REG - Royal Bk Scot.Grp. - Final Results <Origin Href="QuoteRef">RBS.L</Origin> - Part 5
24/02/2017 07:07
- Part 5: For the preceding part double click ID:nRSX7681Xd
5.7
Reverse repos 38.6 42.7 38.6
Securities 22.0 26.4 23.7
Cash and eligible bills 13.4 6.4 14.3
Other 6.2 11.2 4.9
Total funded assets 100.9 112.5 103.3
Notes:
(1) Excludes reverse repurchase agreements and includes disposal groups.
(2) Williams & Glyn refers to the business formerly intended to be divested as a separate legal entity and comprises RBS England and Wales branch-based businesses, along with certain small and medium enterprises and corporate activities across the UK. During the period presented W&G has not operated as a separate legal entity.
(3) Excludes disposal groups.
Segment performance
UK Personal & Business Banking
2016 compared with 2015
● Operating profit was £1,381 million, compared with £1,030 million in 2015, and included a £634 million litigation and conduct charge, principally in respect of additional PPI provisions. Adjusted operating profit of £2,202 million was £33 million, or 2%,
higher than 2015 principally reflecting increased net interest income combined with lower costs, partially offset by a higher impairment charge.
● Total income of £5,290 million increased by £90 million, or 2%, compared with 2015, despite the lower rate environment depressing earnings on current accounts and the impact of regulatory changes impacting interchange fees. Net interest income was robust,
increasing by £135 million, or 3%, reflecting continued strong asset growth combined with the active repricing of our deposit book. This more than offset the impact of lower current account hedge returns and lower mortgage margins. Net interest margin
declined by 17 basis points to 3.01% reflecting the change in the overall portfolio mix and reduced mortgage margins. During the second half of 2016 mortgage SVR balances stabilised at approximately 12%, broadly in line with historical levels.
● Non-interest income reduced by £45 million, or 4%, principally reflecting lower credit card interchange fees, following regulatory changes introduced in 2015. In addition, cash back payments on the Reward account have impacted fee income, however, we have
seen increased levels of customer engagement. Partially offsetting, we recognised a £19 million debt sale gain in 2016.
● Adjusted operating expenses decreased by £33 million, or 1%, to £3,005 million. Direct staff costs were £111 million, or 14%, lower driven by an 18% reduction in headcount reflecting the continued movement to digital channels, exiting of business lines
with returns below required levels and some centralisation of administrative activities. This was partially offset by additional investment costs of £102 million, including one-off intangible asset write-downs of £56 million in 2016, together with a £21
million increase in regulatory charges.
● The net impairment charge of £83 million reflects continued benign credit conditions and compared with a £7 million release in 2015, with the increase principally reflecting reduced portfolio provision releases. The default driven charge was 13% lower than
2015 with REIL 26% lower and provision coverage remaining strong at 65%.
● Net loans and advances of £132.1 billion increased by £12.3 billion, or 10%, compared with 2015 principally driven by mortgage growth of 12%. We continue to see positive momentum across business and personal unsecured lending, up by 6%, excluding
transfers(1), and 7% respectively.
● We continue to build on our strong mortgage market position with gross balances increasing by 12% to £117.1 billion compared with 3% growth for the overall mortgage market. Gross new lending in 2016 was £29.8 billion, representing a market share of
approximately 12% compared with a stock share of approximately 8.8% at 31 December 2016, up from 8.2% in 2015. New business margins were stable over 2016 whilst margins on existing customers remortgaging have improved. Gross new business lending to small
and medium-sized enterprises of £1.6 billion was up 43% compared with 2015. Personal loan gross new lending of £2.3 billion was up 24% supported by the launch of functionality for a customer to apply via the mobile app combined with improvements to
customer experience. We have continued to take a cautionary risk approach to personal unsecured lending. As a result, personal unsecured cards and overdrafts balances have decreased by £0.3 billion, or 5%, compared with 2015, and margins have widened.
Note:
(1) The business transfers included: net loans and advances to customers of £0.8 billion as at 31 December 2016.
Segment performance
● Deposit balances performed strongly, increasing by £8.0 billion, or 6%, to £145.8 billion driven by 13% growth in personal current account balances. Personal savings balances increased 3% despite re-pricing activity.
● RWAs decreased by £0.6 billion, or 2%, to £32.7 billion due to asset mix benefits and overall improved credit quality, largely reflecting the current benign credit conditions, partly offset by increased lending.
Q4 2016 compared with Q3 2016
● Operating profit decreased by £286 million to £281 million. Adjusted operating profit of £546 million was £45 million lower than Q3 2016 primarily reflecting £35 million of intangible asset write downs and the annual UK bank levy charge of £34 million.
● Income was broadly stable in the quarter. Net interest income continued to build momentum, increasing by £8 million driven by further strong lending growth across mortgages, business lending and personal loans, with NIM broadly stable at 2.94%. As mortgage
SVR balances and margins begin to stabilise, we have seen mortgage income growth for the fourth consecutive quarter. Non interest income declined by £5 million, or 2%, reflecting lower seasonal credit card interchange fees and increased Reward cash-back
payments, partially offset by a £15 million gain following the re-commencement of debt sales in our non-performing loans book.
● Adjusted operating expenses increased £59 million, or 8%, principally due to intangible asset write downs of £35 million and the annual UK bank levy charge of £34 million. Excluding these items, adjusted operating expenses reduced by £10 million, or 1%,
due to further improvements in digital and process automation delivering lower headcount and staff costs.
● Net loans and advances grew by £2.5 billion to £132.1 billion with gross mortgage balances up £2.4 billion.
● Deposits grew by £2.1 billion to £145.8 billion driven by strong growth in current account balances, £1.4 billion.
Q4 2016 compared with Q4 2015
● Operating profit increased by £571 million to £281 million, predominantly driven by lower litigation and conduct charges. Adjusted operating profit increased by £142 million to £546 million reflecting an £85 million increase in income and a £100 million
reduction in adjusted operating expenses partially offset by a £43 million increase in impairments.
● Total income increased by £85 million, or 7%, to £1,339 million. Net interest income increased by £63 million, or 6%, to £1,093 million reflecting mortgage volume growth, partially offset by a 9 basis point reduction in net interest margin to 2.94%.
● Adjusted operating expenses reduced by £100 million, or 11%, primarily driven by lower headcount.
● A net impairment loss of £16 million compared with a £27 million release in Q4 2015.
Segment performance
Ulster Bank RoI
2016 compared with 2015
● Operating profit decreased by E338 million to E24 million compared with 2015 primarily due to an increase in litigation and conduct costs of E229 million and a E56 million reduction in net impairment releases. Adjusted operating profit of E280 million was E85 million, or 23%, lower than prior year as a reduction in adjusted operating expenses was more than offset by the non recurrence of one-off income benefits in 2015 and lower impairment releases.
● Net interest income was stable year on year. Net interest margin increased by 5 basis points to 1.62%, compared with 2015, driven by a continued reduction in the cost of deposits and a reduced volume of low yielding liquid assets, partly offset by reduced income on free funds.
● Non interest income decreased by E52 million, or 20%, principally reflecting a one-off E33 million gain realised on the closure of a foreign exchange exposure in 2015 and a E13 million interim adjustment to the pricing of FX transactions between Ulster Bank RoI and NatWest Markets in 2016, pending completion of a detailed pricing review.
● Adjusted operating expenses reduced by E28 million, or 5%, to E559 million reflecting a combination of progress made on cost saving initiatives, the non recurrence of one off costs in 2015 and one off accrual releases in 2016.
● A realignment of costs within direct expenses contributed to an increase in staff costs in 2016 with an offsetting reduction in other costs. This reflects the reallocation of 660 staff from UK PBB to align with current management responsibilities following the separation of the Northern Ireland and Republic of Ireland businesses. Excluding the reallocation from UK PBB and staff supporting the tracker mortgage examination and asset disposal programmes, headcount decreased by 9% year on
year.
● Litigation and conduct costs of E211 million principally reflects a provision for remediation and programme costs associated with an industry wide examination of tracker mortgages. Restructuring costs increased by E27 million to E48 million, primarily driven by costs associated with asset disposal activity.
● A net impairment release of E138 million comprised write-backs associated with asset disposals and benefited from improved macroeconomic conditions.
● The sale of a portfolio of loans contributed to a E0.6 billion, or 13%, reduction in risk elements in lending in 2016 to E4.1 billion. This was partially offset by a widening of the definition of loans which are considered to be impaired to include multiple forbearance arrangements and probationary mortgages. The provision coverage ratio reduced from 55% in 2015 to 34% in 2016 largely reflecting a further de-risking of the balance sheet following recent asset sales of largely non
-performing loans.
● Whilst gross new lending increased 31% in 2016, net loans and advances to customers decreased E0.6 billion, or 3%, as new lending was offset by asset disposals and repayments. The low yielding tracker mortgage portfolio declined by E1.0 billion, or 9%, to E10.8 billion at 31 December 2016 supported by repayments and asset disposals.
● RWAs reduced by E5.3 billion or 20% during 2016 to E21.1 billion driven by the sale of a portfolio of loans combined with adjustments to the mortgage modelling approach and an improvement in the macro economic environment. RWAs on the tracker mortgage portfolio reduced by E3.3 billion, or 31%, during 2016 to E7.4 billion.
● Loan:deposit ratio decreased 10 percentage points to 117% in 2016 supported by a E1.0 billion growth in deposits and reduced net loans following recent asset sales.
Segment performance
Q4 2016 compared with Q3 2016
● Adjusted operating profit of E44 million was E37 million lower than Q3 2016. Adjusted operating expenses increased by E31 million driven by an impairment of intangible assets and a reduction in costs recharged to other business segments. In addition, non-interest income reduced by E12 million principally reflecting an interim adjustment to the pricing of FX transactions between Ulster Bank RoI and NatWest Markets pending completion of a detailed pricing review.
● Litigation and conduct costs increased E93 million primarily reflecting a further provision in respect of remediation and programme costs associated with an industry wide examination of tracker mortgages.
● The recent sale of a portfolio of loans contributed to a E0.5 billion reduction in net loans and advances and a E1.5 billion reduction in risk elements in lending.
● Risk weighted assets decreased by E3.6 billion in the quarter to E21.1 billion largely reflecting the sale of a portfolio of loans combined with enhancements to mortgage models and an improvement in the macro economic environment.
Q4 2016 compared with Q4 2015
● Adjusted operating profit of E44 million was E28 million higher than Q4 2015 primarily driven by increased net impairment releases.
● Net interest margin increased by 14 basis points to 1.59% primarily driven by one-off movements in income recognised on non performing loans in both Q4 2015 and Q4 2016.
Commercial Banking
2016 compared with 2015
● Operating profit was £742 million compared with £1,264 million in 2015 and included a £423 million litigation and conduct charge, principally relating to a provision in respect of the FCA review of RBS's treatment of SMEs. Adjusted operating profit of £1,273 million was £111 million, or 8%, lower than 2015, mainly reflecting increased impairments, partially offset by increased income.
● Total income increased by £161 million to £3,415 million. Excluding the impact of transfers(1), income increased by £21 million, or 1%, reflecting higher asset and deposit volumes. Net interest margin fell by 12 basis points to 1.76% driven by asset margin pressure in a competitive market and low rate environment.
● Adjusted operating expenses of £1,936 million were £135 million higher than 2015. Excluding business transfers, adjusted operating expenses increased by £51 million reflecting a £25 million intangible asset write-down and increased investment spend.
● Net impairment losses increased by £137 million to £206 million primarily reflecting a single name charge taken in respect of the oil and gas portfolio.
● Net loans and advances of £100.1 billion increased by £8.8 billion, or 10%, compared with 2015 reflecting increased borrowing across a number of sectors.
● RWAs were £78.5 billion, an increase of £6.2 billion compared with 2015 reflecting asset growth partially offset by reduced RWA intensity.
Note:
(1) The business transfers included impact of: total income of £218 million (2015 - £79 million; Q4 2016 - £48 million; Q4 2015 - £51 million; Q3 2016 - £58 million); operating expenses of £109 million (2015 - £25 million; Q4 2016 - £29 million; Q4 2015 - £19
million; Q3 2016 - £28 million); impairment losses of £50 million (2015 - £1 million recoveries; Q4 2016 - nil; Q4 2015 - nil; Q3 2016 - £7 million recoveries) net loans and advances to customers of £6.2 billion (31 December 2015 - £5.0 billion; 30
September 2016 - £6.7 billion); customer deposits of £0.4 billion (31 December 2015 - nil; 30 September 2016 - £0.6 billion); and RWAs of £9.3 billion (31 December 2015 - £8.4 billion; 30 September 2016 - £7.4 billion).
Segment performance
Q4 2016 compared with Q3 2016
● An operating loss of £225 million compared with an operating profit of £355 million in Q3 2016 reflecting increased litigation and conduct charges. Adjusted operating profit of £228 million was £154 million lower than Q3 2016 driven by increased adjusted operating expenses and increased impairments.
● Adjusted operating expenses increased by £109 million principally due to the annual UK bank levy charge, £90 million.
● Net impairment losses of £83 million increased by £63 million compared with Q3 2016 largely reflecting single name charges in the quarter.
● Net loans and advances continued to grow in the quarter, up £0.3 billion, similar to the growth achieved in Q3 2016, but at a slower rate than in H1 2016.
Q4 2016 compared with Q4 2015
● An operating loss of £225 million compared with an operating profit of £140 million in Q4 2015 reflecting increased litigation and conduct charges. Adjusted operating profit increased by £42 million to £228 million driven by higher income and lower adjusted operating expenses.
● Total income increased by £70 million, or 9%, principally reflecting higher asset and deposit volumes, partially offset by asset margin pressure.
● Adjusted operating expenses reduced by £28 million reflecting cost efficiencies and a lower bank levy.
Private Banking
2016 compared with 2015
● An operating profit of £111 million compared with an operating loss of £470 million in 2015 which included a goodwill impairment of £498 million. Adjusted operating profit of £149 million was £36 million, or 32%, higher than 2015 reflecting increased income, lower adjusted operating expenses and lower impairments.
● Total income increased by £13 million to £657 million primarily reflecting higher asset volumes. Net interest margin fell by 9 basis points to 2.66% reflecting asset margin pressures.
● Adjusted operating expenses of £511 million were £7 million, or 1%, lower than 2015 driven by reductions in the direct cost base, with employee numbers down 10%, partially offset by increased infrastructure costs absorbed following the sale of the international business.
● Net loans and advances of £12.2 billion increased by £1.0 billion compared with 2015 driven by mortgages. Assets under management of £17.0 billion were £3.1 billion higher compared with 2015 reflecting underlying growth and equity index inflation. In addition, investment cash balances were included in assets under management for the first time in Q3 2016, excluding this, growth was £2.0 billion.
Q4 2016 compared with Q3 2016
● Operating profit decreased by £40 million to £10 million. Adjusted operating profit of £23 million was £30 million lower than Q3 2016 driven by increased adjusted operating expenses partially offset by a net impairment release in Q4 2016.
● Adjusted operating expenses increased by £37 million due to the annual UK bank levy charge, £19 million, and a £13 million VAT recovery in Q3 2016.
● Net loans and advances increased by £0.4 billion to £12.2 billion due to increased mortgage lending. Assets under management increased by £0.5 billion to £17.0 billion driven by market movements.
Segment performance
Q4 2016 compared with Q4 2015
● An operating profit of £10 million compared with an operating loss of £516 million in Q4 2015 which included a goodwill impairment of £498 million. An adjusted operating profit of £23 million compared with a loss of £13 million in Q4 2015 reflecting lower adjusted operating expenses and a net impairment release in Q4 2016.
● Income increased by £3 million, or 2%, principally reflecting higher asset volumes, partially offset by asset margin pressure.
● Adjusted operating expenses reduced by £13 million, or 8%, reflecting cost efficiencies, with headcount down 10%.
RBS International
2016 compared with 2015
● Operating profit decreased by £17 million to £190 million principally reflecting increased impairment losses and operating expenses. Adjusted operating profit of £195 million was £16 million lower than 2015.
● Total income increased by £7 million to £374 million primarily reflecting higher asset volumes. Net interest margin fell by 12 basis points to 1.36% reflecting asset margin pressures.
● Adjusted operating expenses of £169 million were £13 million, or 8%, higher than 2015, reflecting a number of one-off charges.
● A net impairment loss of £10 million was reported in 2016.
● Net loans and advances of £8.8 billion increased by £1.5 billion compared with 2015 reflecting balance draw-downs in the corporate lending portfolio, mainly within the Funds sector.
● Customer deposits of £25.2 billion grew by £3.9 billion compared with 2015 principally reflecting the transfer of the Luxembourg branch into RBSI from Capital Resolution during Q2 2016.
● RWAs were £9.5 billion, an increase of £1.2 billion compared with 2015 reflecting asset growth.
Q4 2016 compared with Q3 2016
● Operating profit decreased by £21 million to £33 million. Adjusted operating profit of £36 million was £17 million lower than Q3 2016 primarily driven by increased adjusted operating expenses.
● Adjusted operating expenses increased by £21 million, or 53%, principally due to the annual UK bank levy charge, £19 million.
● Net loans and advances were broadly stable compared with Q3 2016.
Q4 2016 compared with Q4 2015
● Operating profit decreased by £22 million to £33 million. Adjusted operating profit decreased by £18 million to £36 million primarily driven by increased adjusted expenses.
● Adjusted operating expenses increased by £20 million, or 49%, reflecting an increased bank levy and a number of one-off charges.
Segment performance
NatWest Markets
2016 compared with 2015
● An operating loss of £386 million compared with an operating loss of £837 million in 2015 and included litigation and conduct costs of £528 million. The adjusted operating profit was £201 million compared with a loss of £55 million in 2015. The increase was driven by lower adjusted operating expenses and increased income.
● Total income increased by £47 million to £1,574 million. Excluding the impact of transfers(1), adjusted income increased by £212 million, or 16%, to £1,521 million. The increase was driven by Rates and Currencies, reflecting sustained customer activity throughout the year and favourable market conditions following the EU referendum and subsequent central bank actions.
● Operating expenses decreased from £2,369 million to £1,960 million in 2016, driven by lower restructuring costs and lower adjusted expenses. Excluding business transfers(1), adjusted expenses reduced by £116 million, or 8%, reflecting c.£250 million of cost reductions partially offset by higher investment spend.
● NatWest Markets are currently in the middle of a substantial investment programme which will equip the franchise for new regulatory requirements and provide opportunity to reduce back office support costs. We expect that NatWest Markets adjusted operating expenses will reduce by around £500 million over the next four years.
● Funded assets decreased by £2.4 billion compared with 2015 to £100.9 billion, as the business continues to work through re-shaping, despite the headwind from foreign exchange movements following the EU referendum and the substantial weakening of sterling.
● RWAs increased by £2.1 billion compared with 2015 to £35.2 billion principally due to business movements and the impact of the weakening of sterling.
Q4 2016 compared with Q3 2016
● An operating loss of £565 million compared with an operating profit of £90 million in Q3 2016 reflecting increased litigation and conduct charges. Adjusted operating loss of £24 million compared with an adjusted operating profit of £184 million in Q3 2016 primarily driven by lower income.
● Total income decreased by £186 million to £285 million. Adjusted income reduced by £212 million to £314 million following a particularly strong Q3 2016, which benefitted from sustained customer activity and favourable market conditions following the EU referendum and subsequent central bank actions, in Rates.
● Operating expenses increased by £469 million to £850 million. Adjusted operating expenses reduced by £4 million as lower investment spend, following the elevated Q3 2016 charge, more than offset the annual UK bank levy charge of £13 million.
● Funded assets decreased by £11.6 billion to £100.9 billion in the quarter reflecting seasonally low levels of activity at the end of the year.
Q4 2016 compared with Q4 2015
● An operating loss of £565 million compared with a loss of £245 million in Q4 2015 reflecting increased litigation and conduct charges. An adjusted operating loss of £24 million compared with a loss of £112 million in Q4 2015 reflecting higher income and lower adjusted operating expenses.
● Total income increased by £99 million to £285 million. Adjusted income increased by £62 million, or 25%, principally reflecting Currencies driven by heightened levels of customer activity around the US election.
● Operating expenses increased by £419 million to £850 million. Adjusted expenses decreased by £26 million principally due to lower staff costs and legal expenditure.
Note:
(1) NatWest Markets results include the following financials for businesses subsequently transferred to Commercial Banking for 2015: total income of £98 million and operating expenses of £31 million.
Segment performance
Capital Resolution
2016 compared with 2015
● RWAs decreased by £14.5 billion, or 30%, to £34.5 billion reflecting disposal activity partially offset by an increase due to the weakening of sterling. Since the end of 2014, RWAs have reduced by £60.6 billion, or 64%.
● Funded assets decreased by £25.8 billion to £27.6 billion with the most significant reductions across Markets and GTS.
● An operating loss of £4,870 million compared with a loss of £3,687 million in 2015 and included litigation and conduct costs of £3,413 million. The adjusted operating loss was £1,432 million compared with £412 million in 2015.
● Income disposal losses were £572 million, £205 million higher than 2015, and included £259 million in respect of the shipping portfolio. In addition, a funding valuation adjustment charge of £170 million was incurred in 2016.
● Operating expenses decreased from £4,951 million to £4,255 million in 2016 principally driven by lower adjusted operating expenses and lower restructuring costs. Adjusted expenses decreased by £775 million, or 50%, to £764 million, principally reflecting a 1,000 reduction in headcount.
● A net impairment loss of £253 million compared with a net impairment release of £725 million in 2015 and principally comprised charges relating to a number of shipping assets (£424 million).
Q4 2016 compared with Q3 2016
● RWAs decreased by £4.1 billion to £34.5 billion reflecting disposal activity partially offset by an increase due to the weakening of sterling.
● Funded assets decreased by £7.3 billion to £27.6 billion with the most significant reductions across Markets and GTS.
● An operating loss of £3,503 million compared with an operating loss of £454 million in Q3 2016 and included litigation and conduct costs of £3,156 million. The adjusted operating loss was £331 million compared with £118 million in Q3 2016, with the increase primarily reflecting increased disposal losses.
● Adjusted expenses increased by £3 million to £176 million and included the annual UK bank levy charge of £22 million.
Q4 2016 compared with Q4 2015
● An operating loss of £3,503 million compared with an operating loss of £1,902 million in Q4 2015 and included litigation and conduct costs of £3,156 million. The adjusted operating loss was £331 million compared with a loss of £271 million in Q4 2015.
● Adjusted expenses decreased by £218 million, or 55%, to £176 million principally reflecting a 1,000 reduction in headcount.
Segment performance
Williams & Glyn
2016 compared with 2015
● An operating profit of £345 million compared with £431 million in 2015. Adjusted operating profit of £402 million was £57 million lower than 2015 reflecting higher adjusted operating expenses and increased impairments.
● Total income increased by £4 million to £837 million as the benefit of increased volumes was mainly offset by margin pressure from the impact of the competitive lending environment and a further reduction in interest rates. Net interest margin reduced by
16 basis points to 2.71%.
● Operating expenses of £450 million increased by £63 million, or 16%, and included a £29 million increase in restructuring costs. Adjusted operating expenses increased by £34 million, or 9%, to £393 million reflecting activity undertaken in H1 to create a
standalone bank, partially offset by the benefit of the commercial business restructuring which was announced in Q4 2015. Following the announcement to discontinue the programme to create a cloned banking platform, a further restructuring programme
commenced in Q4 2016 resulting in an additional reduction in headcount.
● Net impairment losses remained low at £42 million compared with a loss of £15 million in 2015. The 2015 charge benefited from a number of releases, totalling £28 million, in the commercial business.
● Net loans and advances increased by £0.6 billion, or 3%, to £20.6 billion principally reflecting growth in mortgages of £0.4 billion, or 4%.
● Customer deposits were broadly stable at £24.2 billion, a £1.2 billion increase in retail deposits was offset by a £1.1 billion reduction in commercial deposits.
Q4 2016 compared with Q3 2016
● Operating profit increased by £25 million to £109 million driven by a £14 million reduction in operating expenses and a £8 million increase in income.
● Total income increased by £8 million to £217 million driven by an improvement in net interest margin with volumes remaining stable.
● Adjusted operating expenses reduced by £2 million to £97 million reflecting the restructuring activities following the announcement to discontinue the programme to create a cloned banking platform. Operating expenses reduced by £14 million principally due
to there being no restructuring costs incurred in Q4 2016 compared with £12 million in Q3 2016.
Q4 2016 compared with Q4 2015
● Operating profit increased by £56 million to £109 million reflecting a £10 million reduction in adjusted operating expenses, a £9 million reduction in impairments and a £9 million increase in income driven by increased volumes. In addition, operating expenses in Q4 2015 included a restructuring charge of £28 million in commercial banking.
Segment performance
Central items
2016 compared with 2015
● Central items not allocated represented a charge of £1,615 million in 2016, compared with a £903 million charge in 2015, and included restructuring costs of £1,482 million and litigation and conduct costs of £697 million. Restructuring costs included a
£750 million provision in respect of the 17 February 2017 update on RBS's remaining State Aid obligation regarding Williams & Glyn. Treasury funding costs were a charge of £94 million, compared with a gain of £169 million in 2015, and included a £510
million charge for volatile items under IFRS, due to reductions in long term interest rates, and a £349 million foreign exchange gain, principally associated with the weakening of sterling against the US dollar. In addition, there was a £126 million loss
on redemption of own debt in 2016. These were partially offset by a VAT recovery of £227 million and a £246 million gain on the sale of the stake in VISA Europe.
Q4 2016 compared with Q3 2016
● Central items not allocated represented a charge of £161 million in the quarter, compared with a £545 million charge in Q3 2016, and included restructuring costs of £836 million and a net credit of £192 million for litigation and conduct costs. Q4 2016
Treasury funding costs were a gain of £465 million (compared with a charge of £177 million in Q3 2016) and included a £308 million IFRS volatility gain and a foreign exchange gain of £140 million. Partially offsetting this was a £77 million own credit
adjustment charge as spreads tightened.
Q4 2016 compared with Q4 2015
● Central items not allocated represented a charge of £161 million in the quarter, compared with a £264 million charge in Q4 2015, and included restructuring costs of £836 million and a net credit of £192 million for litigation and conduct costs. Q4 2016
Treasury funding costs were a gain of £465 million (compared with a gain of £193 million in Q4 2015) which included a £308 million IFRS volatility gain and a foreign exchange gain of £140 million. Partially offsetting this was a £77 million own credit
adjustments charge as spreads tightened.
Statutory results
Condensed consolidated income statement for the period ended 31 December 2016
Year ended Quarter ended
31 December 31 December 31 December 30 September 31 December
2016 2015 2016 2016 2015
£m £m £m £m £m
Interest receivable 11,258 11,925 2,770 2,796 2,855
Interest payable (2,550) (3,158) (562) (629) (693)
Net interest income (1) 8,708 8,767 2,208 2,167 2,162
Fees and commissions receivable 3,340 3,742 821 843 904
Fees and commissions payable (805) (809) (213) (200) (251)
Income from trading activities 974 1,060 590 401 15
(Loss)/gain on redemption of own debt (126) (263) 1 3 (263)
Other operating income 499 426 (191) 96 (83)
Non-interest income 3,882 4,156 1,008 1,143 322
Total income 12,590 12,923 3,216 3,310 2,484
Staff costs (5,124) (5,726) (1,142) (1,287) (1,277)
Premises and equipment (1,388) (1,827) (382) (354) (447)
Other administrative expenses (8,745) (6,288) (5,511) (1,095) (3,192)
Depreciation and amortisation (778) (1,180) (249) (175) (186)
Write down of goodwill and other intangible assets (159) (1,332) (70) - (659)
Operating expenses (16,194) (16,353) (7,354) (2,911) (5,761)
(Loss)/profit before impairment (losses)/releases (3,604) (3,430) (4,138) 399 (3,277)
Impairment (losses)/releases (478) 727 75 (144) 327
Operating (loss)/profit before tax (4,082) (2,703) (4,063) 255 (2,950)
Tax (charge)/credit (1,166) (23) (244) (582) 261
Loss from continuing operations (5,248) (2,726) (4,307) (327) (2,689)
Profit from discontinued operations, net of tax - 1,541 - - 90
Loss for the period (5,248) (1,185) (4,307) (327) (2,599)
Attributable to:
Non-controlling interests 10 409 (27) 7 20
Preference share and other dividends 504 385 161 135 121
Dividend access share 1,193 - - - -
Ordinary shareholders (6,955) (1,979) (4,441) (469) (2,740)
(Loss)/earnings per ordinary share (EPS)
Basic EPS from continuing and discontinued operations (59.5p) (17.2p) (37.7p) (3.9p) (23.6p)
Basic EPS from continuing operations (59.5p) (27.7p) (37.7p) (3.9p) (24.5p)
Note:
(1) Negative interest on loans and advances is classed as interest payable.
Statutory results
Condensed consolidated statement of comprehensive income for the period ended 31 December 2016
Year ended Quarter ended
31 December 31 December 31 December 30 September 31 December
2016 2015 2016 2016 2015
£m £m £m £m £m
Loss for the period (5,248) (1,185) (4,307) (327) (2,599)
Items that do not qualify for reclassification
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