', 'probability', 'risk', 'Value-at-Risk (VaR)', 'target', 'goal', 'objective', 'may', 'endeavour', 'outlook', 'optimistic', 'prospects' and similar expressions or variations on these expressions.
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In particular, this document includes forward-looking statements relating, but not limited to: The Royal Bank of Scotland Group plc's (RBS) transformation plan (which includes RBS's 2013/2014 strategic plan relating to the implementation of its new divisional and functional structure and the continuation of its balance sheet reduction programme including its proposed divestments of CFG and Williams & Glyn, RBS's information technology and operational investment plan, the proposed restructuring of RBS's CIB business and the restructuring of RBS as a result of the implementation of the regulatory ring-fencing regime, together the "Transformation Plan"), as well as restructuring, capital and strategic plans, divestments, capitalisation, portfolios, net interest margin, capital and leverage ratios, liquidity, risk-weighted assets (RWAs), RWA equivalents (RWAe), return on equity (ROE), profitability, cost:income ratios, loan:deposit ratios, AT1 and other capital raising plans, funding and risk profile; litigation, government and regulatory investigations including investigations relating to the setting of interest rates and foreign exchange trading and rate setting activities; costs or exposures borne by RBS arising out of the origination or sale of mortgages or mortgage-backed securities in the US; investigations relating to business conduct and the costs of resulting customers redress and legal proceedings; RBS's future financial performance; the level and extent of future impairments and write-downs; and RBS's exposure to political risks, credit rating risk and to various types of market risks, such as interest rate risk, foreign exchange rate risk and commodity and equity price risk. These statements are based on current plans, estimates, targets and projections, and are subject to inherent risks, uncertainties and other factors which could cause actual results to differ materially from the future results expressed or implied by such forward-looking statements. For example, certain market risk and other disclosures are dependent on choices relying on key model characteristics and assumptions and are subject to various limitations. By their nature, certain of the market risk disclosures are only estimates and, as a result, actual future gains and losses could differ materially from those that have been estimated.
Other factors that could adversely affect our results and the accuracy of forward-looking statements in this document include the risk factors and other uncertainties discussed in the 2014 Annual Report and Accounts and this document. These include the significant risks for RBS presented by the execution of the Transformation Plan; RBS's ability to successfully implement the various initiatives that are comprised in the Transformation Plan, particularly the balance sheet reduction programme including the divestment of Williams & Glyn and its remaining stake in CFG, the proposed restructuring of its CIB business and the significant restructuring undertaken by RBS as a result of the implementation of the ring fence; whether RBS will emerge from implementing the Transformation Plan as a viable, competitive, customer focused and profitable bank; RBS's ability to achieve its capital targets which depend on RBS's success in reducing the size of its business; the cost and complexity of the implementation of the ring-fence and the extent to which it will have a material adverse effect on RBS; the risk of failure to realise the benefit of RBS's substantial investments in its information technology and operational infrastructure and systems, the significant changes, complexity and costs relating to the implementation of the Transformation Plan, the risks of lower revenues resulting from lower customer retention and revenue generation as RBS refocuses on the UK as well as increasing competition. In addition, there are other risks and uncertainties. These include RBS's ability to attract and retain qualified personnel; uncertainties regarding the outcomes of legal, regulatory and governmental actions and investigations that RBS is subject to (including active civil and criminal investigations) and any resulting material adverse effect on RBS of unfavourable outcomes; heightened regulatory and governmental scrutiny and the increasingly regulated environment in which RBS operates; uncertainty relating to the referendum on the UK's membership of the EU and the consequences arising from it; operational risks that are inherent in RBS's business and that could increase as RBS implements its Transformation Plan; the potential negative impact on RBS's business of actual or perceived global economic and financial market conditions and other global risks; how RBS will be increasingly impacted by UK developments as its operations become gradually more focused on the UK; uncertainties regarding RBS exposure to any weakening of economies within the EU and renewed threat of default or exit by certain countries in the Eurozone; the risks resulting from RBS implementing the State Aid restructuring plan including with respect to the disposal of certain assets and businesses as announced or required as part of the State Aid restructuring plan; the achievement of capital and costs reduction targets; ineffective management of capital or changes to regulatory requirements relating to capital adequacy and liquidity; the ability to access sufficient sources of capital, liquidity and funding when required; deteriorations in borrower and counterparty credit quality; the extent of future write-downs and impairment charges caused by depressed asset valuations; the value and effectiveness of any credit protection purchased by RBS; the impact of unanticipated turbulence in interest rates, yield curves, foreign currency exchange rates, credit spreads, bond prices, commodity prices, equity prices; basis, volatility and correlation risks; changes in the credit ratings of RBS; changes to the valuation of financial instruments recorded at fair value; competition and consolidation in the banking sector; regulatory or legal changes (including those requiring any restructuring of RBS's operations); changes to the monetary and interest rate policies of central banks and other governmental and regulatory bodies and continued prolonged periods of low interest rates; changes in UK and foreign laws, regulations, accounting standards and taxes; impairments of goodwill; the high dependence of RBS's operations on its information technology systems and its increasing exposure to cyber security threats; the reputational risks inherent in RBS's operations; the risk that RBS may suffer losses due to employee misconduct; pension fund shortfalls; the recoverability of deferred tax assets; HM Treasury exercising influence over the operations of RBS; limitations on, or additional requirements imposed on, RBS's activities as a result of HM Treasury's investment in RBS; and the success of RBS in managing the risks involved in the foregoing.
The forward-looking statements contained in this document speak only as of the date of this announcement, and RBS does not undertake to update any forward-looking statement to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
The information, statements and opinions contained in this document do not constitute a public offer under any applicable legislation or an offer to sell or solicitation of any offer to buy any securities or financial instruments or any advice or recommendation with respect to such securities or other financial instruments.
Appendix 1
Additional segment information
Appendix 1 UK Personal & Business Banking
Nine months ended Quarter ended
========================== ===================================
30 September 30 September 30 September 30 June 30 September
2015 2014 2015 2015 2014
Income statement GBPm GBPm GBPm GBPm GBPm
=================================== ============ ============ ============ ======= ============
Net interest income 3,460 3,474 1,170 1,147 1,198
Non-interest income 920 1,031 289 322 345
=================================== ============ ============ ============ ======= ============
Total income 4,380 4,505 1,459 1,469 1,543
Operating expenses (2,733) (2,785) (810) (793) (965)
=================================== ============ ============ ============ ======= ============
Profit before impairment
losses 1,647 1,720 649 676 578
Impairment releases/(losses) 6 (227) (11) (9) (79)
=================================== ============ ============ ============ ======= ============
Operating profit 1,653 1,493 638 667 499
=================================== ============ ============ ============ ======= ============
Operating profit - adjusted
(1) 2,092 1,845 663 697 682
=================================== ============ ============ ============ ======= ============
Analysis of income by product
Personal advances 652 698 219 217 231
Personal deposits 601 496 201 210 194
Mortgages 1,871 1,944 637 617 657
Cards 504 561 167 162 187
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October 30, 2015 03:01 ET (07:01 GMT)
Business banking 816 751 269 278 261
Other (64) 55 (34) (15) 13
=================================== ============ ============ ============ ======= ============
Total income 4,380 4,505 1,459 1,469 1,543
=================================== ============ ============ ============ ======= ============
Analysis of impairments by
sector
Personal advances 67 125 14 18 46
Mortgages (12) (3) (10) - (8)
Business banking (74) 50 5 (13) 20
Cards 13 55 2 4 21
=================================== ============ ============ ============ ======= ============
Total impairment (releases)/losses (6) 227 11 9 79
=================================== ============ ============ ============ ======= ============
Williams & Glyn (3)
Total income 625 637 211 211 214
Operating expenses (261) (256) (93) (90) (87)
Impairment releases/(losses) 5 (46) (5) (11) (15)
=================================== ============ ============ ============ ======= ============
Operating profit 369 335 113 110 112
=================================== ============ ============ ============ ======= ============
30 September 30 June 31 December
2015 2015 2014
Capital and balance sheet GBPbn GBPbn GBPbn
============================================== ============ ======= ===========
Loans and advances to customers (gross)
- personal advances 6.9 7.2 7.4
- mortgages 109.2 105.4 103.2
- business banking 14.1 13.7 14.3
- cards 4.3 4.4 4.9
============================================== ============ ======= ===========
Total loans and advances to customers (gross) 134.5 130.7 129.8
============================================== ============ ======= ===========
Williams & Glyn (3)
============================================== ============ ======= ===========
Total assets 20.1 19.5 19.6
Net loans and advances to customers 20.0 19.5 19.5
Customer deposits 23.6 23.4 22.0
Risk-weighted assets (2) 10.1 10.3 10.1
============================================== ============ ======= ===========
Notes:
(1) Excluding restructuring costs and litigation and conduct costs.
(2) RWAs on an end-point CRR basis.
(3) Williams & Glyn has not operated as a separate legal entity therefore these
figures are not necessarily indicative of results that would have occurred
if Williams & Glyn had been standalone.
(4) International private banking business reclassified to disposal groups.
(5) Transfers to other areas comprises the UK Portfolio which was transferred
to Commercial Banking on 1 May 2015, the Western European Portfolio which
is expected to transfer to Commercial Banking during Q4 2015 and UK Transaction
services which is expected to transfer to Commercial Banking in Q4 2015.
(6) The CIB segment is being restructured into CIB Go-forward and CIB Capital
Resolution elements. The split is subject to further refinement.
Appendix 1 Ulster Bank
Nine months ended Quarter ended
========================== ===================================
30 September 30 September 30 September 30 June 30 September
2015 2014 2015 2015 2014
Income statement GBPm GBPm GBPm GBPm GBPm
=================================== ============ ============ ============ ======= ============
Net interest income 392 486 127 132 163
Non-interest income 190 140 87 46 51
=================================== ============ ============ ============ ======= ============
Total income 582 626 214 178 214
Operating expenses (447) (450) (158) (150) (150)
=================================== ============ ============ ============ ======= ============
Profit before impairment
releases 135 176 56 28 64
Impairment releases 110 261 58 52 318
=================================== ============ ============ ============ ======= ============
Operating profit 245 437 114 80 382
=================================== ============ ============ ============ ======= ============
Operating profit - adjusted
(1) 263 463 122 91 394
=================================== ============ ============ ============ ======= ============
Average exchange rate 1.374 1.232 1.392 1.385 1.260
=================================== ============ ============ ============ ======= ============
Analysis of income by business
Corporate 147 199 52 45 65
Retail 346 301 125 112 111
Other 89 126 37 21 38
=================================== ============ ============ ============ ======= ============
Total income 582 626 214 178 214
=================================== ============ ============ ============ ======= ============
Analysis of impairments by
sector
Mortgages (86) (133) (35) (38) (168)
Commercial real estate
- investment 9 (9) (3) 11 (18)
- development 13 (15) (5) 18 (9)
Other corporate (43) (122) (18) (37) (130)
Other lending (3) 18 3 (6) 7
=================================== ============ ============ ============ ======= ============
Total impairment (releases)/losses (110) (261) (58) (52) (318)
=================================== ============ ============ ============ ======= ============
30 September 30 June 31 December
2015 2015 2014
Balance sheet GBPbn GBPbn GBPbn
=============================================================== ============ ======= ============
Loans and advances to customers (gross)
Mortgages 16.1 15.9 17.5
Commercial real estate
- investment 0.9 0.8 1.0
- development 0.3 0.3 0.3
Other corporate 4.7 4.7 4.9
Other lending 0.9 0.9 1.0
=============================================================== ============ ======= ============
Total loans and advances to customers (gross) 22.9 22.6 24.7
Spot exchange rate 1.355 1.411 1.285
=============================================================== ============ ======= ============
For the notes to this table refer to page 1.
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October 30, 2015 03:01 ET (07:01 GMT)
Appendix 1 Commercial Banking
Nine months ended Quarter ended
========================== ===================================
30 September 30 September 30 September 30 June 30 September
2015 2014 2015 2015 2014
Income statement GBPm GBPm GBPm GBPm GBPm
==================================== ============ ============ ============ ======= ============
Net interest income 1,673 1,520 565 562 521
Non-interest income 871 859 265 330 290
==================================== ============ ============ ============ ======= ============
Total income 2,544 2,379 830 892 811
Operating expenses (1,278) (1,294) (403) (466) (392)
==================================== ============ ============ ============ ======= ============
Of which: operating lease
costs (105) (103) (34) (35) (35)
==================================== ============ ============ ============ ======= ============
Profit before impairment
losses 1,266 1,085 427 426 419
Impairment losses (42) (43) (15) (26) (12)
==================================== ============ ============ ============ ======= ============
Operating profit 1,224 1,042 412 400 407
==================================== ============ ============ ============ ======= ============
Operating profit - adjusted
(1) 1,302 1,172 413 476 425
==================================== ============ ============ ============ ======= ============
Analysis of income by business
Commercial lending 1,378 1,353 430 499 459
Deposits 367 248 127 124 95
Asset and invoice finance 542 554 184 180 188
Other 257 224 89 89 69
==================================== ============ ============ ============ ======= ============
Total income 2,544 2,379 830 892 811
==================================== ============ ============ ============ ======= ============
Analysis of impairments by
sector
Commercial real estate 13 (7) 5 10 (1)
Asset and invoice finance 1 4 (2) 2 2
Private sector services (education,
health, etc) 5 (8) 2 - 2
Banks & financial institutions 1 - - 1 (1)
Wholesale and retail trade
repairs 3 16 3 2 2
Hotels and restaurants - 1 1 2 2
Manufacturing 1 9 1 (1) 2
Construction 5 8 3 2 4
Other 13 20 2 8 -
==================================== ============ ============ ============ ======= ============
Total impairment losses 42 43 15 26 12
==================================== ============ ============ ============ ======= ============
30 September 30 June 31 December
2015 2015 2014
Balance sheet GBPbn GBPbn GBPbn
============================================== ============ ======= ===========
Loans and advances to customers (gross)
- Commercial real estate 18.2 17.9 18.3
- Asset and invoice finance 14.3 14.1 14.2
- Private sector services (education, health
etc) 7.1 7.0 6.9
- Banks & financial institutions 7.8 7.2 7.0
- Wholesale and retail trade repairs 6.7 6.6 6.0
- Hotels and restaurants 3.2 3.2 3.4
- Manufacturing 4.4 4.6 3.7
- Construction 1.8 1.8 1.9
- Other 28.9 28.6 24.7
============================================== ============ ======= ===========
Total loans and advances to customers (gross) 92.4 91.0 86.1
============================================== ============ ======= ===========
For the notes to this table refer to page 1.
Appendix 1 Private Banking
Nine months ended Quarter ended
========================== ===================================
30 September 30 September 30 September 30 June 30 September
2015 2014 2015 2015 2014
Income statement GBPm GBPm GBPm GBPm GBPm
================================ ============ ============ ============ ======= ============
Net interest income 377 516 123 126 172
Non-interest income 248 299 81 81 98
================================ ============ ============ ============ ======= ============
Total income 625 815 204 207 270
Operating expenses (659) (610) (185) (287) (210)
================================ ============ ============ ============ ======= ============
(Loss)/profit before impairment
losses (34) 205 19 (80) 60
Impairment (losses)/releases (1) 4 (4) 2 4
================================ ============ ============ ============ ======= ============
Operating (loss)/profit (35) 209 15 (78) 64
Operating profit - adjusted
(1) 77 219 16 32 71
================================ ============ ============ ============ ======= ============
Analysis of income by business
Investments 108 134 34 35 44
Banking 517 681 170 172 226
================================ ============ ============ ============ ======= ============
Total income 625 815 204 207 270
================================ ============ ============ ============ ======= ============
International private banking
activities (4)
================================ ============ ============ ============ ======= ============
Total income 147 171 47 48 53
Operating expenses (226) (197) (69) (89) (68)
================================ ============ ============ ============ ======= ============
Operating loss (79) (26) (22) (41) (15)
================================ ============ ============ ============ ======= ============
30 September 30 June 31 December
2015 2015 2014
Capital and balance sheet GBPbn GBPbn GBPbn
============================================================ ============ ======= ============
Loans and advances to customers (gross)
- Personal 4.7 4.8 5.4
- Mortgages 6.7 6.6 8.9
- Other 2.2 2.1 2.3
============================================================ ============ ======= ============
Total loans and advances to customers (gross) 13.6 13.5 16.6
============================================================ ============ ======= ============
International private banking activities
(4) GBPbn GBPbn GBPbn
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October 30, 2015 03:01 ET (07:01 GMT)
============================================================ ============ ======= ============ Total assets 7.9 8.2 8.9 Net loans and advances to customers 2.5 2.7 3.1 Assets under management 12.2 13.6 14.6 Customer deposits 6.5 6.8 7.4 Risk-weighted assets (2) 1.7 1.9 2.1 ============================================================ ============ ======= ============
For the notes to this table refer to page 1.
Appendix 1 Corporate & Institutional Banking
Nine months ended Quarter ended
========================== ===================================
30 September 30 September 30 September 30 June 30 September
2015 2014 2015 2015 2014
Income statement GBPm GBPm GBPm GBPm GBPm
=================================== ============ ============ ============ ======= ============
Net interest income from
banking activities 518 595 142 174 230
Non-interest income 1,243 2,663 295 346 601
=================================== ============ ============ ============ ======= ============
Total income 1,761 3,258 437 520 831
Operating expenses (4,883) (3,558) (1,453) (1,841) (1,400)
=================================== ============ ============ ============ ======= ============
Loss before impairment losses (3,122) (300) (1,016) (1,321) (569)
Impairment releases/(losses) 35 51 4 (13) 12
=================================== ============ ============ ============ ======= ============
Operating loss (3,087) (249) (1,012) (1,334) (557)
Operating (loss)/profit -
adjusted (1) (445) 570 (268) (227) 21
=================================== ============ ============ ============ ======= ============
Analysis of income by product
Rates 544 723 172 164 200
Currencies 291 385 96 107 138
Credit 277 494 35 86 110
Banking/Other (72) (111) 3 (48) (25)
=================================== ============ ============ ============ ======= ==============
Total CIB (Go-forward) 1,040 1,491 306 309 423
=================================== ============ ============ ============ ======= ==============
Transfers to other areas (5) 316 401 88 103 127
=================================== ============ ============ ============ ======= ==============
CIB Capital Resolution excluding
disposal losses 623 1,366 120 221 281
Disposal losses (218) - (77) (113) -
=================================== ============ ============ ============ ======= ==============
Total CIB Capital Resolution
(6) 405 1,366 43 108 281
=================================== ============ ============ ============ ======= ==============
Total income 1,761 3,258 437 520 831
=================================== ============ ============ ============ ======= ==============
30 September 30 June 31 December
2015 2015 2014
Capital and balance sheet GBPbn GBPbn GBPbn
=============================================================== ============ ======= ============
Loans and advances to customer (gross, excluding
reverse repos) 50.9 57.9 73.0
Loan impairment provisions (0.1) (0.1) (0.2)
=============================================================== ============ ======= ============
Net loans and advances to customers (excluding
reverse repos) 50.8 57.8 72.8
Loans and advances to banks (excluding reverse
repos) 14.8 13.6 16.9
Reverse repos 49.7 63.0 61.6
Securities 33.8 40.8 57.0
Cash and eligible bills 15.2 22.4 23.2
Other 13.1 13.5 9.6
=============================================================== ============ ======= ============
Funded assets 177.4 211.1 241.1
=============================================================== ============ ======= ============
CIB Capital Resolution (6)
=============================================================== ============ ======= ============
Funded assets 50.5 60.7 92.9
Risk-weighted assets (2) 38.7 45.4 64.1
=============================================================== ============ ======= ============
For the notes to this table refer to page 1.
Appendix 1 RBS Capital Resolution
RCR is managed and analysed in four asset management groups - Ulster Bank (RCR Ireland), Real Estate Finance, Corporate and Markets. Real Estate Finance excludes commercial real estate lending in Ulster Bank.
Nine months ended Quarter ended
========================== ===================================
30 September 30 September 30 September 30 June 30 September
2015 2014 2015 2015 2014
Income statement GBPm GBPm GBPm GBPm GBPm
================================ ============ ============ ============ ======= ============
Net interest income (36) (7) (16) (12) (18)
Non-interest income (1) 181 237 (4) 57 140
================================ ============ ============ ============ ======= ============
Total income 145 230 (20) 45 122
Operating expenses (143) (265) (42) (53) (89)
================================ ============ ============ ============ ======= ============
Profit/(loss) before impairment
losses 2 (35) (62) (8) 33
Impairment releases (1) 339 625 46 184 605
================================ ============ ============ ============ ======= ============
Operating profit/(loss) 341 590 (16) 176 638
================================ ============ ============ ============ ======= ============
Operating profit/(loss) -
adjusted (2) 345 594 (12) 176 642
================================ ============ ============ ============ ======= ============
Total income
Ulster Bank (15) (28) 17 (15) (29)
Real Estate Finance 102 163 42 35 67
Corporate (26) 58 (101) (16) 72
Markets 84 37 22 41 12
================================ ============ ============ ============ ======= ============
Total income 145 230 (20) 45 122
================================ ============ ============ ============ ======= ============
Impairment (releases)/losses
Ulster Bank (271) (394) (99) (33) (379)
Real Estate Finance (91) (193) (19) (44) (159)
Corporate (56) (31) 51 (117) (70)
Markets 79 (7) 21 10 3
================================ ============ ============ ============ ======= ============
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October 30, 2015 03:01 ET (07:01 GMT)
Total impairment releases (339) (625) (46) (184) (605) ================================ ============ ============ ============ ======= ============ Loan impairment charge as % of gross loans and advances (3) Ulster Bank (11.0%) (4.2%) (12.0%) (2.8%) (12.0%) Real Estate Finance (6.1%) (4.7%) (3.8%) (6.8%) (11.6%) Corporate (3.1%) (0.6%) 8.5% (15.1%) (4.0%) Markets (1.1%) (1.9%) - (0.7%) (0.6%) ================================ ============ ============ ============ ======= ============ Total (6.9%) (3.3%) (3.3%) (7.1%) (9.5%) ================================ ============ ============ ============ ======= ============
Notes:
(1) Asset disposals contributed GBP349 million in the nine months
ended 30 September 2015 and GBP66 million in Q3 2015 (nine months
ended 30 September 2014 - GBP614 million; Q2 2015 - GBP164 million;
Q3 2014 - GBP332 million) to RCR's operating profit: impairment
provision releases of GBP306 million in the nine months ended
30 September 2015 and GBP75 million in Q3 2015 (nine months
ended 30 September 2014 - GBP552 million; Q2 2015 - GBP167 million;
Q3 2014 - GBP232 million); loss in income from trading activities
of GBP36 million in the nine months ended 30 September 2015
and GBP11 million loss in Q3 2015 (nine months ended 30 September
2014 - GBP99 million gain; Q2 2015 - GBP6 million loss; Q3 2014
- GBP97 million gain) and gain in other operating income of
GBP79 million in the nine months ended 30 September 2015 and
GBP2 million gain in Q3 2015 (nine months ended 30 September
2014 - GBP37 million loss; Q2 2015 - GBP3 million gain; Q3 2014
- GBP3 million gain).
(2) Excluding restructuring costs.
(3) Includes disposal groups.
Appendix 1 RBS Capital Resolution
30 September 30 June 31 December
2015 2015 2014
Capital and balance sheet GBPbn GBPbn GBPbn
============================================ ============ ======= ===========
Loans and advances to customers (gross) (1) 8.2 11.0 21.9
Loan impairment provisions (3.9) (5.1) (10.9)
============================================ ============ ======= ===========
Net loans and advances to customers 4.3 5.9 11.0
Debt securities 0.6 0.6 1.0
Total assets 12.9 16.5 29.0
Funded assets 6.5 8.4 14.9
Risk elements in lending (1) 5.1 7.4 15.4
Provision coverage (2) 76% 69% 71%
Risk-weighted assets
- Credit risk
- non-counterparty 6.0 7.8 13.6
- counterparty 2.8 3.0 4.0
- Market risk 4.0 4.0 4.4
- Operational risk (0.4) (0.4) -
============================================ ============ ======= ===========
Total risk-weighted assets 12.4 14.4 22.0
============================================ ============ ======= ===========
Total RWA equivalent (3) 13.9 17.9 27.3
============================================ ============ ======= ===========
Gross loans and advances to customers (1)
Ulster Bank 3.3 4.7 11.0
Real Estate Finance 2.0 2.6 4.1
Corporate 2.4 3.1 6.2
Markets 0.5 0.6 0.6
============================================ ============ ======= ===========
8.2 11.0 21.9
============================================ ============ ======= ===========
Funded assets - Ulster Bank
Commercial real estate - investment 0.2 0.6 1.2
Commercial real estate - development 0.1 0.2 0.7
Other corporate 0.2 0.2 0.7
============================================ ============ ======= ===========
0.5 1.0 2.6
============================================ ============ ======= ===========
Funded assets - Real Estate Finance (4)
UK 1.2 1.7 2.5
Germany 0.1 0.2 0.4
Spain 0.3 0.3 0.5
Other 0.2 0.3 0.8
============================================ ============ ======= ===========
1.8 2.5 4.2
============================================ ============ ======= ===========
Funded assets - Corporate
Structured finance 0.5 0.6 1.7
Shipping 0.8 1.1 1.8
Other 1.2 1.5 2.3
============================================ ============ ======= ===========
2.5 3.2 5.8
============================================ ============ ======= ===========
Funded assets - Markets
Securitised products 1.3 1.3 1.8
Emerging markets 0.4 0.4 0.5
1.7 1.7 2.3
============================================ ============ ======= ===========
Notes:
(1) Includes disposal groups.
(2) Provision coverage represents loan impairment provisions as a percentage
of risk elements in lending.
(3) RWA equivalent (RWAe) is an internal metric that measures the equity capital
employed in segments. RWAe converts both performing and non-performing exposures
into a consistent capital measure, being the sum of the regulatory RWAs
and the regulatory capital deductions, the latter converted to RWAe by applying
a multiplier. RBS applies a CET1 ratio of 10% for RCR; this results in an
end point CRR RWAe conversion multiplier of 10.
(4) Includes investment properties.
Appendix 1 - RBS Capital Resolution
Funded assets
1 January 30 September
Disposals
2014 Repayments (1) Impairments Other 2015
Life to date GBPbn GBPbn GBPbn GBPbn GBPbn GBPbn
==================== ========= ========== ========= =========== ===== ============
Ulster Bank 4.8 (0.2) (5.2) 1.4 (0.3) 0.5
Real Estate Finance 9.5 (2.9) (4.7) 0.1 (0.2) 1.8
Corporate 9.8 (3.4) (4.2) - 0.3 2.5
Markets 4.8 (1.4) (1.8) - 0.1 1.7
==================== ========= ========== ========= =========== ===== ============
Total 28.9 (7.9) (15.9) 1.5 (0.1) 6.5
==================== ========= ========== ========= =========== ===== ============
Risk-weighted assets
1 January Risk 30 September
Disposals parameters Other
2014 Repayments (1) (2) Impairments (3) 2015
Life to date GBPbn GBPbn GBPbn GBPbn GBPbn GBPbn GBPbn
==================== ========= ========== ========= ========== =========== ===== ============
Ulster Bank 3.3 (0.5) (1.0) (1.3) - (0.1) 0.4
Real Estate Finance 13.5 (2.8) (2.5) (6.5) - (0.1) 1.6
Corporate 16.4 (2.9) (5.3) (4.9) (0.4) 0.6 3.5
Markets 13.5 (3.5) (3.2) - (0.2) 0.3 6.9
==================== ========= ========== ========= ========== =========== ===== ============
Total 46.7 (9.7) (12.0) (12.7) (0.6) 0.7 12.4
==================== ========= ========== ========= ========== =========== ===== ============
Capital deductions
1 January Risk 30 September
Disposals parameters Other
2014 Repayments (1) (2) Impairments (3) 2015
Life to date GBPm GBPm GBPm GBPm GBPm GBPm GBPm
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==================== ========= ========== ========= ========== =========== ===== ============
Ulster Bank 559 (31) (439) (154) 183 (29) 89
Real Estate Finance 505 (446) (872) 776 68 (31) -
Corporate 477 (250) (179) 110 (138) 16 36
Markets 291 (30) (86) (146) 1 (6) 24
==================== ========= ========== ========= ========== =========== ===== ============
Total 1,832 (757) (1,576) 586 114 (50) 149
==================== ========= ========== ========= ========== =========== ===== ============
RWA equivalent (4)
1 January Risk 30 September
Disposals parameters Other
2014 Repayments (1) (2) Impairments (3) 2015
Life to date GBPbn GBPbn GBPbn GBPbn GBPbn GBPbn GBPbn
==================== ========= ========== ========= ========== =========== ===== ============
Ulster Bank 8.9 (0.8) (5.4) (2.8) 1.8 (0.4) 1.3
Real Estate Finance 18.6 (7.3) (11.3) 1.3 0.7 (0.4) 1.6
Corporate 21.1 (5.4) (7.1) (3.8) (1.8) 0.8 3.8
Markets 16.4 (3.7) (4.1) (1.4) (0.2) 0.2 7.2
==================== ========= ========== ========= ========== =========== ===== ============
Total 65.0 (17.2) (27.9) (6.7) 0.5 0.2 13.9
==================== ========= ========== ========= ========== =========== ===== ============
Notes:
(1) Includes all effects relating to disposals, including associated removal
of deductions from regulatory capital.
(2) Principally reflects credit migration and other technical adjustments.
(3) Includes fair value adjustments and foreign exchange movements.
(4) RWA equivalent (RWAe) is an internal metric that measures the equity capital
employed in segments. RWAe converts both performing and non-performing exposures
into a consistent capital measure, being the sum of the regulatory RWAs
and the regulatory capital deductions, the latter converted to RWAe by applying
a multiplier. RBS applies a CET1 ratio of 10% for RCR; this results in an
end point CRR RWAe conversion multiplier of 10.
Appendix 1 RBS Capital Resolution
Gross loans and advances, REIL and impairments
Credit metrics Year-to-date
=================================== ========================
REIL as
a Provisions Provisions Impairment
as a %
Gross % of gross as a % of (releases)/ Amounts
losses
loans REIL Provisions loans of REIL gross loans (2) written-off
30 September
2015 (1) GBPbn GBPbn GBPbn % % % GBPm GBPm
=================== ===== ===== ========== ========== ========== =========== =========== ===========
By sector:
Commercial real
estate
- investment 2.4 1.7 1.1 71 65 46 (152) 1,649
- development 2.2 2.1 1.9 95 90 86 (69) 2,959
Asset finance 0.9 0.3 0.1 33 33 11 8 273
Other corporate 2.7 1.0 0.8 37 80 30 (123) 1,265
Total 8.2 5.1 3.9 62 76 48 (336) 6,146
=================== ===== ===== ========== ========== ========== =========== =========== ===========
By donating
segment
and sector
Ulster Bank
Commercial real
estate
- investment 0.7 0.7 0.6 100 86 86 (35) 1,320
- development 2.0 2.0 1.9 100 95 95 (121) 2,847
Other corporate 0.6 0.5 0.4 83 80 67 (115) 861
=================== ===== ===== ========== ========== ========== =========== =========== ===========
Total Ulster
Bank 3.3 3.2 2.9 97 91 88 (271) 5,028
=================== ===== ===== ========== ========== ========== =========== =========== ===========
Commercial Banking
Commercial real
estate
- investment 0.6 0.3 0.1 50 33 17 (26) 164
- development 0.1 0.1 - 100 - - (7) 79
Other corporate 0.4 0.2 0.1 50 50 25 (60) 114
Total Commercial
Banking 1.1 0.6 0.2 55 33 18 (93) 357
=================== ===== ===== ========== ========== ========== =========== =========== ===========
CIB
Commercial real
estate
- investment 1.1 0.7 0.4 64 57 36 (91) 165
- development 0.1 - - - - - 59 33
Asset finance 0.9 0.3 0.1 33 33 11 8 273
Other corporate 1.7 0.3 0.3 18 100 18 52 290
Total CIB 3.8 1.3 0.8 34 62 21 28 761
=================== ===== ===== ========== ========== ========== =========== =========== ===========
Total 8.2 5.1 3.9 62 76 48 (336) 6,146
=================== ===== ===== ========== ========== ========== =========== =========== ===========
Of which:
UK 4.5 2.4 1.4 53 58 31 (71) 2,605
Europe 3.5 2.6 2.4 74 92 69 (323) 3,431
US 0.1 - - - - - 68 1
RoW 0.1 0.1 0.1 100 100 100 (10) 109
=================== ===== ===== ========== ========== ========== =========== =========== ===========
Customers 8.2 5.1 3.9 62 76 48 (336) 6,146
Banks 0.5 - - - - - (3) 33
=================== ===== ===== ========== ========== ========== =========== =========== ===========
Total 8.7 5.1 3.9 59 76 45 (339) 6,179
=================== ===== ===== ========== ========== ========== =========== =========== ===========
Notes:
(1) Includes disposal groups.
(2) Impairment (releases)/losses include those relating to AFS securities; sector
analyses above include allocation of latent impairment charges.
Appendix 2
Go-forward Bank profile
Appendix 2 Go-forward Bank profile
RBS is committed to becoming a leaner, less volatile business based around its core franchises of PBB and CPB. To achieve this goal a number of initiatives have been announced which include, but are not limited to, the restructuring of CIB into CIB Go-forward and CIB Capital Resolution, the divestment of the remaining stake in Citizens, the sale of the international private banking business, the exit of Williams & Glyn and the continued run down of RCR. Significant progress towards these exits is expected by the end of 2015. The following table illustrates the impact on certain key performance measures of these initiatives by showing the 'Go-forward' profile of the bank and the segments, businesses and portfolios which it intends to exit. This information is presented to illustrate the strategy and its impact on the business and is on a non-statutory basis and should be read in conjunction with the notes below as well as the section titled Forward-looking statements.
Go-forward Bank profile Exit Bank
============================================================= ==============================================================
Other Total CIB Total
UK Private CIB Go- Go- - Capital Williams International Other Exit Total
PBB Ulster Commercial Banking forward forward Go Resolution & Glyn private investments
Quarter ended (1) Bank Banking (2) (3) (4) forward (3) (5) banking RCR (6) Bank RBS
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30 September 2015 GBPbn GBPbn GBPbn GBPbn GBPbn GBPbn GBPbn GBPbn GBPbn GBPbn GBPbn GBPbn GBPbn GBPbn ================== ===== ====== ========== ======= ======= ======= ======= ========== ======== ============= ===== =========== ===== ======= Total income 1.2 0.2 0.8 0.2 0.4 (0.1) 2.7 - 0.3 - - 0.1 0.4 3.1 Operating expenses - adjusted (7) (0.7) (0.1) (0.4) (0.2) (0.4) - (1.8) (0.3) (0.1) - (0.1) - (0.5) (2.3) Impairment (losses)/releases - 0.1 - - - (0.1) - - - - 0.1 - 0.1 0.1 ================== ===== ====== ========== ======= ======= ======= ======= ========== ======== ============= ===== =========== ===== ======= Operating profit/(loss) - adjusted (7) 0.5 0.2 0.4 - - (0.2) 0.9 (0.3) 0.2 - - 0.1 - 0.9 ================== ===== ====== ========== ======= ======= ======= ======= ========== ======== ============= ===== =========== ===== ======= Return on equity - adjusted (7,8,9) 36% 15% 12% 8% nm nm 10% nm nm nm nm nm nm 5% ================== ===== ====== ========== ======= ======= ======= ======= ========== ======== ============= ===== =========== ===== ======= Nine months ended 30 September 2015 ================== ===== ====== ========== ======= ======= ======= ======= ========== ======== ============= ===== =========== ===== ===== Total income 3.7 0.6 2.5 0.5 1.4 - 8.7 0.4 0.7 0.1 0.2 0.1 1.5 10.2 Operating expenses - adjusted (7) (2.0) (0.4) (1.2) (0.4) (1.2) 0.1 (5.1) (1.0) (0.3) (0.2) (0.2) - (1.7) (6.8) Impairment (losses)/releases - 0.1 - - - (0.1) - - - - 0.4 - 0.4 0.4 ================== ===== ====== ========== ======= ======= ======= ======= ========== ======== ============= ===== =========== ===== ===== Operating profit/(loss) - adjusted (7) 1.7 0.3 1.3 0.1 0.2 - 3.6 (0.6) 0.4 (0.1) 0.4 0.1 0.2 3.8 ================== ===== ====== ========== ======= ======= ======= ======= ========== ======== ============= ===== =========== ===== ===== Return on equity - adjusted (7,8,9) 36% 11% 12% 10% nm nm 13% nm nm nm nm nm nm 8% ================== ===== ====== ========== ======= ======= ======= ======= ========== ======== ============= ===== =========== ===== ===== As at 30 September 2015 ================== ===== ====== ========== ======= ======= ======= ======= ========== ======== ============= ===== =========== ===== ===== Funded assets 119 28 96 12 127 114 496 50 20 5 7 2 84 580 Net loans and advances to customers 112 21 92 11 24 - 260 27 20 3 4 - 54 314 Customer deposits 129 19 99 23 19 4 293 29 24 6 1 - 60 353 Risk-weighted assets (10) 29 22 67 8 39 10 175 39 10 2 12 78 141 316 ================== ===== ====== ========== ======= ======= ======= ======= ========== ======== ============= ===== =========== ===== =====
Appendix 2 Go-forward Bank profile
Notes:
(1) Excluding Williams & Glyn.
(2) Excluding international private banking business reclassified to disposal groups.
(3) The CIB segment is being restructured into CIB Go-forward and CIB Capital Resolution elements.
The split is subject to further refinement. In Q4 2015 the Western European loan portfolio and
the UK Transaction Services business will transfer to Commercial Banking.
(4) Other Go-forward is primarily Centre, which includes the liquidity portfolio.
(5) Does not reflect the cost base, funding and capital profile of a standalone bank. Operating expenses
include charges based on an attribution of support provided by RBS to Williams & Glyn. Expenses
incurred by Williams & Glyn were GBP96 million in Q3 2015 (nine months ended 30 September 2015
- GBP267 million).
(6) Includes Citizens RWAs of GBP72 billion which remain consolidated for regulatory reporting purposes
and the interest in associate in relation to Citizens funded assets.
(7) Excluding restructuring costs and litigation and conduct costs.
(8) ROE is based on operating profit after tax on a non-statutory basis adjusted for preference share
dividends divided by average notional equity (based on 13% of the monthly average of segmental
RWAe).
(9) PBB adjusted ROE Q3 2015 - 27% (nine months ended 30 September 2015 - 26%). CPB adjusted ROE
Q3 2015 - 11% (nine months ended 30 September 2015 - 12%). Excluding IFRS volatility loss of
Q3 2015 - GBP126 million (nine months ended 30 September 2015 - loss GBP44 million), the Go-forward
Bank's adjusted return on equity was Q3 2015 - 13% (nine months ended 30 September 2015 - 13%).
(10) CIB RWAs of GBP39 billion includes GBP8 billion of RWAs related to businesses that will transfer
out of CIB in Q4 2015, comprising the Western European loan portfolio and the UK Transaction
Services business.
30 September 2015 31 December 2014
==================== ====================
Funded assets RWAs Funded assets RWAs
CIB Capital Resolution by product GBPbn GBPbn GBPbn GBPbn
================================== ============= ===== ============= =====
APAC portfolio (1) 3.2 2.0 7.7 4.2
Americas portfolio 1.5 2.4 4.7 7.8
EMEA portfolio (2) 4.4 2.9 9.9 6.8
Shipping 5.3 4.4 5.7 4.4
Markets 30.5 19.8 52.1 28.9
GTS 4.4 6.6 11.3 11.1
Other 1.2 0.6 1.5 0.9
================================== ============= ===== ============= =====
Total 50.5 38.7 92.9 64.1
================================== ============= ===== ============= =====
Notes:
(1) Asia-Pacific portfolio. (2) European, the Middle East and Africa portfolio.
Appendix 3
Income statement reconciliations
Appendix 3 Income statement reconciliations
Operating profit on a non-statutory basis is presented before certain items, namely own credit adjustments, gain on redemption of own debt, write-down of goodwill and strategic disposals. RFS Holdings minority interest was also a reconciling item for the periods ended 30 September 2014.
In addition, restructuring costs and litigation and conduct costs are presented separately within operating expenses on a non-statutory basis.
The following table shows how these items are presented in the statutory income statement.
Nine months ended Quarter ended
========================== ===================================
30 September 30 September 30 September 30 June 30 September
2015 2014 2015 2015 2014
GBPm GBPm GBPm GBPm GBPm
================================= ============ ============ ============ ======= ============
Reallocation of one-off items
Net interest income
RFS Holdings minority interest - (3) - - -
Non-interest income
Own credit adjustments 424 (2) 136 168 49
Gain on redemption of own debt - 20 - - -
Strategic disposals (135) 191 - - -
RFS Holdings minority interest - (31) - - (56)
Operating expenses
Write down of goodwill - (130) - - -
RFS Holdings minority interest - (1) - - -
Presentational adjustments
Staff costs
Restructuring costs (625) (248) (281) (288) (79)
Premises and equipment
Restructuring costs (319) (241) (283) (28) (52)
Other administrative expenses
Restructuring costs (314) (120) (124) (87) (36)
Litigation and conduct costs (1,444) (1,030) (129) (459) (780)
Depreciation and amortisation
Restructuring costs (386) (3) (92) (14) -
Write down of goodwill and other
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