REG - Royal Bk Scot.Grp. - 1st Quarter Results <Origin Href="QuoteRef">RBS.L</Origin> - Part 5
15/07/2015 15:25
- Part 5: For the preceding part double click ID:nRSd7782Ld
Operating profit 51 169 9
Operating profit - adjusted (1) 50 146 11
Average exchange rate 1.345 1.268 1.208
Analysis of income by product
Corporate 50 69 69
Retail 109 100 90
Other 31 35 42
Total income 190 204 201
Analysis of impairments by sector
Mortgages (13) (39) 19
Commercial real estate
- investment 1 (7) 8
- development - 4 (3)
Other corporate 12 (64) 17
Other lending - 2 6
Total impairment (releases)/losses - (104) 47
Performance ratios
Return on equity (2) 6.2% 20.2% 1.0%
Return on equity - adjusted (1,2) 6.1% 17.5% 1.2%
Net interest margin 1.95% 2.14% 2.29%
Cost:income ratio 73% 68% 72%
Cost:income ratio - adjusted (1) 74% 79% 71%
31 March 31 December 31 March
2015 2014 2014
Capital and balance sheet £bn £bn £bn
Funded assets 26.5 27.5 26.0
Total assets 26.6 27.6 26.2
Net loans and advances to customers 20.5 22.0 23.2
Risk elements in lending 4.4 4.8 4.7
Impairment provisions (2.5) (2.7) (3.4)
Customer deposits 19.2 20.6 21.1
Risk-weighted assets 22.4 23.8 28.7
Spot exchange rate 1.382 1.285 1.210
For the notes to this table refer to page 1.
Appendix 1 - Commercial Banking
Quarter ended
31 March 31 December 31 March
2015 2014 2014
Income statement £m £m £m
Net interest income 546 521 488
Net fees and commissions 207 217 221
Other non-interest income 69 93 61
Non-interest income 276 310 282
Total income 822 831 770
Direct expenses
- staff costs (129) (118) (133)
- other costs (54) (73) (62)
Indirect expenses (225) (284) (213)
Restructuring costs
- indirect (1) (13) (1)
Litigation and conduct costs - (62) -
Operating expenses (409) (550) (409)
Profit before impairment losses 413 281 361
Impairment losses (1) (33) (40)
Operating profit 412 248 321
Operating profit - adjusted (1) 413 323 322
Analysis of income by business
Commercial lending 449 477 446
Deposits 116 105 72
Asset and invoice finance 178 186 180
Other 79 63 72
Total income 822 831 770
Analysis of impairments by sector
Commercial real estate (2) 5 11
Asset and invoice finance 1 7 2
Private sector services (education, health, etc) 3 - (10)
Banks & financial institutions - - 2
Wholesale and retail trade repairs (2) 4 12
Hotels and restaurants (3) 6 3
Manufacturing 1 1 3
Construction - 1 2
Other 3 9 15
Total impairment losses 1 33 40
Performance ratios
Return on equity (2) 11.9% 6.8% 9.7%
Return on equity - adjusted (1,2) 11.9% 9.2% 9.7%
Net interest margin 2.87% 2.77% 2.68%
Cost:income ratio 50% 66% 53%
Cost:income ratio - adjusted (1) 50% 57% 53%
31 March 31 December 31 March
2015 2014 2014
Capital and balance sheet £bn £bn £bn
Funded assets 93.3 89.4 89.6
Total assets 93.3 89.4 89.6
Net loans and advances to customers 88.8 85.1 84.9
Risk elements in lending 2.4 2.5 3.4
Impairment provisions (0.9) (1.0) (1.3)
Customer deposits 99.0 86.8 87.6
Risk-weighted assets (3) 65.5 64.0 63.5
For the notes to this table refer to page 1.
Appendix 1 - Private Banking
Quarter ended
31 March 31 December 31 March
2015 2014 2014
Income statement £m £m £m
Net interest income 128 175 170
Net fees and commissions 75 78 88
Other non-interest income 11 14 15
Non-interest income 86 92 103
Total income 214 267 273
Direct expenses
- staff costs (76) (75) (76)
- other costs (12) (21) (15)
Indirect expenses (98) (132) (108)
Restructuring costs
- direct - (6) -
- indirect 1 (2) -
Litigation and conduct costs (2) (90) -
Operating expenses (187) (326) (199)
Profit/(loss) before impairment losses 27 (59) 74
Impairment releases 1 - 1
Operating profit/(loss) 28 (59) 75
Operating profit - adjusted (1) 29 39 75
Of which: international private banking activities (4)
Total income 51 54 57
Operating expenses (44) (51) (44)
Operating profit 7 3 13
Analysis of income by business
Investments 39 42 45
Banking 175 225 228
Total income 214 267 273
Performance ratios
Return on equity (2) 4.4% (12.9%) 13.4%
Return on equity - adjusted (1,2) 4.6% 6.2% 13.4%
Net interest margin 3.25% 3.74% 3.70%
Cost:income ratio 87% 122% 73%
Cost:income ratio - adjusted (1) 87% 85% 73%
31 March 31 December 31 March
2015 2014 2014
Capital and balance sheet £bn £bn £bn
Funded assets 17.8 20.4 21.1
Total assets 17.9 20.5 21.2
Net loans and advances to customers 14.0 16.5 16.7
Assets under management 29.2 28.3 28.5
Risk elements in lending 0.1 0.2 0.3
Impairment provisions (0.1) (0.1) (0.1)
Customer deposits 29.6 36.1 36.6
Risk-weighted assets (3) 10.2 11.5 12.0
Of which: international private banking activities (4)
Net loans and advances to customers 3.0 3.1 3.3
Assets under management 13.7 13.4 13.7
Customer deposits 7.5 7.3 7.8
Risk-weighted assets (3) 2.9 2.7 3.4
For the notes to this table refer to page 1.
Appendix 1 - Corporate & Institutional Banking
Quarter ended
31 March 31 December 31 March
2015 2014 2014
Income statement £m £m £m
Net interest income from banking activities 202 222 179
Net fees and commissions 235 219 243
Income from trading activities 309 212 885
Other operating income 58 38 44
Non-interest income 602 469 1,172
Total income 804 691 1,351
Direct expenses
- staff costs (180) (63) (270)
- other costs (78) (100) (110)
Indirect expenses (540) (659) (593)
Restructuring costs
- direct (16) (49) (13)
- indirect (275) (39) (26)
Litigation and conduct costs (500) (382) -
Operating expenses (1,589) (1,292) (1,012)
(Loss)/profit before impairment losses (785) (601) 339
Impairment releases/(losses) 44 (42) (6)
Operating (loss)/profit (741) (643) 333
Operating profit/(loss) - adjusted (1) 50 (173) 372
Analysis of income by product
Rates 217 79 359
Currencies 143 210 192
Credit 235 116 465
Global Transaction Services 189 190 207
Portfolio 151 171 162
Total (excluding revenue share and run-off businesses) 935 766 1,385
Inter-segment revenue share (54) (59) (60)
Run-off businesses (77) (16) 26
Total income 804 691 1,351
Performance ratios
Return on equity (2) (17.1%) (13.8%) 4.4%
Return on equity - adjusted (1,2) (0.4%) (4.8%) 5.0%
Net interest margin 1.12% 1.11% 0.85%
Cost:income ratio 198% 187% 75%
Cost:income ratio - adjusted (1) 99% 119% 72%
31 March 31 December 31 March
2015 2014 2014
Capital and balance sheet £bn £bn £bn
Funded assets 248.4 241.1 286.6
Total assets 623.8 577.2 547.0
Reverse repos 68.4 61.6 78.1
Net loans and advances to customers 76.7 72.8 70.5
Net loans and advances to banks 18.5 16.9 20.0
Securities 48.2 57.0 75.0
Risk-weighted assets (3)
- credit risk
- non-counterparty 49.8 51.3 59.0
- counterparty 26.1 25.1 34.0
- market risk 18.4 18.9 35.3
- operational risk 8.5 11.8 11.9
102.8 107.1 140.2
For the notes to this table refer to page 1.
Appendix 1 - Citizens Financial Group (US dollar)
Quarter ended
31 March 31 December 31 March
2015 2014 2014
Income statement $m $m $m
Net interest income 837 846 809
Net fees and commissions 272 293 279
Other non-interest income 97 69 99
Non-interest income 369 362 378
Total income 1,206 1,208 1,187
Direct expenses
- staff costs (436) (417) (416)
- other costs (313) (408) (412)
Restructuring costs (10) (32) -
Operating expenses (759) (857) (828)
Profit before impairment losses 447 351 359
Impairment losses (58) (73) (121)
Operating profit 389 278 238
Operating profit - adjusted (1) 399 310 238
Average exchange rate - US$/£ 1.514 1.582 1.655
Performance ratios
Return on equity (2) 7.2% 5.3% 4.7%
Return on equity - adjusted (1,2) 7.4% 5.9% 4.7%
Net interest margin 2.83% 2.86% 2.94%
Cost:income ratio 63% 71% 70%
Cost:income ratio - adjusted (1) 62% 68% 70%
31 March 31 December 31 March
2015 2014 2014
Capital and balance sheet $bn $bn $bn
Funded assets 135.6 132.0 126.2
Total assets 136.3 132.6 126.8
Net loans and advances to customers 94.1 93.1 87.9
Risk elements in lending 2.0 2.1 2.2
Impairment provisions (0.8) (0.8) (0.9)
Customer deposits (excluding repos) 97.7 94.6 91.6
Risk-weighted assets (3) 106.9 106.8 102.2
Spot exchange rate 1.485 1.562 1.668
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.
Quarter ended
31 March 31 December 31 March
2015 2014 2014
£m £m £m
Income statement
Net interest income (8) (17) (5)
Net fees and commissions 3 15 14
Income from trading activities (1) 8 (207) 16
Other operating income (1) 117 24 48
Non-interest income 128 (168) 78
Total income 120 (185) 73
Direct expenses
- staff costs (25) (41) (38)
- other costs (6) (29) (18)
Indirect expenses (17) (25) (23)
Restructuring costs - (3) -
Operating expenses (48) (98) (79)
Profit/(loss) before impairment losses 72 (283) (6)
Impairment releases/(losses) (1) 109 681 (108)
Operating profit/(loss) 181 398 (114)
Operating profit/(loss) - adjusted (2) 181 401 (114)
Total income
Ulster Bank (17) 8 (13)
Real Estate Finance 25 59 83
Corporate 91 (75) (2)
Markets 21 (177) 5
Total income 120 (185) 73
` ` `
Impairment (releases)/losses
Ulster Bank (139) (712) 52
Real Estate Finance (28) 10 89
Corporate 10 10 (34)
Markets 48 11 1
Total impairment (releases)/losses (109) (681) 108
Loan impairment charge as % of gross loans and advances (3)
Ulster Bank (8.6%) (25.9%) 1.3%
Real Estate Finance (3.2%) 1.0% 4.1%
Corporate 0.9% 0.6% (1.5%)
Markets (2.0%) - -
Total (4.2%) (12.6%) 1.2%
Notes:
(1) Asset disposals contributed £119 million (Q4 2014 - £291 million; Q1 2014 - £56 million) to RCR's operating profit: impairment provision releases of £64 million (Q4 2014 - £321 million; Q1 2014 - £64 million); £19 million loss in income from trading activities (Q4 2014 - £11 million loss; Q1 2014 - £5 million loss) and £74 million gain in other operating income (Q4 2014 - £19 million loss; Q1 2014 - £3 million loss).
(2) Excluding restructuring costs.
(3) Includes disposal groups.
Appendix 1 - RBS Capital Resolution
31 March 31 December 31 March
2015 2014 2014
£bn £bn £bn
Capital and balance sheet
Loans and advances to customers (gross) (1) 15.1 21.9 34.0
Loan impairment provisions (7.1) (10.9) (15.7)
Net loans and advances to customers 8.0 11.0 18.3
Debt securities 0.8 1.0 2.2
Funded assets 11.1 14.9 24.3
Total assets 22.8 29.0 38.8
Risk elements in lending (1) 10.2 15.4 23.0
Provision coverage (2) 70% 71% 68%
Risk-weighted assets
- Credit risk
- non-counterparty 9.7 13.6 29.6
- counterparty 3.8 4.0 5.7
- Market risk 4.1 4.4 5.2
- Operational risk (0.4) - -
Total risk-weighted assets 17.2 22.0 40.5
Total RWA equivalent (3) 21.7 27.3 50.9
Gross loans and advances to customers (1)
Ulster Bank 6.5 11.0 15.5
Real Estate Finance 3.5 4.1 8.6
Corporate 4.5 6.2 9.1
Markets 0.6 0.6 0.8
15.1 21.9 34.0
Funded assets - Ulster Bank
Commercial real estate - investment 0.7 1.2 2.4
Commercial real estate - development 0.4 0.7 0.8
Other corporate 0.4 0.7 1.2
1.5 2.6 4.4
Funded assets - Real Estate Finance (4)
UK 2.3 2.5 4.7
Germany 0.3 0.4 1.4
Spain 0.5 0.5 0.6
Other 0.4 0.8 1.0
3.5 4.2 7.7
Funded assets - Corporate
Structured finance 0.9 1.7 2.2
Shipping 1.5 1.8 2.0
Other 1.8 2.3 4.4
4.2 5.8 8.6
Funded assets - Markets
Securitised products 1.5 1.8 3.0
Emerging markets 0.4 0.5 0.6
1.9 2.3 3.6
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
Beginning End of
of period Repayments Disposals (1) Impairments Other period
Quarter ended 31 March 2015 £bn £bn £bn £bn £bn £bn
Ulster Bank 2.6 - (1.1) 0.1 (0.1) 1.5
Real Estate Finance 4.2 (0.1) (0.5) - (0.1) 3.5
Corporate 5.8 (0.6) (1.2) - 0.2 4.2
Markets 2.3 (0.1) (0.3) - - 1.9
Total 14.9 (0.8) (3.1) 0.1 - 11.1
Risk-weighted assets
Beginning Risk Other (3) End of
of period Repayments Disposals (1) parameters (2) Impairments period
Quarter ended 31 March 2015 £bn £bn £bn £bn £bn £bn £bn
Ulster Bank 1.3 - (0.4) (0.2) - - 0.7
Real Estate Finance 4.7 (0.1) (0.5) (0.3) - (0.1) 3.7
Corporate 7.2 (0.3) (1.3) (0.9) - 0.2 4.9
Markets 8.8 (0.2) (0.4) - - (0.3) 7.9
Total 22.0 (0.6) (2.6) (1.4) - (0.2) 17.2
Capital deductions
Beginning Risk Impairments Other (3) End of
of period Repayments Disposals (1) parameters (2) period
Quarter ended 31 March 2015 £m £m £m £m £m £m £m
Ulster Bank 258 - (107) 13 85 (13) 236
Real Estate Finance 111 (20) 1 76 8 (18) 158
Corporate 112 (56) (67) 41 (19) 4 15
Markets 53 (3) (5) (5) - (3) 37
Total 534 (79) (178) 125 74 (30) 446
RWA equivalent (4)
Beginning Risk Impairments Other (3) End of
of period Repayments Disposals (1) parameters (2) period
Quarter ended 31 March 2015 £bn £bn £bn £bn £bn £bn £bn
Ulster Bank 3.9 - (1.4) - 0.8 (0.2) 3.1
Real Estate Finance 5.8 (0.3) (0.4) 0.5 - (0.3) 5.3
Corporate 8.3 (0.9) (2.0) (0.5) (0.2) 0.3 5.0
Markets 9.3 (0.3) (0.4) - - (0.3) 8.3
Total 27.3 (1.5) (4.2) - 0.6 (0.5) 21.7
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 Quarter ended
REIL as a Provisions Provisions Impairment
Gross % of gross as a % as a % of (releases)/ Amounts
loans REIL Provisions loans of REIL gross loans losses (2) written-off
31 March 2015 (1) £bn £bn £bn % % % £m £m
By sector:
Commercial real estate
- investment 4.2 3.1 1.7 74 55 40 (54) 925
- development 4.2 3.9 3.4 93 87 81 (87) 1,621
Asset finance 2.0 0.9 0.4 45 44 20 64 37
Other corporate 4.7 2.2 1.6 47 73 34 (32) 622
Total 15.1 10.1 7.1 67 70 47 (109) 3,205
By donating segment
and sector
Ulster Bank
Commercial real estate
- investment 1.7 1.6 1.1 94 69 65 (58) 751
- development 3.6 3.5 3.2 97 91 89 (85) 1,589
Other corporate 1.2 1.2 1.0 100 83 83 4 527
Total Ulster Bank 6.5 6.3 5.3 97 84 82 (139) 2,867
Commercial Banking
Commercial real estate
- investment 1.0 0.6 0.2 60 33 20 - 36
- development 0.4 0.3 0.1 75 33 25 (3) 32
Other corporate 0.9 0.3 0.2 33 67 22 (10) 14
Total Commercial Banking 2.3 1.2 0.5 52 42 22 (13) 82
CIB
Commercial real estate
- investment 1.5 0.9 0.4 60 44 27 4 138
- development 0.2 0.1 0.1 50 100 50 1 -
Asset finance 2.0 0.9 0.4 45 44 20 64 36
Other corporate 2.6 0.7 0.4 27 57 15 (26) 82
Total CIB 6.3 2.6 1.3 41 50 21 43 256
Total 15.1 10.1 7.1 67 70 47 (109) 3,205
Of which:
UK 8.0 4.7 3.1 59 66 39 (79) 936
Europe 6.8 5.2 3.9 76 75 57 (70) 2,246
US 0.2 0.1 - 50 - - 25 -
RoW 0.1 0.1 0.1 100 100 100 15 23
Customers 15.1 10.1 7.1 67 70 47 (109) 3,205
Banks 0.5 0.1 0.1 20 100 20 - -
Total 15.6 10.2 7.2 65 70 46 (109) 3,205
Notes:
(1) Includes disposal groups.
(2) Impairment (releases)/losses include those relating to AFS securities; sector analyses above include allocation of latent impairment charges.
Impairment (releases)/losses include those relating to AFS securities; sector analyses above include allocation of latent
impairment charges.
Appendix 2
Go-forward business profile
Appendix 2 Go-forward business profile
RBS is committed to 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, the divestment
of the remaining stake in CFG, the exit of Williams & Glyn and the continued run down of RCR. Significant progress towards
these exits is expected in 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 business profile (pro forma) Exit group overview (pro forma)
International Total
UK Ulster Commercial Private CIB go- Other go- Total go- CIB Williams private Other exit Total
Quarter ended and as at PBB (1) Bank Banking Banking (2) forward (3) forward (4) forward legacy (3) & Glyn (5) banking Citizens RCR investments group RBS
31 March 2015 £bn £bn £bn £bn £bn £bn £bn £bn £bn £bn £bn £bn £bn £bn £bn
Total income 1.2 0.2 0.8 0.2 0.5 - 2.9 0.3 0.2 - 0.8 0.1 - 1.4 4.3
Total operating expenses
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