|
Form 20-F X
|
Form 40-F ___
|
|
Yes
|
___ |
No X
|
|
Quarter ended
|
|||
|
31 March
2011
|
31 December
2010
|
31 March
2010
|
|
|
£m
|
£m
|
£m
|
|
|
Operating profit/(loss) before impairment losses by division
|
|||
|
UK Retail
|
702
|
780
|
527
|
|
UK Corporate
|
598
|
552
|
504
|
|
Wealth
|
85
|
93
|
66
|
|
Global Transaction Services
|
207
|
270
|
233
|
|
Ulster Bank
|
84
|
105
|
81
|
|
US Retail & Commercial
|
190
|
169
|
183
|
|
Retail & Commercial
|
1,866
|
1,969
|
1,594
|
|
Global Banking & Markets
|
1,074
|
522
|
1,530
|
|
RBS Insurance
|
67
|
(9)
|
(50)
|
|
Central items
|
(42)
|
119
|
338
|
|
Core
|
2,965
|
2,601
|
3,412
|
|
Non-Core
|
35
|
(405)
|
145
|
|
Group operating profit before impairment losses
|
3,000
|
2,196
|
3,557
|
|
Impairment losses by division
|
|||
|
UK Retail
|
194
|
222
|
387
|
|
UK Corporate
|
105
|
219
|
186
|
|
Wealth
|
5
|
6
|
4
|
|
Global Transaction Services
|
20
|
3
|
-
|
|
Ulster Bank
|
461
|
376
|
218
|
|
US Retail & Commercial
|
110
|
105
|
143
|
|
Retail & Commercial
|
895
|
931
|
938
|
|
Global Banking & Markets
|
(24)
|
(5)
|
32
|
|
Central items
|
1
|
4
|
1
|
|
Core
|
872
|
930
|
971
|
|
Non-Core
|
1,075
|
1,211
|
1,704
|
|
Group impairment losses
|
1,947
|
2,141
|
2,675
|
|
(1)
|
Operating profit/(loss) before movement in the fair value of own debt, Asset Protection Scheme credit default swap - fair value changes, amortisation of purchased intangible assets, integration and restructuring costs, strategic disposals, bonus tax, write-down of goodwill and other intangible assets and RFS Holdings minority interest.
|
|
Quarter ended
|
|||
|
31 March
2011
|
31 December
2010
|
31 March
2010
|
|
|
£m
|
£m
|
£m
|
|
|
Operating profit/(loss) by division
|
|||
|
UK Retail
|
508
|
558
|
140
|
|
UK Corporate
|
493
|
333
|
318
|
|
Wealth
|
80
|
87
|
62
|
|
Global Transaction Services
|
187
|
267
|
233
|
|
Ulster Bank
|
(377)
|
(271)
|
(137)
|
|
US Retail & Commercial
|
80
|
64
|
40
|
|
Retail & Commercial
|
971
|
1,038
|
656
|
|
Global Banking & Markets
|
1,098
|
527
|
1,498
|
|
RBS Insurance
|
67
|
(9)
|
(50)
|
|
Central items
|
(43)
|
115
|
337
|
|
Core
|
2,093
|
1,671
|
2,441
|
|
Non-Core
|
(1,040)
|
(1,616)
|
(1,559)
|
|
Group operating profit
|
1,053
|
55
|
882
|
|
Quarter ended
|
|||
|
31 March
2011
|
31 December
2010
|
31 March
2010
|
|
|
%
|
%
|
%
|
|
|
Net interest margin by division
|
|||
|
UK Retail
|
4.04
|
4.05
|
3.71
|
|
UK Corporate
|
2.73
|
2.55
|
2.41
|
|
Wealth
|
3.45
|
3.29
|
3.42
|
|
Global Transaction Services
|
5.91
|
6.14
|
8.08
|
|
Ulster Bank
|
1.72
|
1.77
|
1.79
|
|
US Retail & Commercial
|
3.01
|
3.00
|
2.72
|
|
Retail & Commercial
|
3.27
|
3.21
|
3.01
|
|
Global Banking & Markets
|
0.76
|
0.93
|
1.13
|
|
Non-Core
|
0.90
|
1.09
|
1.27
|
|
Group net interest margin
|
2.03
|
2.02
|
1.95
|
|
31 March
2011
|
31 December
2010
|
31 March
2010
|
||||
|
£bn
|
£bn
|
Change
|
£bn
|
Change
|
||
|
Risk-weighted assets by division
|
||||||
|
UK Retail
|
50.3
|
48.8
|
3%
|
49.8
|
1%
|
|
|
UK Corporate
|
79.3
|
81.4
|
(3%)
|
91.3
|
(13%)
|
|
|
Wealth
|
12.6
|
12.5
|
1%
|
11.7
|
8%
|
|
|
Global Transaction Services
|
18.2
|
18.3
|
(1%)
|
20.4
|
(11%)
|
|
|
Ulster Bank
|
31.7
|
31.6
|
-
|
32.8
|
(3%)
|
|
|
US Retail & Commercial
|
53.6
|
57.0
|
(6%)
|
63.8
|
(16%)
|
|
|
Retail & Commercial
|
245.7
|
249.6
|
(2%)
|
269.8
|
(9%)
|
|
|
Global Banking & Markets
|
146.5
|
146.9
|
-
|
141.8
|
3%
|
|
|
Other
|
14.5
|
18.0
|
(19%)
|
9.6
|
51%
|
|
|
Core
|
406.7
|
414.5
|
(2%)
|
421.2
|
(3%)
|
|
|
Non-Core
|
128.5
|
153.7
|
(16%)
|
164.3
|
(22%)
|
|
|
Group before benefit of Asset Protection
Scheme
|
535.2
|
568.2
|
(6%)
|
585.5
|
(9%)
|
|
|
Benefit of Asset Protection Scheme
|
(98.4)
|
(105.6)
|
(7%)
|
(124.8)
|
(21%)
|
|
|
Group before RFS Holdings minority
interest
|
436.8
|
462.6
|
(6%)
|
460.7
|
(5%)
|
|
|
RFS Holdings minority interest
|
2.9
|
2.9
|
-
|
106.5
|
(97%)
|
|
|
439.7
|
465.5
|
(6%)
|
567.2
|
(22%)
|
|
Employee numbers by division (full time equivalents in continuing operations rounded to the nearest hundred)
|
31 March
2011
|
31 December
2010
|
31 March
2010
|
|
UK Retail
|
28,100
|
28,200
|
29,200
|
|
UK Corporate
|
13,100
|
13,100
|
12,400
|
|
Wealth
|
5,400
|
5,200
|
4,900
|
|
Global Transaction Services
|
2,700
|
2,600
|
3,500
|
|
Ulster Bank
|
4,300
|
4,200
|
4,300
|
|
US Retail & Commercial
|
15,400
|
15,700
|
15,700
|
|
Retail & Commercial
|
69,000
|
69,000
|
70,000
|
|
Global Banking & Markets
|
19,000
|
18,700
|
18,200
|
|
RBS Insurance
|
14,900
|
14,500
|
14,200
|
|
Group Centre
|
4,800
|
4,700
|
4,400
|
|
Core
|
107,700
|
106,900
|
106,800
|
|
Non-Core
|
6,700
|
6,900
|
14,900
|
|
114,400
|
113,800
|
121,700
|
|
|
Business Services
|
34,100
|
34,400
|
38,000
|
|
Integration
|
-
|
300
|
300
|
|
Group
|
148,500
|
148,500
|
160,000
|
|
Quarter ended
|
|||
|
31 March
2011
|
31 December
2010
|
31 March
2010
|
|
|
£m
|
£m
|
£m
|
|
|
Income statement
|
|||
|
Net interest income
|
1,076
|
1,088
|
933
|
|
Net fees and commissions
|
270
|
316
|
259
|
|
Other non-interest income (net of insurance claims)
|
34
|
55
|
58
|
|
Non-interest income
|
304
|
371
|
317
|
|
Total income
|
1,380
|
1,459
|
1,250
|
|
Direct expenses
|
|||
|
- staff
|
(215)
|
(208)
|
(225)
|
|
- other
|
(113)
|
(71)
|
(133)
|
|
Indirect expenses
|
(350)
|
(400)
|
(365)
|
|
(678)
|
(679)
|
(723)
|
|
|
Operating profit before impairment losses
|
702
|
780
|
527
|
|
Impairment losses
|
(194)
|
(222)
|
(387)
|
|
Operating profit
|
508
|
558
|
140
|
|
Analysis of income by product
|
|||
|
Personal advances
|
275
|
275
|
234
|
|
Personal deposits
|
254
|
271
|
277
|
|
Mortgages
|
543
|
557
|
422
|
|
Cards
|
238
|
251
|
229
|
|
Other, including bancassurance
|
70
|
105
|
88
|
|
Total income
|
1,380
|
1,459
|
1,250
|
|
Analysis of impairments by sector
|
|||
|
Mortgages
|
61
|
30
|
48
|
|
Personal
|
95
|
131
|
233
|
|
Cards
|
38
|
61
|
106
|
|
Total impairment losses
|
194
|
222
|
387
|
|
Loan impairment charge as % of gross customer loans and advances
(excluding reverse repurchase agreements) by sector
|
|||
|
Mortgages
|
0.3%
|
0.1%
|
0.2%
|
|
Personal
|
3.3%
|
4.5%
|
7.1%
|
|
Cards
|
2.7%
|
4.0%
|
7.1%
|
|
Total
|
0.7%
|
0.8%
|
1.5%
|
|
Quarter ended
|
|||
|
31 March
2011
|
31 December
2010
|
31 March
2010
|
|
|
Performance ratios
|
|||
|
Return on equity (1)
|
26.2%
|
25.2%
|
7.1%
|
|
Net interest margin
|
4.04%
|
4.05%
|
3.71%
|
|
Cost:income ratio
|
49%
|
46%
|
57%
|
|
Adjusted cost:income ratio (2)
|
49%
|
47%
|
58%
|
|
31 March
2011
|
31 December
2010
|
31 March
2010
|
||||
|
£bn
|
£bn
|
Change
|
£bn
|
Change
|
||
|
Capital and balance sheet
|
||||||
|
Loans and advances to customers (gross)
|
||||||
|
- mortgages
|
93.0
|
90.6
|
3%
|
84.8
|
10%
|
|
|
- personal
|
11.4
|
11.7
|
(3%)
|
13.2
|
(14%)
|
|
|
- cards
|
5.6
|
6.1
|
(8%)
|
6.0
|
(7%)
|
|
|
110.0
|
108.4
|
1%
|
104.0
|
6%
|
||
|
Customer deposits (excluding
bancassurance)
|
96.1
|
96.1
|
-
|
89.4
|
7%
|
|
|
Assets under management (excluding
deposits)
|
5.8
|
5.7
|
2%
|
5.3
|
9%
|
|
|
Risk elements in lending
|
4.6
|
4.6
|
-
|
4.7
|
(2%)
|
|
|
Loan:deposit ratio (excluding repos)
|
112%
|
110%
|
200bp
|
113%
|
(100bp)
|
|
|
Risk-weighted assets
|
50.3
|
48.8
|
3%
|
49.8
|
1%
|
|
(1)
|
Divisional return on equity is based on divisional operating profit after tax divided by average notional equity (based on 9% of the monthly average of divisional RWAs, adjusted for capital deductions); Q4 2010 adjusted for timing of intra-quarter items.
|
|
(2)
|
Adjusted cost:income ratio is based on total income after netting insurance claims and operating expenses.
|
|
UK Retail is committed to rebuilding customer trust and the reputation of its brands by becoming the most helpful and sustainable bank in the UK. During Q1 2011 the division developed increased online functionality and simplified the product offering as part of a continued effort to achieve this goal.
|
|
|
In March 2011 the first externally assessed, six-monthly review of the RBS and NatWest Customer Charters was published with UK Retail having delivered on 80% of the 25 goals outlined. Although this was a positive start, the division recognises that there is still far to go and will not be complacent. Already, further feedback is being sought from customers to ensure the Charters continue to really focus on delivering for our customers throughout 2011.
|
|
|
UK Retail has also continued with a major investment programme that began in 2010. This programme aims to support the improvement in customer service embodied by the Customer Charters by providing the division and its staff with the training and tools necessary to achieve the strategic goals of the division.
|
|
|
The economic environment in the UK remains challenging for the division’s customers and, while UK Retail remains focussed on providing support to customers who do find themselves in difficulty, the division also recognises the need for continued commitment to responsible lending - including first time buyers in the mortgage market.
|
|
|
Overall, Q1 2011 demonstrates continued progress towards achieving the business and strategic goals of the UK Retail division.
|
|
|
·
|
Operating profit of £508 million in Q1 2011 was £50 million lower than in the previous quarter. Excluding the lower Financial Services Compensation Scheme levy cost recognised in Q4 2010 and profit share payment received in the same quarter, operating profit increased £51 million in Q1 2011. Impairment losses improved by £28 million to £194 million.
|
|
·
|
UK Retail continued to drive strong growth in secured lending.
o Mortgage balances increased 3% on Q4 2010. RBS lending volumes showed signs of recovery in the quarter, with more new mortgages written at lower loan to value ratios. Market share of new mortgage
lending increased to 14% in the quarter, well above the Group’s 8% share of stock. o Unsecured lending fell by 4% in the quarter, in line with the Group’s continued focus on lower risk secured lending.
o Total deposits remained flat in the quarter after a strong period of growth in Q4 2010.
o The loan to deposit ratio at 31 March 2011 was 112%, slightly higher than the prior quarter ratio of 110%.
|
|
·
|
Net interest income fell by 1%, with net interest margin at 4.04%, a 1 basis point decline on Q4 2010. Asset margins fell marginally on Q4 2010, with rate upside offset by increased mortgage volumes written at lower loan to value ratios. Liability margins continued to contract in the quarter, largely reflecting the reduction in yield on current account hedges. Savings margins were broadly flat on Q4 2010.
|
|
·
|
Non-interest income fell by 18% from the prior quarter. Excluding the one-off profit share received in Q4 2010 and the impact of restructuring the division’s Bancassurance Joint Venture, fee income growth was 1% driven by an increase in transactional fees.
|
|
·
|
Overall expenses remained flat quarter on quarter. Excluding the lower Financial Services Compensation Scheme cost recognised in Q4 2010 and the effect of restructuring our Bancassurance Joint Venture, costs improved by 1%, with continued management focus on process re-engineering and technology investment. The cost:income ratio (net of insurance claims) increased marginally from 47% to 49%.
|
|
·
|
Impairment losses improved by 13% in Q1 2011. Impairments are expected to stabilise subject to normal seasonal fluctuations and broad stability within the economic environment.
o Mortgage impairment losses were £61 million on a total book of £93 billion. The quarter on quarter increase of £31 million primarily reflects the continued impact of difficult housing market conditions
on the recovery of already defaulted debt. Arrears rates, which continue to be supported by low interest rates and good book growth, were stable and remained below the Council of Mortgage Lenders industry average. o The unsecured portfolio impairment charge fell 31% to £133 million, on a book of £17 billion, with lower default volumes and improved collections performance. Industry benchmarks for cards arrears remain
stable, with RBS continuing to perform better than the market. |
|
·
|
Risk-weighted assets increased in the quarter, primarily reflecting business growth.
|
|
·
|
Operating profit increased by £368 million, with income up 10%, costs down 6% and impairments 50% lower than in Q1 2010.
|
|
·
|
Net interest income was 15% higher than Q1 2010, with strong mortgage balance growth and recovering asset margins across all products but with continual competitive pressure on liability margins.
|
|
·
|
Costs were 6% lower than in Q1 2010, driven by careful management of process efficiencies within the branch network and operational centres. The cost:income ratio (net of insurance claims) improved from 58% to 49%.
|
|
·
|
Impairment losses decreased by 50% on Q1 2010 primarily reflecting lower arrears on the unsecured portfolio.
|
|
·
|
Savings balances were up 11% on Q1 2010, significantly outperforming the market which remains intensely competitive. Personal current account balances remained largely flat over the same period.
|
|
Quarter ended
|
|||
|
31 March
2011
|
31 December
2010
|
31 March
2010
|
|
|
£m
|
£m
|
£m
|
|
|
Income statement
|
|||
|
Net interest income
|
689
|
653
|
610
|
|
Net fees and commissions
|
244
|
251
|
224
|
|
Other non-interest income
|
88
|
79
|
105
|
|
Non-interest income
|
332
|
330
|
329
|
|
Total income
|
1,021
|
983
|
939
|
|
Direct expenses
|
|||
|
- staff
|
(202)
|
(198)
|
(205)
|
|
- other
|
(90)
|
(93)
|
(103)
|
|
Indirect expenses
|
(131)
|
(140)
|
(127)
|
|
(423)
|
(431)
|
(435)
|
|
|
Operating profit before impairment losses
|
598
|
552
|
504
|
|
Impairment losses
|
(105)
|
(219)
|
(186)
|
|
Operating profit
|
493
|
333
|
318
|
|
Analysis of income by business
|
|||
|
Corporate and commercial lending
|
729
|
657
|
630
|
|
Asset and invoice finance
|
152
|
166
|
134
|
|
Corporate deposits
|
170
|
184
|
176
|
|
Other
|
(30)
|
(24)
|
(1)
|
|
Total income
|
1,021
|
983
|
939
|
|
Analysis of impairments by sector
|
|||
|
Banks and financial institutions
|
3
|
12
|
2
|
|
Hotels and restaurants
|
8
|
18
|
16
|
|
Housebuilding and construction
|
32
|
47
|
14
|
|
Manufacturing
|
6
|
(9)
|
6
|
|
Other
|
1
|
(12)
|
37
|
|
Private sector education, health, social work, recreational and community
services
|
11
|
21
|
8
|
|
Property
|
18
|
84
|
66
|
|
Wholesale and retail trade, repairs
|
16
|
31
|
18
|
|
Asset and invoice finance
|
10
|
27
|
19
|
|
Total impairment losses
|
105
|
219
|
186
|
|
Quarter ended
|
|||
|
31 March
2011
|
31 December
2010
|
31 March
2010
|
|
|
Loan impairment charge as % of gross customer loans and advances
(excluding reverse repurchase agreements) by sector
|
|||
|
Banks and financial institutions
|
0.2%
|
0.8%
|
0.1%
|
|
Hotels and restaurants
|
0.5%
|
1.1%
|
1.0%
|
|
Housebuilding and construction
|
2.8%
|
4.2%
|
1.3%
|
|
Manufacturing
|
0.5%
|
(0.7%)
|
0.4%
|
|
Other
|
-
|
(0.2%)
|
0.5%
|
|
Private sector education, health, social work, recreational and community
services
|
0.5%
|
0.9%
|
0.4%
|
|
Property
|
0.2%
|
1.1%
|
0.8%
|
|
Wholesale and retail trade, repairs
|
0.7%
|
1.3%
|
0.7%
|
|
Asset and invoice finance
|
0.4%
|
1.1%
|
0.8%
|
|
Total
|
0.4%
|
0.8%
|
0.7%
|
|
Quarter ended
|
|||
|
31 March
2011
|
31 December
2010
|
31 March
2010
|
|
|
Performance ratios
|
|||
|
Return on equity (1)
|
15.8%
|
11.8%
|
9.9%
|
|
Net interest margin
|
2.73%
|
2.55%
|
2.41%
|
|
Cost:income ratio
|
41%
|
44%
|
46%
|
|
31 March
2011
|
31 December
2010
|
31 March
2010
|
||||
|
£bn
|
£bn
|
Change
|
£bn
|
Change
|
||
|
Capital and balance sheet
|
||||||
|
Total third party assets
|
115.0
|
114.6
|
-
|
117.4
|
(2%)
|
|
|
Loans and advances to customers (gross)
|
||||||
|
- banks and financial institutions
|
6.0
|
6.1
|
(2%)
|
6.5
|
(8%)
|
|
|
- hotels and restaurants
|
6.7
|
6.8
|
(1%)
|
6.6
|
2%
|
|
|
- housebuilding and construction
|
4.5
|
4.5
|
-
|
4.3
|
5%
|
|
|
- manufacturing
|
5.1
|
5.3
|
(4%)
|
5.9
|
(14%)
|
|
|
- other
|
31.8
|
31.0
|
3%
|
31.1
|
2%
|
|
|
- private sector education, health, social
work, recreational and community services
|
8.9
|
9.0
|
(1%)
|
8.5
|
5%
|
|
|
- property
|
30.2
|
29.5
|
2%
|
32.0
|
(6%)
|
|
|
- wholesale and retail trade, repairs
|
9.5
|
9.6
|
(1%)
|
10.4
|
(9%)
|
|
|
- asset and invoice finance
|
9.8
|
9.9
|
(1%)
|
9.0
|
9%
|
|
|
112.5
|
111.7
|
1%
|
114.3
|
(2%)
|
||
|
Customer deposits
|
100.6
|
100.0
|
1%
|
91.4
|
10%
|
|
|
Risk elements in lending
|
4.6
|
4.0
|
15%
|
2.5
|
84%
|
|
|
Loan:deposit ratio (excluding repos)
|
110%
|
110%
|
-
|
124%
|
(1,400bp)
|
|
|
Risk-weighted assets
|
79.3
|
81.4
|
(3%)
|
91.3
|
(13%)
|
|
(1)
|
Divisional return on equity is based on divisional operating profit after tax, adjusted for a one-off item in Q1 2011, divided by average notional equity (based on 9% of the monthly average of divisional RWAs, adjusted for capital deductions).
|
|
UK Corporate has made good progress in enhancing the ways in which it services and adds value to its corporate and SME customers.
|
|
|
During Q1 2011, the division exceeded its overall business lending targets. The SME Customer Charter, introduced in 2009, underscores UK Corporate’s determination to service its business customers fairly and transparently. This has brought real advantages to customers, with more than 80,000 SMEs benefiting from the Charter’s overdraft price promise during the quarter.
|
|
|
UK Corporate has engaged in a £300 million investment programme over five years to strengthen its customer proposition, delivery channels, data analytics and risk discipline, and is increasing the number of experienced business managers in branches. The development of tailored propositions for targeted segments has delivered initial success, with strong customer recruitment among, for example, businesses run by women and start-ups.
|
|
|
·
|
Operating profit increased by 48% to £493 million, driven by lower impairments and a revision to deferred income recognition assumptions which boosted income in the quarter.
|
|
·
|
Net interest income rose by 6% as a result of this revision to income deferral assumptions. Adjusting for this, (£50 million), net interest income was stable with net interest margin holding up well despite the continuing pressure on deposit margins. Customer deposits continued to grow. The growth in lending in Q1 2011 resulted from a transfer from Non-Core in preparation for the sale of the RBS England & Wales branch-based business to Santander. Underlying net lending was slightly down as customer deleveraging persisted.
|
|
·
|
Non-interest income was broadly in line with Q4 2010 with fee accelerations from refinancing in the quarter offsetting lower Global Banking & Markets related income and lower operating lease activity.
|
|
·
|
Total costs remain under control, down 2%, despite a small number of fraud cases costing £15 million in Q1 2011.
|
|
·
|
Impairments of £105 million were £114 million lower than Q4 2010. This was primarily driven by a release of latent provisions reflecting improving book quality and credit metrics. In addition specific provisions fell, following the small number of specific, significant impairments recorded in Q4 2010.
|
|
·
|
Operating profit was up £175 million or 55%, primarily driven by lower impairments, widening asset margins and revised deferred income recognition assumptions implemented in Q1 2011.
|
|
·
|
Excluding the deferred fee impact, net interest income rose 5% and net interest margin increased 22 basis points, reflecting re-pricing of the lending portfolio. Customer deposits saw significant growth, up £9.2 billion (10%), through successful deposit-gathering initiatives. This contributed to an improvement in the loan to deposit ratio from 124% to 110%.
|
|
·
|
Non-interest income increased 1% as a result of strong refinancing activity largely offset by lower sales of financial market products.
|
|
·
|
Total costs decreased by 3% compared with Q1 2010, which included an OFT penalty of £29 million.
|
|
·
|
Impairments were 44% lower, reflecting improved book quality and credit metrics.
|
|
Quarter ended
|
|||
|
31 March
2011
|
31 December
2010
|
31 March
2010
|
|
|
£m
|
£m
|
£m
|
|
|
Income statement
|
|||
|
Net interest income
|
167
|
160
|
143
|
|
Net fees and commissions
|
97
|
94
|
95
|
|
Other non-interest income
|
17
|
17
|
17
|
|
Non-interest income
|
114
|
111
|
112
|
|
Total income
|
281
|
271
|
255
|
|
Direct expenses
|
|||
|
- staff
|
(100)
|
(96)
|
(99)
|
|
- other
|
(44)
|
(29)
|
(35)
|
|
Indirect expenses
|
(52)
|
(53)
|
(55)
|
|
(196)
|
(178)
|
(189)
|
|
|
Operating profit before impairment losses
|
85
|
93
|
66
|
|
Impairment losses
|
(5)
|
(6)
|
(4)
|
|
Operating profit
|
80
|
87
|
62
|
|
Analysis of income
|
|||
|
Private banking
|
231
|
220
|
204
|
|
Investments
|
50
|
51
|
51
|
|
Total income
|
281
|
271
|
255
|
|
Quarter ended
|
|||
|
31 March
2011
|
31 December
2010
|
31 March
2010
|
|
|
Performance ratios
|
|||
|
Return on equity (1)
|
19.0%
|
21.0%
|
15.9%
|
|
Net interest margin
|
3.45%
|
3.29%
|
3.42%
|
|
Cost:income ratio
|
70%
|
66%
|
74%
|
|
31 March
2011
|
31 December
2010
|
31 March
2010
|
||||
|
£bn
|
£bn
|
Change
|
£bn
|
Change
|
||
|
Capital and balance sheet
|
||||||
|
Loans and advances to customers (gross)
|
||||||
|
- mortgages
|
7.8
|
7.8
|
-
|
6.8
|
15%
|
|
|
- personal
|
7.0
|
6.7
|
4%
|
6.2
|
13%
|
|
|
- other
|
1.7
|
1.6
|
6%
|
1.5
|
13%
|
|
|
16.5
|
16.1
|
2%
|
14.5
|
14%
|
||
|
Customer deposits
|
37.5
|
36.4
|
3%
|
36.4
|
3%
|
|
|
Assets under management (excluding
deposits)
|
34.4
|
32.1
|
7%
|
31.7
|
9%
|
|
|
Risk elements in lending
|
0.2
|
0.2
|
-
|
0.2
|
-
|
|
|
Loan:deposit ratio (excluding repos)
|
44%
|
44%
|
-
|
40%
|
400bp
|
|
|
Risk-weighted assets
|
12.6
|
12.5
|
1%
|
11.7
|
8%
|
|
(1)
|
Divisional return on equity is based on divisional operating profit after tax divided by average notional equity (based on 9% of the monthly average of divisional RWAs, adjusted for capital deductions).
|
|
In Q1 2011 Wealth announced a new set of goals and strategic plans, which have been accompanied by significant management change. The new strategy focuses on a narrower range of territories, balancing mature and growth markets, where the Coutts brand is strong and resonant. Wealth is already making progress in the UK with an increased focus on investment advisory services, while internationally cash management services are receiving increasing attention.
|
|
|
The new Wealth strategy is underpinned by technology. A new IT platform, already in place within Wealth International was launched in Adam & Company during Q1 2011 and will be rolled out to the rest of the UK businesses during the year. This new platform will enhance the customer service provided to Wealth clients and allow for an integrated banking platform throughout the division. It is only the first of a number of planned technology investments to improve customer connectivity and take advantage of the growth opportunity the division represents.
|
|
|
·
|
Operating profit decreased 8% to £80 million in the first quarter with an increase in income being more than offset by increased expenses as the division continues to invest in enhancing its strategic proposition.
|
|
·
|
Income increased 4% in Q1 2011, with net interest income up 4% primarily reflecting increased treasury income. As a result, net interest margin improved by 16 basis points. Non-interest income rose 3% reflecting growth in assets under management and improved brokerage income.
|
|
·
|
Expenses grew by 10% to £196 million reflecting significant investment to support strategic initiatives.
|
|
·
|
Lending volumes maintained strong momentum in the quarter with balances up a further 2%. Assets under management experienced strong growth of 7%.
|
|
·
|
Q1 2011 operating profit of £80 million was 29% higher than Q1 2010 as a result of strong income growth reflecting continued increases in client assets and liabilities managed by the division.
|
|
·
|
Income increased by 10%, driven by a 17% increase in net interest income. Strong growth in lending margins and lending volumes was supported by increased deposit balances.
|
|
·
|
Expenses grew by 4% reflecting additional strategic investment offset by phasing of bonus expense.
|
|
·
|
Client assets and liabilities managed by the division increased by 7%. This reflects the success of attracting new customer deposits and sustained lending growth within the UK. There was continued recovery in assets under management as underlying balances grew 3% despite the impact of client losses in the international businesses, resulting from the private banker attrition previously experienced.
|
|
Quarter ended
|
|||
|
31 March
2011
|
31 December
2010
|
31 March
2010
|
|
|
£m
|
£m
|
£m
|
|
|
Income statement
|
|||
|
Net interest income
|
260
|
263
|
217
|
|
Non-interest income
|
282
|
375
|
390
|
|
Total income
|
542
|
638
|
607
|
|
Direct expenses
|
|||
|
- staff
|
(96)
|
(105)
|
(104)
|
|
- other
|
(29)
|
(51)
|
(33)
|
|
Indirect expenses
|
(210)
|
(212)
|
(237)
|
|
(335)
|
(368)
|
(374)
|
|
|
Operating profit before impairment losses
|
207
|
270
|
233
|
|
Impairment losses
|
(20)
|
(3)
|
-
|
|
Operating profit
|
187
|
267
|
233
|
|
Analysis of income by product
|
|||
|
Domestic cash management
|
212
|
207
|
194
|
|
International cash management
|
211
|
223
|
185
|
|
Trade finance
|
73
|
81
|
71
|
|
Merchant acquiring
|
3
|
80
|
115
|
|
Commercial cards
|
43
|
47
|
42
|
|
Total income
|
542
|
638
|
607
|
|
Quarter ended
|
|||
|
31 March
2011
|
31 December
2010
|
31 March
2010
|
|
|
Performance ratios
|
|||
|
Return on equity (1)
|
30.8%
|
42.7%
|
35.8%
|
|
Net interest margin
|
5.91%
|
6.14%
|
8.08%
|
|
Cost:income ratio
|
62%
|
58%
|
62%
|
|
31 March
2011
|
31 December
2010
|
31 March
2010
|
||||
|
£bn
|
£bn
|
Change
|
£bn
|
Change
|
||
|
Capital and balance sheet
|
||||||
|
Total third party assets
|
27.1
|
25.2
|
8%
|
25.6
|
6%
|
|
|
Loans and advances
|
17.2
|
14.4
|
19%
|
14.3
|
20%
|
|
|
Customer deposits
|
69.3
|
69.9
|
(1%)
|
64.6
|
7%
|
|
|
Risk elements in lending
|
0.2
|
0.1
|
100%
|
0.2
|
-
|
|
|
Loan:deposit ratio (excluding repos)
|
25%
|
21%
|
400bp
|
22%
|
300bp
|
|
|
Risk-weighted assets
|
18.2
|
18.3
|
(1%)
|
20.4
|
(11%)
|
|
(1)
|
Divisional return on equity is based on divisional operating profit after tax divided by average notional equity (based on 9% of the monthly average of divisional RWAs, adjusted for capital deductions).
|
|
Global Transaction Services (GTS) delivered a strong deposit-gathering performance over the past year and, with the reinforcement of the management of the business in January, the division is poised to take further advantage of its strong position as a liquidity manager and provider of working capital solutions to its customers.
|
|
|
During the first quarter success was achieved with innovative supply chain finance services, among other product developments, and GTS has continued its support of UK exporters in growing their businesses in new markets.
|
|
|
·
|
Operating profit fell 30%, in part reflecting the sale of GMS, which completed on 30 November 2010. Adjusting for the disposal, operating profit decreased 21% significantly driven by a specific impairment provision recognised in Q1 2011.
|
|
·
|
Excluding GMS, income was 3% lower as a result of volume and pricing pressure in the International Cash Management and Trade businesses.
|
|
·
|
Expenses, excluding GMS, increased by 5%, driven by higher technology and support infrastructure costs, partly offset by tight cost control of discretionary expenditure.
|
|
·
|
Q1 2011 impairment losses of £20 million included a single large provision.
|
|
·
|
Third party assets increased by £1.9 billion due to an increase in UK Domestic Cash Management lending. This affected the loan to deposit ratio, which increased by 400 basis points to 25%.
|
|
·
|
For the two months in Q4 2010 before completion of the disposal, GMS recorded income of £80 million, expenses of £50 million and an operating profit of £30 million. Q1 2011 includes £3 million of income from the ongoing investment that GTS holds in WorldPay.
|
|
·
|
Operating profit decreased 20%, primarily reflecting the sale of GMS which completed on 30 November 2010. Adjusting for the disposal, operating profit increased 5%.
|
|
·
|
Excluding GMS, income was 10% higher, with a strong increase in income from Domestic and International Cash Management products driven by growth in interest-bearing balances.
|
|
·
|
Customer deposits increased by 7% to £69.3 billion as a result of higher international cash management balances reflecting further strengthening of deposit gathering initiatives.
|
|
·
|
Third party assets, excluding GMS, increased by £2.9 billion, driven by an increase in trade finance balances and the impact of Yen clearing activities brought in-house during 2010. The loan to deposit ratio increased by 300 basis points to 25%.
|
|
·
|
During Q1 2010, GMS recorded income of £115 million, total expenses of £61 million and an operating profit of £54 million.
|
|
Quarter ended
|
|||
|
31 March
2011
|
31 December
2010
|
31 March
2010
|
|
|
£m
|
£m
|
£m
|
|
|
Income statement
|
|||
|
Net interest income
|
169
|
187
|
188
|
|
Net fees and commissions
|
36
|
40
|
35
|
|
Other non-interest income
|
15
|
16
|
18
|
|
Non-interest income
|
51
|
56
|
53
|
|
Total income
|
220
|
243
|
241
|
|
Direct expenses
|
|||
|
- staff
|
(56)
|
(57)
|
(66)
|
|
- other
|
(18)
|
(17)
|
(19)
|
|
Indirect expenses
|
(62)
|
(64)
|
(75)
|
|
(136)
|
(138)
|
(160)
|
|
|
Operating profit before impairment losses
|
84
|
105
|
81
|
|
Impairment losses
|
(461)
|
(376)
|
(218)
|
|
Operating loss
|
(377)
|
(271)
|
(137)
|
|
Analysis of income by business
|
|||
|
Corporate
|
113
|
122
|
145
|
|
Retail
|
113
|
124
|
112
|
|
Other
|
(6)
|
(3)
|
(16)
|
|
Total income
|
220
|
243
|
241
|
|
Analysis of impairments by sector
|
|||
|
Mortgages
|
233
|
159
|
33
|
|
Corporate
|
|||
|
- property
|
97
|
69
|
82
|
|
- other corporate
|
120
|
135
|
91
|
|
Other lending
|
11
|
13
|
12
|
|
Total impairment losses
|
461
|
376
|
218
|
|
Loan impairment charge as % of gross customer loans and advances
(excluding reverse repurchase agreements) by sector
|
|||
|
Mortgages
|
4.3%
|
3.0%
|
0.8%
|
|
Corporate
|
|||
|
- property
|
7.2%
|
5.1%
|
3.3%
|
|
- other corporate
|
5.5%
|
6.0%
|
3.5%
|
|
Other lending
|
2.8%
|
4.0%
|
2.0%
|
|
Total
|
5.0%
|
4.1%
|
2.3%
|
|
Quarter ended
|
|||
|
31 March
2011
|
31 December
2010
|
31 March
2010
|
|
|
Performance ratios
|
|||
|
Return on equity (1)
|
(41.9%)
|
(29.8%)
|
(14.9%)
|
|
Net interest margin
|
1.72%
|
1.77%
|
1.79%
|
|
Cost:income ratio
|
62%
|
57%
|
66%
|
|
31 March
2011
|
31 December
2010
|
31 March
2010
|
||||
|
£bn
|
£bn
|
Change
|
£bn
|
Change
|
||
|
Capital and balance sheet
|
||||||
|
Loans and advances to customers (gross)
|
||||||
|
- mortgages
|
21.5
|
21.2
|
1%
|
16.1
|
34%
|
|
|
- corporate
|
||||||
|
- property
|
5.4
|
5.4
|
-
|
9.9
|
(45%)
|
|
|
- other corporate
|
8.8
|
9.0
|
(2%)
|
10.4
|
(15%)
|
|
|
- other lending
|
1.5
|
1.3
|
15%
|
2.4
|
(38%)
|
|
|
37.2
|
36.9
|
1%
|
38.8
|
(4%)
|
||
|
Customer deposits
|
23.8
|
23.1
|
3%
|
23.7
|
-
|
|
|
Risk elements in lending
|
||||||
|
- mortgages
|
1.8
|
1.5
|
20%
|
0.7
|
157%
|
|
|
- corporate
|
||||||
|
- property
|
1.0
|
0.7
|
43%
|
1.0
|
-
|
|
|
- other corporate
|
1.6
|
1.2
|
33%
|
1.1
|
45%
|
|
|
- other lending
|
0.2
|
0.2
|
-
|
0.2
|
-
|
|
|
4.6
|
3.6
|
28%
|
3.0
|
53%
|
||
|
Loan:deposit ratio (excluding repos)
|
147%
|
152%
|
(500bp)
|
159%
|
(1200bp)
|
|
|
Risk-weighted assets
|
31.7
|
31.6
|
-
|
32.8
|
(3%)
|
|
|
Spot exchange rate - €/£
|
1.131
|
1.160
|
1.122
|
|
(1)
|
Divisional return on equity is based on divisional operating loss after tax divided by average notional equity (based on 9% of the monthly average of divisional RWAs, adjusted for capital deductions).
|
|
Ulster Bank’s results for Q1 2011 continue to be overshadowed by the challenging economic climate in Ireland, with impairments remaining elevated. Key priorities are the further development of Ulster Bank’s deposit-gathering franchise combined with cost control. Nonetheless, the early restructuring measures undertaken by Ulster Bank have left it in position to capitalise on those growth opportunities that are starting to emerge in the significantly more consolidated Irish banking market, particularly in export-oriented sectors.
|
|
·
|
Operating loss for the quarter was £377 million, a deterioration of £106 million compared with the previous quarter. The key driver was an increase in impairment losses of £85 million.
|
|
·
|
Net interest income declined by 9% in constant currency terms. Higher funding costs in both the wholesale and deposit markets more than offset actions to improve lending margins. Non-interest income fell 11% in constant currency terms, partially reflecting the loss of income from the Merchant Services business, disposed of in Q4 2010.
|
|
·
|
Direct costs remained relatively flat, reflecting continued tight expense management.
|
|
·
|
Impairment losses were £461 million, an increase of 22% on a constant currency basis, driven by the continued deterioration in retail mortgage credit metrics. Higher levels of default were also recorded in the Corporate Investment and SME portfolio. The credit quality of customers has continued to decline in line with market trends.
|
|
·
|
Deposits remained resilient in the period, up 1% at constant exchange rates, with continued steady growth in both retail and business banking deposits.
|
|
·
|
Loans to customers fell by 1% at constant exchange rates as repayments continued to exceed demand for new lending.
|
|
·
|
Income fell over the period reflecting the impact of higher funding costs and the continued high cost of deposit raising.
|
|
·
|
Expenses decreased by 15% on a constant currency basis, driven by the impact of the restructuring programme initiated in late 2009 and the continued focus on cost management.
|
|
·
|
Impairments rose by 119% on a constant currency basis, reflecting the significant deterioration in customer credit quality combined with asset price deflation over the period.
|
|
·
|
Loans and advances to customers reduced by 4% at constant exchange rates reflecting the impact of muted new business demand and continued customer deleveraging.
|
|
·
|
Customer deposits have increased slightly over the period with strong growth in current and savings accounts offset by lower wholesale balances.
|
|
Quarter ended
|
|||
|
31 March
2011
|
31 December
2010
|
31 March
2010
|
|
|
£m
|
£m
|
£m
|
|
|
Income statement
|
|||
|
Net interest income
|
451
|
467
|
468
|
|
Net fees and commissions
|
170
|
169
|
177
|
|
Other non-interest income
|
73
|
62
|
75
|
|
Non-interest income
|
243
|
231
|
252
|
|
Total income
|
694
|
698
|
720
|
|
Direct expenses
|
|||
|
- staff
|
(197)
|
(204)
|
(215)
|
|
- other
|
(124)
|
(124)
|
(134)
|
|
Indirect expenses
|
(183)
|
(201)
|
(188)
|
|
(504)
|
(529)
|
(537)
|
|
|
Operating profit before impairment losses
|
190
|
169
|
183
|
|
Impairment losses
|
(110)
|
(105)
|
(143)
|
|
Operating profit
|
80
|
64
|
40
|
|
Average exchange rate - US$/£
|
1.601
|
1.581
|
1.560
|
|
Analysis of income by product
|
|||
|
Mortgages and home equity
|
109
|
128
|
115
|
|
Personal lending and cards
|
107
|
113
|
114
|
|
Retail deposits
|
216
|
206
|
226
|
|
Commercial lending
|
137
|
141
|
142
|
|
Commercial deposits
|
69
|
75
|
81
|
|
Other
|
56
|
35
|
42
|
|
Total income
|
694
|
698
|
720
|
|
Analysis of impairments by sector
|
|||
|
Residential mortgages
|
6
|
3
|
19
|
|
Home equity
|
40
|
26
|
6
|
|
Corporate and commercial
|
17
|
54
|
49
|
|
Other consumer
|
20
|
6
|
56
|
|
Securities
|
27
|
16
|
13
|
|
Total impairment losses
|
110
|
105
|
143
|
|
Loan impairment charge as % of gross customer loans and advances
(excluding reverse repurchase agreements) by sector
|
|||
|
Residential mortgages
|
0.4%
|
0.2%
|
1.1%
|
|
Home equity
|
1.1%
|
0.7%
|
0.1%
|
|
Corporate and commercial
|
0.3%
|
1.1%
|
1.0%
|
|
Other consumer
|
1.3%
|
0.3%
|
2.8%
|
|
Total
|
0.7%
|
0.7%
|
1.0%
|
|
Quarter ended
|
|||
|
31 March
2011
|
31 December
2010
|
31 March
2010
|
|
|
Performance ratios
|
|||
|
Return on equity (1)
|
4.4%
|
3.3%
|
1.9%
|
|
Net interest margin
|
3.01%
|
3.00%
|
2.72%
|
|
Cost:income ratio
|
72%
|
76%
|
74%
|
|
31 March
2011
|
31 December
2010
|
31 March
2010
|
||||
|
£bn
|
£bn
|
Change
|
£bn
|
Change
|
||
|
Capital and balance sheet
|
||||||
|
Total third party assets
|
70.6
|
71.2
|
(1%)
|
78.9
|
(11%)
|
|
|
Loans and advances to customers (gross)
|
||||||
|
- residential mortgages
|
5.6
|
6.1
|
(8%)
|
6.7
|
(16%)
|
|
|
- home equity
|
14.7
|
15.2
|
(3%)
|
16.2
|
(9%)
|
|
|
- corporate and commercial
|
20.2
|
20.4
|
(1%)
|
20.5
|
(1%)
|
|
|
- other consumer
|
6.4
|
6.9
|
(7%)
|
8.0
|
(20%)
|
|
|
46.9
|
48.6
|
(3%)
|
51.4
|
(9%)
|
||
|
Customer deposits (excluding repos)
|
56.7
|
58.7
|
(3%)
|
62.5
|
(9%)
|
|
|
Risk elements in lending
|
||||||
|
- retail
|
0.5
|
0.4
|
25%
|
0.4
|
25%
|
|
|
- commercial
|
0.5
|
0.5
|
-
|
0.3
|
67%
|
|
|
1.0
|
0.9
|
11%
|
0.7
|
43%
|
||
|
Loan:deposit ratio (excluding repos)
|
81%
|
81%
|
-
|
81%
|
-
|
|
|
Risk-weighted assets
|
53.6
|
57.0
|
(6%)
|
63.8
|
(16%)
|
|
|
Spot exchange rate - US$/£
|
1.605
|
1.552
|
1.517
|
|
(1)
|
Divisional return on equity is based on divisional operating profit after tax divided by average notional equity (based on 9% of the monthly average of divisional RWAs, adjusted for capital deductions).
|
|
·
|
Sterling strengthened relative to the US dollar during the first quarter, with the average exchange rate increasing by 1% compared with Q4 2010.
|
|
·
|
Performance is described in full in the US dollar-based financial statements set out on pages 38 and 39.
|
|
Quarter ended
|
|||
|
31 March
2011
|
31 December
2010
|
31 March
2010
|
|
|
$m
|
$m
|
$m
|
|
|
Income statement
|
|||
|
Net interest income
|
723
|
739
|
730
|
|
Net fees and commissions
|
273
|
267
|
276
|
|
Other non-interest income
|
116
|
100
|
116
|
|
Non-interest income
|
389
|
367
|
392
|
|
Total income
|
1,112
|
1,106
|
1,122
|
|
Direct expenses
|
|||
|
- staff
|
(315)
|
(322)
|
(335)
|
|
- other
|
(198)
|
(197)
|
(207)
|
|
Indirect expenses
|
(293)
|
(317)
|
(293)
|
|
(806)
|
(836)
|
(835)
|
|
|
Operating profit before impairment losses
|
306
|
270
|
287
|
|
Impairment losses
|
(177)
|
(168)
|
(224)
|
|
Operating profit
|
129
|
102
|
63
|
|
Analysis of income by product
|
|||
|
Mortgages and home equity
|
175
|
201
|
180
|
|
Personal lending and cards
|
171
|
179
|
178
|
|
Retail deposits
|
346
|
329
|
351
|
|
Commercial lending
|
219
|
223
|
222
|
|
Commercial deposits
|
110
|
119
|
126
|
|
Other
|
91
|
55
|
65
|
|
Total income
|
1,112
|
1,106
|
1,122
|
|
Analysis of impairments by sector
|
|||
|
Residential mortgages
|
9
|
5
|
30
|
|
Home equity
|
64
|
40
|
10
|
|
Corporate and commercial
|
28
|
87
|
77
|
|
Other consumer
|
33
|
11
|
87
|
|
Securities
|
43
|
25
|
20
|
|
Total impairment losses
|
177
|
168
|
224
|
|
Loan impairment charge as % of gross customer loans and advances
(excluding reverse repurchase agreements) by sector
|
|||
|
Residential mortgages
|
0.4%
|
0.2%
|
1.2%
|
|
Home equity
|
1.1%
|
0.7%
|
0.2%
|
|
Corporate and commercial
|
0.3%
|
1.1%
|
1.0%
|
|
Other consumer
|
1.3%
|
0.4%
|
2.9%
|
|
Total
|
0.7%
|
0.8%
|
1.1%
|
|
Quarter ended
|
|||
|
31 March
2011
|
31 December
2010
|
31 March
2010
|
|
|
Performance ratios
|
|||
|
Return on equity (1)
|
4.4%
|
3.3%
|
1.9%
|
|
Net interest margin
|
3.01%
|
3.00%
|
2.72%
|
|
Cost:income ratio
|
72%
|
76%
|
74%
|
|
31 March
2011
|
31 December
2010
|
31 March
2010
|
||||
|
$bn
|
$bn
|
Change
|
$bn
|
Change
|
||
|
Capital and balance sheet
|
||||||
|
Total third party assets
|
113.2
|
110.5
|
2%
|
119.6
|
(5%)
|
|
|
Loans and advances to customers (gross)
|
||||||
|
- residential mortgages
|
9.1
|
9.4
|
(3%)
|
10.1
|
(10%)
|
|
|
- home equity
|
23.6
|
23.6
|
-
|
24.6
|
(4%)
|
|
|
- corporate and commercial
|
32.2
|
31.7
|
2%
|
31.1
|
4%
|
|
|
- other consumer
|
10.3
|
10.6
|
(3%)
|
12.1
|
(15%)
|
|
|
75.2
|
75.3
|
-
|
77.9
|
(3%)
|
||
|
Customer deposits (excluding repos)
|
91.0
|
91.2
|
-
|
94.8
|
(4%)
|
|
|
Risk elements in lending
|
||||||
|
- retail
|
0.8
|
0.7
|
14%
|
0.6
|
33%
|
|
|
- commercial
|
0.8
|
0.7
|
14%
|
0.5
|
60%
|
|
|
1.6
|
1.4
|
14%
|
1.1
|
45%
|
||
|
Loan:deposit ratio (excluding repos)
|
81%
|
81%
|
-
|
81%
|
-
|
|
|
Risk-weighted assets
|
86.0
|
88.4
|
(3%)
|
96.8
|
(11%)
|
|
(1)
|
Divisional return on equity is based on divisional operating profit after tax divided by average notional equity (based on 9% of monthly average of divisional RWAs, adjusted for capital deductions).
|
|
Despite operating in a challenging market and regulatory environment, US Retail & Commercial’s “back-to-basics” strategy has made good progress in developing the division’s customer franchise.
|
|
|
US Retail & Commercial has taken a market leading role in providing transparency around overdraft fees, communicating to its customers what new regulations mean and how they will affect their banking. In February, Citizens received external recognition for superior customer experience.
|
|
|
Citizens has continued to expand its branch network selectively and increased ATM distribution through partnerships, enhancing convenience for its customers. It has also invested in innovative technology channels such as mobile banking through an iPhone and iPad application. Citizens’ active online banking penetration of households - a key driver of retention - continues to grow and remains superior to peers.
|
|
|
Consumer Finance has continued to strengthen its alignment with branch banking, further increasing the penetration of products to deposit households, particularly branch-based credit cards. The Commercial Banking business has achieved good momentum, expanding specialised lines of business such as franchise and health care lending, and expanding its cross-sales of capital markets and Global Transaction Services (GTS) products.
|
|
|
·
|
US Retail & Commercial posted an operating profit of $129 million compared with $102 million in the prior quarter. The Q1 2011 operating environment remained challenging, marked by low absolute interest rates, high but stable unemployment, a soft housing market and the impact of legislative changes.
|
|
·
|
Net interest income was down 2%. Product net interest income was up slightly from the previous quarter and net interest margin increased by 1 basis point. Loans and advances were flat, with continued run-off of fixed rate consumer products offset by commercial loan growth.
|
|
·
|
Non-interest income was up 6% driven by higher securities gains partially offset by lower mortgage banking income.
|
|
·
|
Total expenses were 4% lower than Q4 2010, which included a number of specific items such as higher litigation costs.
|
|
·
|
Impairment losses were up 5% reflecting higher impairments related to securities, partially offset by improving credit conditions across the portfolio. Excluding the impact of the securities impairments, credit costs generally remained stable or improved across the entire portfolio.
|
|
·
|
Operating profit increased to $129 million from $63 million, as impairments fell and expenses were reduced.
|
|
·
|
Net interest income was down 1%, as a result of a smaller balance sheet. Net interest margin improved by 29 basis points to 3.01% reflecting changes in deposit mix and continued discipline around deposit pricing, combined with the positive impact of the balance sheet restructuring programme carried out during Q3 2010.
|
|
·
|
Customer deposits were down 4% reflecting the impact of a changed pricing strategy on low margin term and time products partially offset by strong checking balance growth. Consumer checking balances grew by 7% while small business checking balances grew by 9%.
|
|
·
|
Non-interest income was in line with Q1 2010 reflecting lower deposit fees which were impacted by Regulation E legislative changes offset by higher gains on sales of securities. Regulation E prohibits financial institutions from charging consumers fees for paying overdrafts on automated teller machine (ATM) and one-off debit card transactions, unless a consumer consents, or opts in, to the overdraft service for those types of transactions.
|
|
·
|
Total expenses were down 3% primarily reflecting a change in accrual methodology relating to the annual incentive plan and lower Federal Deposit Insurance Corporation (FDIC) deposit insurance levies.
|
|
·
|
Impairment losses declined by 21% reflecting a gradual improvement in the underlying credit environment partially offset by higher impairments related to securities. Loan impairments as a percentage of loans and advances have declined to 0.7% from 1.1%.
|
|
Quarter ended
|
|||
|
31 March
2011
|
31 December
2010
|
31 March
2010
|
|
|
£m
|
£m
|
£m
|
|
|
Income statement
|
|||
|
Net interest income from banking activities
|
193
|
245
|
379
|
|
Net fees and commissions receivable
|
390
|
425
|
345
|
|
Income from trading activities
|
1,752
|
893
|
2,027
|
|
Other operating income (net of related funding costs)
|
45
|
24
|
73
|
|
Non-interest income
|
2,187
|
1,342
|
2,445
|
|
Total income
|
2,380
|
1,587
|
2,824
|
|
Direct expenses
|
|||
|
- staff
|
(863)
|
(554)
|
(887)
|
|
- other
|
(216)
|
(292)
|
(184)
|
|
Indirect expenses
|
(227)
|
(219)
|
(223)
|
|
(1,306)
|
(1,065)
|
(1,294)
|
|
|
Operating profit before impairment losses
|
1,074
|
522
|
1,530
|
|
Impairment losses
|
24
|
5
|
(32)
|
|
Operating profit
|
1,098
|
527
|
1,498
|
|
Analysis of income by product
|
|||
|
Rates - money markets
|
(74)
|
(65)
|
88
|
|
Rates - flow
|
733
|
413
|
699
|
|
Currencies & commodities
|
224
|
178
|
295
|
|
Credit and mortgage markets
|
885
|
433
|
959
|
|
Portfolio management and origination
|
337
|
445
|
469
|
|
Equities
|
275
|
183
|
314
|
|
Total income
|
2,380
|
1,587
|
2,824
|
|
Analysis of impairments by sector
|
|||
|
Manufacturing and infrastructure
|
32
|
2
|
(7)
|
|
Property and construction
|
6
|
10
|
8
|
|
Banks and financial institutions
|
(23)
|
54
|
16
|
|
Other
|
(39)
|
(71)
|
15
|
|
Total impairment losses
|
(24)
|
(5)
|
32
|
|
Loan impairment charge as % of gross customer loans and advances
(excluding reverse repurchase agreements)
|
(0.1%)
|
-
|
0.1%
|
|
Quarter ended
|
|||
|
31 March
2011
|
31 December
2010
|
31 March
2010
|
|
|
Performance ratios
|
|||
|
Return on equity (1)
|
20.8%
|
10.2%
|
30.5%
|
|
Net interest margin
|
0.76%
|
0.93%
|
1.13%
|
|
Cost:income ratio
|
55%
|
67%
|
46%
|
|
Compensation ratio (2)
|
36%
|
35%
|
31%
|
|
31 March
2011
|
31 December
2010
|
31 March
2010
|
||||
|
£bn
|
£bn
|
Change
|
£bn
|
Change
|
||
|
Capital and balance sheet
|
||||||
|
Loans and advances to customers
|
70.1
|
75.1
|
(7%)
|
91.5
|
(23%)
|
|
|
Loans and advances to banks
|
46.2
|
44.5
|
4%
|
42.0
|
10%
|
|
|
Reverse repos
|
105.1
|
94.8
|
11%
|
93.1
|
13%
|
|
|
Securities
|
132.2
|
119.2
|
11%
|
116.6
|
13%
|
|
|
Cash and eligible bills
|
33.9
|
38.8
|
(13%)
|
61.9
|
(45%)
|
|
|
Other
|
35.8
|
24.3
|
47%
|
38.6
|
(7%)
|
|
|
Total third party assets (excluding derivatives
mark-to-market)
|
423.3
|
396.7
|
7%
|
443.7
|
(5%)
|
|
|
Net derivative assets (after netting)
|
34.5
|
37.4
|
(8%)
|
66.9
|
(48%)
|
|
|
Customer deposits (excluding repos)
|
36.6
|
38.9
|
(6%)
|
47.0
|
(22%)
|
|
|
Risk elements in lending
|
1.8
|
1.7
|
6%
|
1.2
|
50%
|
|
|
Loan:deposit ratio (excluding repos)
|
191%
|
193%
|
(200bp)
|
195%
|
(400bp)
|
|
|
Risk-weighted assets
|
146.5
|
146.9
|
-
|
141.8
|
3%
|
|
(1)
|
Divisional return on equity is based on divisional operating profit after tax divided by average notional equity (based on 10% of the monthly average of divisional RWAs, adjusted for capital deductions).
|
|
(2)
|
Compensation ratio is based on staff costs as a percentage of total income.
|
|
Q1 2011 witnessed a strong rebound in investor activity, compared with the prior quarter, which benefited GBM’s credit and mortgage franchises. This rebound lessened over the course of the quarter with the re-emergence of sovereign debt concerns and global economic uncertainty compounded by events in the Middle East and Japan. Specific exposure to these regions is limited, but these events had a dampening effect on overall client activity in the quarter.
|
|
|
Nevertheless, GBM continued to deliver on its strategic plan, focusing on its chosen client franchises and achieving its targeted return and efficiency metrics while investing for the future.
|
|
|
·
|
Operating profit increased to £1,098 million with strong growth in income.
|
|
|
·
|
Revenue increased 50% on a slow Q4 2010, although investor confidence remained fragile:
|
|
|
○
|
The underlying Money Markets business was profitable but, as in Q4 2010, this was more than offset by the cost of the division’s funding activities.
|
|
|
○
|
Rates Flow and Currencies benefited from a rebound in market opportunities early in the quarter.
|
|
|
○
|
Credit and Mortgage Markets were well positioned to take advantage of higher activity driven by increased client risk appetite coupled with limited issuance.
|
|
|
○
|
The underlying Portfolio Management and Origination business remained broadly flat; the decline in revenue was driven by movements in market derivative values.
|
|
|
○
|
Equities had a solid quarter and improved sharply in comparison to a quiet Q4 2010.
|
|
|
·
|
The fall in net interest margin from 0.93% to 0.76% reflected a lengthening of the GBM funding profile and continuing margin compression on the portfolio as markets normalised and loans were booked or refinanced at finer margins.
|
|
|
·
|
Total costs increased £241 million in the quarter, primarily reflecting higher performance-related pay driven by the increase in revenue. This was partially offset by lower non-staff costs.
|
|
|
·
|
Impairments generated a net gain of £24 million in Q1 2011 as a small number of specific impairments were offset by a release of latent loss provision.
|
|
|
·
|
Third party assets increased by £27 billion from a seasonally low Q4 2010 level, but remained comfortably within the targeted range of £400 - £450 billion.
|
|
|
·
|
Risk-weighted assets remained flat, reflecting continued focus on the balance sheet and a prudent approach to risk management.
|
|
|
·
|
Return on equity of 20.8% was driven by the improved revenue performance on unchanged risk-weighted assets.
|
|
|
·
|
Operating profit declined by 27% driven by a fall in revenue.
|
|
·
|
Although Q1 2011 began strongly, activity across all business lines was more restrained than Q1 2010 which benefitted from more buoyant client demand.
|
|
·
|
Total costs remained flat, with lower staff costs but an increase in non-staff costs, primarily driven by increased depreciation charges reflecting previous strategic investment.
|
|
·
|
Q1 impairments were minimal in both periods.
|
|
Quarter ended
|
|||
|
31 March
2011
|
31 December
2010*
|
31 March
2010*
|
|
|
£m
|
£m
|
£m
|
|
|
Income statement
|
|||
|
Earned premiums
|
1,065
|
1,100
|
1,130
|
|
Reinsurers' share
|
(54)
|
(40)
|
(34)
|
|
Net premium income
|
1,011
|
1,060
|
1,096
|
|
Fees and commissions
|
(75)
|
(133)
|
(90)
|
|
Instalment income
|
35
|
38
|
42
|
|
Other income
|
35
|
70
|
38
|
|
Total income
|
1,006
|
1,035
|
1,086
|
|
Net claims
|
(784)
|
(898)
|
(966)
|
|
Underwriting profit
|
222
|
137
|
120
|
|
Staff expenses
|
(76)
|
(72)
|
(70)
|
|
Other expenses
|
(87)
|
(77)
|
(86)
|
|
Total direct expenses
|
(163)
|
(149)
|
(156)
|
|
Indirect expenses
|
(56)
|
(74)
|
(65)
|
|
(219)
|
(223)
|
(221)
|
|
|
Technical result
|
3
|
(86)
|
(101)
|
|
Investment income
|
64
|
77
|
51
|
|
|
|||
|
Operating profit/(loss)
|
67
|
(9)
|
(50)
|
|
Analysis of income by product
|
|||
|
Personal lines motor excluding broker
|
|||
|
- own brands
|
440
|
468
|
456
|
|
- partnerships
|
73
|
91
|
84
|
|
Personal lines home excluding broker
|
|||
|
- own brands
|
117
|
120
|
116
|
|
- partnerships
|
98
|
100
|
99
|
|
Personal lines other excluding broker
|
|||
|
- own brands
|
46
|
49
|
51
|
|
- partnerships
|
46
|
2
|
55
|
|
Other
|
|||
|
- commercial
|
74
|
76
|
81
|
|
- international
|
80
|
82
|
79
|
|
- other (1)
|
32
|
47
|
65
|
|
Total income
|
1,006
|
1,035
|
1,086
|
|
Quarter ended
|
|||
|
31 March
2011
|
31 December
2010
|
31 March
2010
|
|
|
In-force policies (000’s)
|
|||
|
Personal lines motor excluding broker
|
|||
|
- own brands
|
4,071
|
4,162
|
4,623
|
|
- partnerships
|
559
|
645
|
797
|
|
Personal lines home excluding broker
|
|||
|
- own brands
|
1,738
|
1,758
|
1,755
|
|
- partnerships
|
1,836
|
1,850
|
1,896
|
|
Personal lines other excluding broker
|
|||
|
- own brands
|
2,009
|
2,005
|
2,346
|
|
- partnerships
|
8,574
|
8,177
|
7,350
|
|
Other
|
|||
|
- commercial
|
383
|
352*
|
264
|
|
- international
|
1,234
|
1,082
|
1,014
|
|
- other (1)
|
418
|
644
|
1,108
|
|
Total in-force policies (2)
|
20,822
|
20,675*
|
21,153
|
|
Gross written premium (£m)
|
1,037
|
988
|
1,090
|
|
Performance ratios
|
|||
|
Return on equity (3)
|
7.0%
|
(0.9%)
|
(5.6%)
|
|
Loss ratio (4)
|
77%
|
85%
|
88%
|
|
Commission ratio (5 )
|
8%
|
15%
|
9%
|
|
Expense ratio (6)
|
21%
|
19%
|
18%
|
|
Combined operating ratio (7)
|
106%
|
119%
|
116%
|
|
Balance sheet
|
|||
|
General insurance reserves - total (£m)
|
7,541
|
7,559
|
7,101
|
|
(1)
|
Other is predominantly made up of the discontinued personal lines broker business.
|
|
(2)
|
Total in-force policies include travel and creditor policies sold through RBS Group. These comprise travel policies included in bank accounts e.g. Royalties Gold Account, and creditor policies sold with bank products including mortgage, loan and card repayment payment protection.
|
|
(3)
|
Divisional return on equity is based on divisional operating profit/(loss) after tax, divided by divisional average notional equity (based on regulatory capital).
|
|
(4)
|
Loss ratio is based on net claims divided by net premium income for the UK businesses.
|
|
(5)
|
Commission ratio is based on fees and commissions divided by gross written premium for the UK businesses.
|
|
(6)
|
Expense ratio is based on expenses (excluding fees and commissions) divided by gross written premium for the UK businesses.
|
|
(7)
|
Combined operating ratio is expenses (including fees and commissions) divided by gross written premium added to the loss ratio, for the UK businesses.
|
|
RBS Insurance returned to profit in the first quarter of 2011 with an operating profit of £67 million. RBS Insurance continues on a significant programme of investment designed to achieve a substantial improvement in operational and financial performance, ahead of the planned divestment of the business, with a current target date of the second half of 2012. New pricing models and business selection criteria have been the main drivers of the turnaround, coupled with early benefits from new claims processes.
|
|
While overall motor volumes have been deliberately reduced over recent months, new business continues to be grown in selected areas. In March 2011, negotiations started with Sainsbury's Finance with the intention of forming a long-term strategic partnership for the supply of car insurance under the Sainsbury's brand. RBS Insurance also entered the premium insurance market with the launch of Select Insurance from Direct Line.
|
|
|
Initiatives to grow ancillary income, implemented during 2010, continued to deliver into 2011.
|
|
|
Claims and underwriting profit showed strong improvement due to pricing methodology and underwriting selection which resulted in lower claims in the personal and commercial motor business. Overall prior year reserve impact was broadly neutral with a modest release from 2010 accident year motor reserves, which compensated for some adverse development in reserves for the end-December 2010 severe weather event.
|
|
|
Overall underwriting profit at £222 million was substantially better than recent quarters and the highest quarterly figure since Q2 2009.
|
|
|
The actions being taken to improve claims processes and operating efficiency, together with continued focus on pricing and underwriting, are intended to achieve major increases to profitability in future periods.
|
|
|
In the home business, gross written premiums and total income were stable compared with Q4 2010 and Q1 2010.
|
|
|
The International business continued to grow in Q1 2011 with gross written premium for the quarter up 28% on the same quarter in 2010. The Italian business performed strongly due largely to the Fiat partnership and the German business also increased gross written premium by 4% against Q1 2010 in a flat market.
|
|
|
·
|
There was a return to profitability with an operating profit of £67 million in Q1 2011, compared with a Q4 2010 operating loss of £9 million, driven by lower claims.
|
|
·
|
Claims fell by £114 million, 13%, largely because there was no repeat of December 2010’s severe weather.
|
|
·
|
The total number of in-force policies increased marginally due to new travel policy business from the Nationwide Building Society partnership.
|
|
·
|
The operating profit of £67 million for Q1 2011 was a significant improvement from the loss of £50 million in Q1 2010. An £80 million decrease in income was more than offset by a £182 million reduction in claims.
|
|
·
|
Net claims were 19% lower reflecting the de-risking of the portfolio and improved performance in motor.
|
|
·
|
Total income was down 7% compared with Q1 2010, driven by the managed reduction in the risk of the UK motor book throughout 2010 and into 2011 and the exit of the motor broker business. The fall in in-force policies was partially offset by significant premium increases, in line with industry trends. Average motor premiums for RBS Insurance were up 9% in Q1 2011 compared with Q1 2010.
|
|
·
|
Total expenses of £219 million were broadly stable. However, as RBS Insurance prepares to reshape for divestment, certain functions and capability (including systems development) are being developed to replace services provided by RBS Group. This results in a switch from indirect expenses to staff and other direct expenses.
|
|
Quarter ended
|
|||
|
31 March
2011
|
31 December
2010
|
31 March
2010
|
|
|
£m
|
£m
|
£m
|
|
|
Central items not allocated
|
(43)
|
115
|
337
|
|
(1)
|
Costs/charges are denoted by brackets.
|
|
·
|
Central items not allocated represented a charge of £43 million versus a credit of £115 million in the previous quarter. This movement was primarily due to lower net gains and adverse IFRS volatility and other volatile Treasury items.
|
|
·
|
Central items not allocated represented a net charge of £43 million versus a credit of £337 million in Q1 2010. This movement is primarily driven by a £170 million VAT recovery in Q1 2010 which was not repeated as well as unallocated Group Treasury items, including the impact of economic hedges that do not qualify for IFRS hedge accounting.
|
|
Quarter ended
|
|||
|
31 March
2011
|
31 December
2010
|
31 March
2010
|
|
|
£m
|
£m
|
£m
|
|
|
Income statement
|
|||
|
Net interest income
|
303
|
419
|
568
|
|
Net fees and commissions
|
47
|
166
|
104
|
|
Loss from trading activities
|
(298)
|
(152)
|
(131)
|
|
Insurance net premium income
|
138
|
181
|
168
|
|
Other operating income
|
|||
|
- rental income
|
192
|
218
|
187
|
|
- other (1)
|
104
|
(511)
|
21
|
|
Non-interest income
|
183
|
(98)
|
349
|
|
Total income
|
486
|
321
|
917
|
|
Direct expenses
|
|||
|
- staff
|
(91)
|
(105)
|
(252)
|
|
- operating lease depreciation
|
(87)
|
(108)
|
(109)
|
|
- other
|
(69)
|
(141)
|
(156)
|
|
Indirect expenses
|
(76)
|
(127)
|
(122)
|
|
(323)
|
(481)
|
(639)
|
|
|
Operating profit/(loss) before other operating charges and impairment losses
|
163
|
(160)
|
278
|
|
Insurance net claims
|
(128)
|
(245)
|
(133)
|
|
Impairment losses
|
(1,075)
|
(1,211)
|
(1,704)
|
|
Operating loss
|
(1,040)
|
(1,616)
|
(1,559)
|
|
(1)
|
Includes losses on disposals (quarter ended 31 March 2011 - £35 million; quarter ended 31 December 2010 - £247 million; quarter ended 31 March 2010 - £1 million).
|
|
Quarter ended
|
|||
|
31 March
2011
|
31 December
2010
|
31 March
2010
|
|
|
£m
|
£m
|
£m
|
|
|
Analysis of income by business
|
|||
|
Banking & portfolios
|
598
|
157
|
630
|
|
International businesses & portfolios
|
89
|
84
|
269
|
|
Markets
|
(201)
|
80
|
18
|
|
Total income
|
486
|
321
|
917
|
|
Loss from trading activities
|
|||
|
Monoline exposures
|
(130)
|
(57)
|
-
|
|
Credit derivative product companies
|
(40)
|
(38)
|
(31)
|
|
Asset-backed products (1)
|
66
|
33
|
(55)
|
|
Other credit exotics
|
(168)
|
21
|
11
|
|
Equities
|
1
|
11
|
(7)
|
|
Banking book hedges
|
(29)
|
(70)
|
(36)
|
|
Other (2)
|
2
|
(52)
|
(13)
|
|
(298)
|
(152)
|
(131)
|
|
|
Impairment losses
|
|||
|
Banking & portfolios
|
1,058
|
1,258
|
1,579
|
|
International businesses & portfolios
|
20
|
59
|
68
|
|
Markets
|
(3)
|
(106)
|
57
|
|
Total impairment losses
|
1,075
|
1,211
|
1,704
|
|
Loan impairment charge as % of gross customer loans and advances
(excluding reverse repurchase agreements) (3)
|
|||
|
Banking & portfolios
|
4.1%
|
4.6%
|
4.7%
|
|
International businesses & portfolios
|
2.1%
|
5.2%
|
2.1%
|
|
Markets
|
(0.1%)
|
(38.4%)
|
55.1%
|
|
Total
|
4.0%
|
4.4%
|
4.6%
|
|
(1)
|
Asset-backed products include super senior asset-backed structures and other asset-backed products.
|
|
(2)
|
Includes profits in RBS Sempra Commodities JV (quarter ended 31 March 2011 - nil; quarter ended 31 December 2010 - £19 million; quarter ended 31 March 2010 - £127 million).
|
|
(3)
|
Includes disposal groups.
|
|
Quarter ended
|
|||
|
31 March
2011
|
31 December
2010
|
31 March
2010
|
|
|
Performance ratios
|
|||
|
Net interest margin
|
0.90%
|
1.09%
|
1.27%
|
|
Cost:income ratio
|
66%
|
150%
|
70%
|
|
Adjusted cost:income ratio
|
90%
|
633%
|
82%
|
|
31 March
2011
|
31 December
2010
|
31 March
2010
|
||||
|
£bn
|
£bn
|
Change
|
£bn
|
Change
|
||
|
Capital and balance sheet (1)
|
||||||
|
Total third party assets (excluding derivatives)
|
124.8
|
137.9
|
(9%)
|
193.5
|
(36%)
|
|
|
Total third party assets (including derivatives)
|
137.1
|
153.9
|
(11%)
|
212.6
|
(36%)
|
|
|
Loans and advances to customers (gross)
|
101.0
|
108.4
|
(7%)
|
141.2
|
(28%)
|
|
|
Customer deposits
|
7.1
|
6.7
|
6%
|
10.2
|
(30%)
|
|
|
Risk elements in lending
|
24.0
|
23.4
|
3%
|
24.0
|
-
|
|
|
Risk-weighted assets (2)
|
128.5
|
153.7
|
(16%)
|
164.3
|
(22%)
|
|
(1)
|
Includes disposal groups.
|
|
(2)
|
Includes RBS Sempra Commodities JV (31 March 2011 Third party assets (TPAs) £3.9 billion, RWAs £2.4 billion; 31 December 2010 TPAs £6.7 billion, RWAs £4.3 billion; 31 March 2010 TPAs £14.0 billion, RWAs £11.1 billion).
|
|
31 March
2011
|
31 December
2010
|
31 March
2010
|
|
|
£m
|
£m
|
£m
|
|
|
Gross customer loans and advances
|
|||
|
Banking & portfolios
|
98.0
|
104.9
|
132.3
|
|
International businesses & portfolios
|
2.9
|
3.5
|
8.8
|
|
Markets
|
0.1
|
-
|
0.1
|
|
101.0
|
108.4
|
141.2
|
|
|
Risk-weighted assets
|
|||
|
Banking & portfolios
|
76.5
|
83.5
|
94.3
|
|
International businesses & portfolios
|
5.1
|
5.6
|
10.6
|
|
Markets
|
46.9
|
64.6
|
59.4
|
|
128.5
|
153.7
|
164.3
|
|
Third party assets (excluding derivatives)
|
|||||||||
|
Quarter ended 31 March 2011
|
|||||||||
|
31 December
2010
|
Run-off
|
Disposals/
restructuring
|
Drawings/
roll overs
|
Impairments
|
FX
|
31 March
2011
|
|||
|
£bn
|
£bn
|
£bn
|
£bn
|
£bn
|
£bn
|
£bn
|
|||
|
Commercial real estate
|
42.6
|
(3.0)
|
(0.4)
|
0.2
|
(1.0)
|
0.3
|
38.7
|
||
|
Corporate
|
59.8
|
(1.9)
|
(2.4)
|
0.8
|
-
|
(0.3)
|
56.0
|
||
|
SME
|
3.7
|
(0.6)
|
-
|
-
|
-
|
-
|
3.1
|
||
|
Retail
|
9.0
|
(0.4)
|
-
|
-
|
(0.1)
|
(0.2)
|
8.3
|
||
|
Other
|
2.5
|
-
|
-
|
-
|
-
|
-
|
2.5
|
||
|
Markets
|
13.6
|
(1.1)
|
-
|
0.1
|
-
|
(0.3)
|
12.3
|
||
|
Total (excluding derivatives)
|
131.2
|
(7.0)
|
(2.8)
|
1.1
|
(1.1)
|
(0.5)
|
120.9
|
||
|
Markets - RBS Sempra
Commodities JV
|
6.7
|
(0.3)
|
(2.3)
|
-
|
-
|
(0.2)
|
3.9
|
||
|
Total (1)
|
137.9
|
(7.3)
|
(5.1)
|
1.1
|
(1.1)
|
(0.7)
|
124.8
|
||
|
30 September
2010
|
Run-off
|
Disposals/
restructuring
|
Drawings/
roll overs
|
Impairments
|
FX
|
31 December
2010
|
|
|
£bn
|
£bn
|
£bn
|
£bn
|
£bn
|
£bn
|
£bn
|
|
|
Commercial real estate
|
46.5
|
(2.3)
|
(0.8)
|
0.4
|
(1.2)
|
-
|
42.6
|
|
Corporate
|
66.1
|
(2.0)
|
(4.9)
|
0.4
|
-
|
0.2
|
59.8
|
|
SME
|
3.9
|
(0.3)
|
-
|
0.1
|
-
|
-
|
3.7
|
|
Retail
|
10.3
|
(0.6)
|
(0.7)
|
-
|
(0.1)
|
0.1
|
9.0
|
|
Other
|
2.6
|
(0.1)
|
-
|
-
|
-
|
-
|
2.5
|
|
Markets
|
16.5
|
0.2
|
(3.7)
|
0.3
|
0.1
|
0.2
|
13.6
|
|
Total (excluding derivatives)
|
145.9
|
(5.1)
|
(10.1)
|
1.2
|
(1.2)
|
0.5
|
131.2
|
|
Markets - RBS Sempra
Commodities JV
|
8.3
|
1.4
|
(3.0)
|
-
|
-
|
-
|
6.7
|
|
Total (1)
|
154.2
|
(3.7)
|
(13.1)
|
1.2
|
(1.2)
|
0.5
|
137.9
|
|
31 December
2009
|
Run-off
|
Disposals/
restructuring
|
Drawings/
roll overs
|
Impairments
|
FX
|
31 March
2010
|
|
|
£bn
|
£bn
|
£bn
|
£bn
|
£bn
|
£bn
|
£bn
|
|
|
Commercial real estate
|
51.3
|
(1.5)
|
-
|
0.2
|
(1.1)
|
0.6
|
49.5
|
|
Corporate
|
82.6
|
(4.6)
|
(1.2)
|
0.4
|
(0.4)
|
2.0
|
78.8
|
|
SME
|
3.9
|
-
|
-
|
-
|
-
|
0.1
|
4.0
|
|
Retail
|
19.9
|
(0.4)
|
(0.2)
|
0.1
|
(0.2)
|
0.6
|
19.8
|
|
Other
|
4.7
|
(1.6)
|
-
|
0.2
|
-
|
-
|
3.3
|
|
Markets
|
24.4
|
(1.2)
|
(0.3)
|
-
|
-
|
1.2
|
24.1
|
|
Total (excluding derivatives)
|
186.8
|
(9.3)
|
(1.7)
|
0.9
|
(1.7)
|
4.5
|
179.5
|
|
Markets - RBS Sempra
Commodities JV
|
14.2
|
(1.2)
|
-
|
-
|
-
|
1.0
|
14.0
|
|
Total (1)
|
201.0
|
(10.5)
|
(1.7)
|
0.9
|
(1.7)
|
5.5
|
193.5
|
|
(1)
|
£7 billion of disposals have been signed as of 31 March 2011 but are pending closing (31 December 2010 - £12 billion; 31 March 2010 - £2 billion).
|
|
Quarter ended
|
|||
|
31 March
2011
|
31 December
2010
|
31 March
2010
|
|
|
£m
|
£m
|
£m
|
|
|
Loan impairment losses by donating division and sector
|
|||
|
UK Retail
|
|||
|
Mortgages
|
(3)
|
1
|
3
|
|
Personal
|
3
|
2
|
2
|
|
Total UK Retail
|
-
|
3
|
5
|
|
UK Corporate
|
|||
|
Manufacturing and infrastructure
|
-
|
5
|
(5)
|
|
Property and construction
|
13
|
103
|
54
|
|
Transport
|
20
|
(20)
|
-
|
|
Banks and financials
|
3
|
51
|
24
|
|
Lombard
|
18
|
50
|
25
|
|
Other
|
11
|
50
|
57
|
|
Total UK Corporate
|
65
|
239
|
155
|
|
Ulster Bank
|
|||
|
Mortgages
|
-
|
-
|
20
|
|
Commercial real estate
|
|||
|
- investment
|
223
|
206
|
99
|
|
- development
|
503
|
596
|
362
|
|
Other corporate
|
107
|
(19)
|
51
|
|
Other EMEA
|
6
|
6
|
20
|
|
Total Ulster Bank
|
839
|
789
|
552
|
|
US Retail & Commercial
|
|||
|
Auto and consumer
|
25
|
37
|
15
|
|
Cards
|
(7)
|
3
|
14
|
|
SBO/home equity
|
53
|
51
|
102
|
|
Residential mortgages
|
4
|
(1)
|
12
|
|
Commercial real estate
|
19
|
31
|
63
|
|
Commercial and other
|
(3)
|
2
|
2
|
|
Total US Retail & Commercial
|
91
|
123
|
208
|
|
Global Banking & Markets
|
|||
|
Manufacturing and infrastructure
|
(2)
|
15
|
29
|
|
Property and construction
|
105
|
176
|
472
|
|
Transport
|
(6)
|
24
|
1
|
|
Telecoms, media and technology
|
(11)
|
(23)
|
(11)
|
|
Banks and financials
|
1
|
19
|
161
|
|
Other
|
(8)
|
(163)
|
101
|
|
Total Global Banking & Markets
|
79
|
48
|
753
|
|
Other
|
|||
|
Wealth
|
1
|
-
|
28
|
|
Global Transaction Services
|
-
|
7
|
3
|
|
Central items
|
-
|
2
|
-
|
|
Total Other
|
1
|
9
|
31
|
|
Total impairment losses
|
1,075
|
1,211
|
1,704
|
|
31 March
2011
|
31 December
2010
|
31 March
2010
|
|
|
£bn
|
£bn
|
£bn
|
|
|
Gross loans and advances to customers (excluding reverse
repurchase agreements) by donating division and sector
|
|||
|
UK Retail
|
|||
|
Mortgages
|
1.6
|
1.6
|
1.8
|
|
Personal
|
0.3
|
0.4
|
0.6
|
|
Total UK Retail
|
1.9
|
2.0
|
2.4
|
|
UK Corporate
|
|||
|
Manufacturing and infrastructure
|
0.2
|
0.3
|
0.4
|
|
Property and construction
|
8.0
|
11.4
|
13.2
|
|
Transport
|
5.1
|
5.4
|
5.8
|
|
Banks and financials
|
0.8
|
0.8
|
1.0
|
|
Lombard
|
1.5
|
1.7
|
2.7
|
|
Invoice finance
|
-
|
-
|
0.4
|
|
Other
|
7.5
|
7.4
|
9.2
|
|
Total UK Corporate
|
23.1
|
27.0
|
32.7
|
|
Ulster Bank
|
|||
|
Mortgages
|
-
|
-
|
6.1
|
|
Commercial real estate
|
|||
|
- investment
|
3.9
|
4.0
|
2.8
|
|
- development
|
8.9
|
8.4
|
5.7
|
|
Other corporate
|
2.0
|
2.2
|
1.3
|
|
Other EMEA
|
0.5
|
0.4
|
1.1
|
|
Total Ulster Bank
|
15.3
|
15.0
|
17.0
|
|
US Retail & Commercial
|
|||
|
Auto and consumer
|
2.4
|
2.6
|
3.2
|
|
Cards
|
0.1
|
0.1
|
0.2
|
|
SBO/home equity
|
2.9
|
3.2
|
3.7
|
|
Residential mortgages
|
0.7
|
0.7
|
1.2
|
|
Commercial real estate
|
1.4
|
1.5
|
2.0
|
|
Commercial and other
|
0.4
|
0.5
|
0.8
|
|
Total US Retail & Commercial
|
7.9
|
8.6
|
11.1
|
|
Global Banking & Markets
|
|||
|
Manufacturing and infrastructure
|
8.9
|
8.7
|
17.2
|
|
Property and construction
|
19.1
|
19.6
|
23.4
|
|
Transport
|
4.5
|
5.5
|
6.0
|
|
Telecoms, media and technology
|
1.1
|
0.9
|
3.4
|
|
Banks and financials
|
11.1
|
12.0
|
16.1
|
|
Other
|
8.2
|
9.0
|
11.7
|
|
Total Global Banking & Markets
|
52.9
|
55.7
|
77.8
|
|
Other
|
|||
|
Wealth
|
0.4
|
0.4
|
2.4
|
|
Global Transaction Services
|
0.2
|
0.3
|
0.8
|
|
RBS Insurance
|
0.1
|
0.2
|
0.2
|
|
Central items
|
(1.0)
|
(1.0)
|
(4.3)
|
|
Total Other
|
(0.3)
|
(0.1)
|
(0.9)
|
|
Gross loans and advances to customers (excluding reverse repurchase
|
|||
|
agreements)
|
100.8
|
108.2
|
140.1
|
|
Non-Core continues to make good progress in balance sheet reduction and is on track to reduce funded assets to below £100 billion by the end of 2011. 24 of 30 country/whole business exits have been agreed or completed, and so far this year Non-Core has signed and/or completed over 190 portfolio asset disposals and run-off.
|
|
|
Momentum continues from the previous year - Non-Core has now realised £6 billion of the £12 billion of transactions signed but not completed by the end of 2010, which included assets totalling £3 billion which were returned to Core in preparation for the sale of the RBS England and Wales branch-based business to Santander.
|
|
|
Overall Q1 2011 saw a reduction of £13 billion in assets and Non-Core continues to develop a healthy pipeline of transactions, typically with a six to nine month execution cycle. At the end of Q1 2011 there were signed but not completed transactions totalling £7 billion, including those remaining from end 2010.
|
|
|
Since December 2009, headcount has fallen from 15,100 to 6,700, largely as a result of the completion of country exits.
|
|
|
The division is central to the strategy which will return RBS Group to standalone strength, and Non-Core continues to deliver results in what is a challenging and complex environment with significant regulatory headwinds.
|
|
|
As Non-Core continues to reduce, income and expenses are falling in line with expectations. Impairments remain high, driven by continued difficulties in Ireland, where high impairment charges are expected to persist. Non-Core is also still experiencing higher impairment charges in real estate. Across the remaining book impairment losses have eased as fewer cases flow into restructuring units.
|
|
|
·
|
Non-Core made further progress in its asset reduction programme, with third party assets (excluding derivatives) declining by £13 billion to £125 billion, driven by disposals of £5 billion and run-off of £7 billion which included £3 billion of assets transferred to Core in preparation for the sale of the RBS England and Wales branch-based business to Santander.
|
|
|
·
|
Risk-weighted assets decreased by £25 billion driven principally by asset run-off, changes in certain asset reclassifications, and foreign exchange movements.
|
|
|
·
|
Non-Core operating loss was £1,040 million in the first quarter, compared with £1,616 million in Q4 2010. This primarily reflects:
|
|
|
○
|
Continued decrease in net interest income, reflecting ongoing balance sheet reduction.
|
|
|
○
|
Higher trading losses of £298 million, reflecting costs of portfolio de-risking and net losses, after CVA, on monoline related structures.
|
|
|
○
|
Fair value gains arising from equity positions held in restructured assets.
|
|
|
○
|
Lower expenses following exits from a number of countries in 2010.
|
|
|
○
|
Impairments were lower, reflecting the improving corporate environment, but with continued high impairment levels in Ulster Bank.
|
|
|
·
|
Third party assets have declined £69 billion (36%) since Q1 2010 reflecting run-off (£30 billion) and disposals (£37 billion).
|
|
·
|
Risk-weighted assets were £36 billion lower, driven principally by disposals and run-offs, offset by increases from regulatory changes.
|
|
·
|
In addition to the impact of continuing balance sheet reduction on net interest income, non-interest income was lower as a result of higher disposal losses, increased trading losses and a fall in associated income following the sale of the RBS Sempra Commodities joint venture in the second half of 2010.
|
|
THE ROYAL BANK OF SCOTLAND GROUP plc (Registrant)
|
|
By:
|
/s/ Jan Cargill
|
|
Name:
Title:
|
Jan Cargill
Deputy Secretary
|