REG - Royal Bk Scot.Grp. - Final Results <Origin Href="QuoteRef">RBS.L</Origin> - Part 7
24/02/2017 07:07
- Part 7: For the preceding part double click ID:nRSX7681Xf
included in the
consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.
By order of the Board
Howard Davies Ross McEwan Ewen Stevenson
Chairman Chief Executive Chief Financial Officer
23 February 2017
Board of directors
Chairman Executive directors Non-executive directors
Howard Davies Ross McEwanEwen Stevenson Sandy CrombieFrank DangeardAlison DavisMorten FriisRobert Gillespie
Penny Hughes
Brendan NelsonBaroness NoakesMike Rogers
Forward-looking statements
Cautionary statement regarding forward-looking statements
Certain sections in this document contain 'forward-looking statements' as that term is defined in the United States Private
Securities Litigation Reform Act of 1995, such as statements that include the words 'expect', 'estimate', 'project',
'anticipate', 'commit', 'believe', 'should', 'intend', 'plan', 'could', 'probability', 'risk', 'Value-at-Risk (VaR)',
'target', 'goal', 'objective', 'may', 'endeavour', 'outlook', 'optimistic', 'prospects' and similar expressions or
variations on these expressions.
In particular, this document includes forward-looking statements relating, but not limited to: future profitability and
performance, including financial performance targets such as return on tangible equity; cost savings and targets, including
cost:income ratios; litigation and government and regulatory investigations, including the timing and financial and other
impacts thereof; structural reform and the implementation of the UK ring-fencing regime; the implementation of RBS's
transformation programme, including the further restructuring of the NatWest Markets business; the satisfaction of the
Group's residual EU State Aid obligations; the continuation of RBS's balance sheet reduction programme, including the
reduction of risk-weighted assets (RWAs) and the timing thereof; capital and strategic plans and targets; capital,
liquidity and leverage ratios and requirements, including CET1 Ratio, RWA equivalents (RWAe), Pillar 2 and other regulatory
buffer requirements, minimum requirement for own funds and eligible liabilities, and other funding plans; funding and
credit risk profile; capitalisation; portfolios; net interest margin; customer loan and income growth; the level and extent
of future impairments and write-downs, including with respect to goodwill; restructuring and remediation costs and charges;
future pension contributions; RBS's exposure to political risks, operational risk, conduct risk, cyber and IT risk and
credit rating risk and to various types of market risks, including as interest rate risk, foreign exchange rate risk and
commodity and equity price risk; customer experience including our Net Promotor Score (NPS); employee engagement and gender
balance in leadership positions.
Limitations inherent to forward-looking statements
These statements are based on current plans, estimates, targets and projections, and are subject to significant inherent
risks, uncertainties and other factors, both external and relating to the Group's strategy or operations, which may result
in the Group being unable to achieve the current targets, predictions, expectations and other anticipated outcomes
expressed or implied by such forward-looking statements. In addition certain of these disclosures are dependent on choices
relying on key model characteristics and assumptions and are subject to various limitations, including assumptions and
estimates made by management. By their nature, certain of these disclosures are only estimates and, as a result, actual
future gains and losses could differ materially from those that have been estimated. Accordingly, undue reliance should not
be placed on these statements. Forward-looking statements speak only as of the date we make them and we expressly disclaim
any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained
herein to reflect any change in the Group's expectations with regard thereto or any change in events, conditions or
circumstances on which any such statement is based.
Important factors that could affect the actual outcome of the forward-looking statements
We caution you that a large number of important factors could adversely affect our results or our ability to implement our
strategy, cause us to fail to meet our targets, predictions, expectations and other anticipated outcomes or affect the
accuracy of forward-looking statements we describe in this document including in the risk factors set out in the Group's
2016 Annual Report and other uncertainties discussed in this document. These include the significant risks for RBS
presented by the outcomes of the legal, regulatory and governmental actions and investigations that RBS is or may be
subject to (including active civil and criminal investigations) and any resulting material adverse effect on RBS of
unfavourable outcomes and the timing thereof (including where resolved by settlement); economic, regulatory and political
risks, including as may result from the uncertainty arising from the EU Referendum; RBS's ability to satisfy its residual
EU State Aid obligations and the timing thereof; RBS's ability to successfully implement the significant and complex
restructuring required to be undertaken in order to implement the UK ring-fencing regime and related costs; RBS's ability
to successfully implement the various initiatives that are comprised in its transformation programme, particularly the
proposed further restructuring of the NatWest Markets business, the balance sheet reduction programme and its significant
cost-saving initiatives and whether RBS will be a viable, competitive, customer focused and profitable bank especially
after its restructuring and the implementation of the UK ring-fencing regime; the exposure of RBS to cyber-attacks and its
ability to defend against such attacks; RBS's ability to achieve its capital and leverage requirements or targets which
will depend in part on RBS's success in reducing the size of its business and future profitability as well as developments
which may impact its CET1 capital including additional litigation or conduct costs, additional pension contributions,
further impairments or accounting changes; ineffective management of capital or changes to regulatory requirements relating
to capital adequacy and liquidity or failure to pass mandatory stress tests; RBS's ability to access sufficient sources of
capital, liquidity and funding when required; changes in the credit ratings of RBS, RBS entities or the UK government;
declining revenues resulting from lower customer retention and revenue generation in light of RBS's strategic refocus on
the UK; as well as increasing competition from new incumbents and disruptive technologies.
Forward-looking statements
In addition, there are other risks and uncertainties that could adversely affect our results, ability to implement our
strategy, cause us to fail to meet our targets or the accuracy of forward-looking statements in this document. These
include operational risks that are inherent to RBS's business and will increase as a result of RBS's significant
restructuring initiatives being concurrently implemented; the potential negative impact on RBS's business of global
economic and financial market conditions and other global risks; the impact of a prolonged period of low interest rates or
unanticipated turbulence in interest rates, yield curves, foreign currency exchange rates, credit spreads, bond prices,
commodity prices, equity prices; basis, volatility and correlation risks; the extent of future write-downs and impairment
charges caused by depressed asset valuations; deteriorations in borrower and counterparty credit quality; heightened
regulatory and governmental scrutiny and the increasingly regulated environment in which RBS operates as well as
divergences in regulatory requirements in the jurisdictions in which RBS operates; the risks relating to RBS's IT systems
or a failure to protect itself and its customers against cyber threats, reputational risks; risks relating to increased
pension liabilities and the impact of pension risk on RBS's capital position; risks relating to the failure to embed and
maintain a robust conduct and risk culture across the organisation or if its risk management framework is ineffective;
RBS's ability to attract and retain qualified personnel; limitations on, or additional requirements imposed on, RBS's
activities as a result of HM Treasury's investment in RBS; the value and effectiveness of any credit protection purchased
by RBS; risks relating to the reliance on valuation, capital and stress test models and any inaccuracies resulting
therefrom or failure to accurately reflect changes in the micro and macroeconomic environment in which RBS operates, risks
relating to changes in applicable accounting policies or rules which may impact the preparation of RBS's financial
statements or adversely impact its capital position; the impact of the recovery and resolution framework and other
prudential rules to which RBS is subject; the recoverability of deferred tax assets by the Group; and the success of RBS in
managing the risks involved in the foregoing.
The forward-looking statements contained in this document speak only as at the date hereof, and RBS does not assume or
undertake any obligation or responsibility to update any forward-looking statement to reflect events or circumstances after
the date hereof or to reflect the occurrence of unanticipated events.
The information, statements and opinions contained in this document do not constitute a public offer under any applicable
legislation or an offer to sell or solicit of any offer to buy any securities or financial instruments or any advice or
recommendation with respect to such securities or other financial instruments.
Appendix 1
Segmental income statement reconciliations
Segmental income statement reconciliations
PBB CPB Central
Ulster Commercial Private RBS NatWest Capital Williams items & Total
UK PBB Bank RoI Banking Banking International Markets Resolution & Glyn other RBS
Year ended 31 December 2016 £m £m £m £m £m £m £m £m £m £m
Income statement
Total income - statutory 5,290 576 3,415 657 374 1,574 (362) 837 229 12,590
Own credit adjustments - (3) - - - (53) (134) - 10 (180)
Loss on redemption of own debt - - - - - - - - 126 126
Strategic disposals - - - - - - 81 - (245) (164)
Total income - adjusted 5,290 573 3,415 657 374 1,521 (415) 837 120 12,372
Operating expenses - statutory (3,826) (669) (2,467) (549) (174) (1,960) (4,255) (450) (1,844) (16,194)
Restructuring costs - direct 51 38 25 7 2 19 56 57 1,851 2,106
- indirect 136 2 83 30 3 93 22 - (369) -
Litigation and conduct costs 634 172 423 1 - 528 3,413 - 697 5,868
Operating expenses - adjusted (3,005) (457) (1,936) (511) (169) (1,320) (764) (393) 335 (8,220)
Impairment (losses)/releases (83) 113 (206) 3 (10) - (253) (42) - (478)
Operating profit/(loss) - adjusted 2,202 229 1,273 149 195 201 (1,432) 402 455 3,674
Additional information
Return on equity (1) 16.2% 0.7% 4.1% 5.6% 13.8% (6.6%) nm nm nm (17.9%)
Return on equity - adjusted (1,2) 26.8% 8.4% 8.4% 7.8% 14.2% 1.1% nm nm nm 1.6%
Cost income ratio 72% 116% 72% 84% 47% 125% nm 54% nm 129%
Cost income ratio - adjusted (2) 57% 80% 57% 78% 45% 87% nm 47% nm 66%
Year ended 31 December 2015
Income statement
Total income - statutory 5,200 550 3,254 644 367 1,527 539 833 9 12,923
Own credit adjustments - - - - - (120) (175) - (14) (309)
Loss on redemption of own debt - - - - - - - - 263 263
Strategic disposals - - - - - - 38 - 119 157
Total income - adjusted 5,200 550 3,254 644 367 1,407 402 833 377 13,034
Operating expenses - statutory (4,177) (429) (1,921) (1,101) (160) (2,369) (4,951) (387) (858) (16,353)
Restructuring costs - direct 38 12 52 7 - 44 380 28 2,370 2,931
- indirect 129 3 17 66 4 480 927 - (1,626) -
Litigation and conduct costs 972 (13) 51 12 - 378 2,105 - 63 3,568
Write down of goodwill - - - 498 - - - - - 498
Operating expenses - adjusted (3,038) (427) (1,801) (518) (156) (1,467) (1,539) (359) (51) (9,356)
Impairment releases/(losses) 7 141 (69) (13) - 5 725 (15) (54) 727
Operating profit/(loss) - adjusted 2,169 264 1,384 113 211 (55) (412) 459 272 4,405
Additional information
Return on equity (1) 11.7% 10.6% 9.8% (27.7%) 18.5% (11.1%) nm nm nm (4.7%)
Return on equity - adjusted (1,2) 26.2% 10.6% 10.9% 4.9% 18.9% (2.0%) nm nm nm 11.0%
Cost income ratio 80% 78% 59% 171% 44% 155% nm 46% nm 127%
Cost income ratio - adjusted (2) 58% 78% 55% 80% 43% 104% nm 43% nm 72%
For the notes to this table refer to page 3.
Segmental income statement reconciliations
PBB CPB Central
Ulster Commercial Private RBS NatWest Capital Williams items & Total
UK PBB Bank RoI Banking Banking International Markets Resolution & Glyn other RBS
Quarter ended 31 December 2016 £m £m £m £m £m £m £m £m £m £m
Income statement
Total income - statutory 1,339 137 867 161 96 285 (293) 217 407 3,216
Own credit adjustments - - - - - 29 8 - 77 114
Gain on redemption of own debt - - - - - - - - (1) (1)
Total income - adjusted 1,339 137 867 161 96 314 (285) 217 483 3,329
Operating expenses - statutory (1,042) (226) (1,009) (159) (64) (850) (3,340) (97) (567) (7,354)
Restructuring costs - direct 1 6 12 6 1 3 21 - 957 1,007
- indirect 50 (2) 34 8 1 43 (13) - (121) -
Litigation and conduct costs 214 77 407 (1) 1 466 3,156 - (192) 4,128
Operating expenses - adjusted (777) (145) (556) (146) (61) (338) (176) (97) 77 (2,219)
Impairment (losses)/releases (16) 47 (83) 8 1 - 130 (11) (1) 75
Operating profit/(loss) - adjusted 546 39 228 23 36 (24) (331) 109 559 1,185
Additional information
Return on equity (1) 13.5% (5.8%) (9.1%) 1.6% 8.8% (30.2%) nm nm nm (48.2%)
Return on equity - adjusted (1,2) 27.8% 5.4% 5.3% 4.5% 9.8% (2.7%) nm nm nm 8.6%
Cost income ratio 78% 165% 116% 99% 67% nm nm 45% nm 229%
Cost income ratio - adjusted (2) 58% 106% 64% 91% 64% 108% nm 45% nm 67%
Quarter ended 30 September 2016
Income statement
Total income - statutory 1,336 146 849 165 93 471 103 209 (62) 3,310
Own credit adjustments - - - - - 55 42 - 59 156
Gain on redemption of own debt - - - - - - - - (3) (3)
Strategic disposals - - - - - - 30 - 1 31
Total income - adjusted 1,336 146 849 165 93 526 175 209 (5) 3,494
Operating expenses - statutory (742) (131) (474) (112) (39) (381) (437) (111) (484) (2,911)
Restructuring costs - direct (1) 8 12 - - 6 23 12 409 469
- indirect 26 3 9 3 - 27 10 - (78) -
Litigation and conduct costs (1) 3 6 - (1) 6 231 - 181 425
Operating expenses - adjusted (718) (117) (447) (109) (40) (342) (173) (99) 28 (2,017)
Impairment (losses)/releases (27) 39 (20) (3) - - (120) (14) 1 (144)
Operating profit/(loss) - adjusted 591 68 382 53 53 184 (118) 96 24 1,333
Additional information
Return on equity (1) 27.1% 7.8% 9.5% 11.1% 15.4% 3.1% nm nm nm (4.8%)
Return on equity - adjusted (1,2) 28.3% 9.9% 10.4% 11.8% 15.1% 8.0% nm nm nm 4.6%
Cost income ratio 56% 90% 56% 68% 42% 81% nm 53% nm 88%
Cost income ratio - adjusted (2) 54% 80% 53% 66% 43% 65% 99% 47% nm 58%
For the notes to this table refer to page 3.
Segmental income statement reconciliations
PBB CPB Central
Ulster Commercial Private RBS NatWest Capital Williams items & Total
UK PBB Bank RoI Banking Banking International Markets Resolution & Glyn other RBS
Quarter ended 31 December 2015 £m £m £m £m £m £m £m £m £m £m
Income statement
Total income - statutory 1,254 116 797 158 95 186 (262) 208 (68) 2,484
Own credit adjustments - - - - - 66 5 - 44 115
Loss on redemption of own debt - - - - - - - - 263 263
Strategic disposals - - - - - - 24 - (2) 22
Total income - adjusted 1,254 116 797 158 95 252 (233) 208 237 2,884
Operating expenses - statutory (1,571) (107) (630) (662) (40) (431) (1,996) (135) (189) (5,761)
Restructuring costs - direct 31 (7) 40 7 - - 21 28 494 614
- indirect 56 1 14 (12) (1) 62 83 - (203) -
Litigation and conduct costs 607 (4) (8) 10 - 5 1,498 - 16 2,124
Write down of goodwill - - - 498 - - - - - 498
Operating expenses - adjusted (877) (117) (584) (159) (41) (364) (394) (107) 118 (2,525)
Impairment (losses)/releases 27 10 (27) (12) - - 356 (20) (7) 327
Operating profit/(loss) - adjusted 404 9 186 (13) 54 (112) (271) 81 348 686
Additional information
Return on equity (1) (16.8%) 3.0% 3.1% (118.9%) 19.1% (15.1%) nm nm nm (26.5%)
Return on equity - adjusted (1,2) 19.8% 1.4% 4.6% (4.4%) 18.7% (7.6%) nm nm nm 6.6%
Cost income ratio 125% 92% 79% 419% 42% 232% nm 65% nm 232%
Cost income ratio - adjusted (2) 70% 101% 73% 101% 43% 144% nm 51% nm 88%
Notes:
(1) RBS's CET 1 target is 13% but for the purposes of computing segmental return on equity (ROE), to better reflect the differential drivers of capital usage, segmental operating profit after tax and adjusted for preference dividends is divided by notional
equity allocated at different rates of 11% (Commercial Banking and Ulster Bank RoI), 12% (RBS International) and 15% for all other segments, of the monthly average of segmental risk-weighted assets incorporating the effect capital deductions (RWAes). RBS
Return on equity is calculated using profit for the period attributable to ordinary shareholders.
(2) Excluding own credit adjustments, (loss)/gain on redemption of own debt, strategic disposals, restructuring costs, litigation and conduct costs and write down of goodwill. Legal Entity Identifier No: 2138005O9XJIJN4JPN90
This information is provided by RNS
The company news service from the London Stock ExchangeRecent news on Natwest
See all newsREG - NatWest Group plc - Transaction in Own Shares
AnnouncementREG - Stock Exch Notice - Admission to Trading - 18/12/2025
AnnouncementREG - NatWest Group plc - Transaction in Own Shares
AnnouncementREG - NatWest Group plc - Transaction in Own Shares
AnnouncementREG - Natwest Markets PLC - Publication of Final Terms
Announcement