REG - Royal Bk Scot.Grp. - Final Results - Part 1 <Origin Href="QuoteRef">RBS.L</Origin> - Part 3
26/02/2015 07:13
- Part 3: For the preceding part double click ID:nRSZ9135Fb
Staff costs as a % of total income (1) 35% 35% 38% 37% 39%
Cost:income ratio 87% 95% 126% 89% 175%
Cost:income ratio - adjusted (1) 68% 72% 81% 67% 97%
Employee numbers (FTE - thousands) 108.7 118.6 108.7 110.8 118.6
Note:
(1) Excluding restructuring costs and litigation and conduct costs.
Key points
2014 compared with 2013
· Operating expenses decreased by £2,661 million or 14% to £15,849 million. Adjusted operating expenses declined by £1,612 million or 12% to £12,398 million. Excluding the impact of foreign exchange movements and intangible assets write-offs, adjusted operating expenses reduced by £1.1 billion, exceeding the bank's £1 billion cost saving target.
· Staff expenses declined by 7%, and by 1% on a per capita basis against average full time employees(1).
· Litigation and conducts costs totalled £2,194 million compared with £3,844 million in 2013. This included additional provisions for PPI redress (£650 million) in PBB, provisions relating to investigations into the foreign exchange market (£720 million) in CIB, Interest Rate Hedging Product redress (£185 million), the fine relating to the 2012 IT incident (£59 million) booked in Centre and other costs (£580 million) including provisions relating to packaged accounts and investment products.
· Restructuring costs increased by £601 million to £1,257 million, including £378 million in relation to Williams & Glyn and a £247 million write-off of intangible IT assets.
Note:
(1) Average full time employees, rounded to the nearest hundred, for continuing operations was 95,600 (2013 - 102,000).
Analysis of results
Key points (continued)
Q4 2014 compared with Q3 2014
· Operating expenses increased by £975 million or 25% to £4,858 million. Litigation and conduct costs were up 49% to £1,164 million and included provisions for PPI redress (£400 million), provisions relating to investigations into the foreign exchange market
(£320 million), Interest Rate Hedging Product redress (£85 million) and other costs (£359 million) including provisions relating to certain packaged accounts and investment products. Adjusted operating expenses increased by £208 million or 7% to £3,131
million primarily reflecting a UK bank levy charge of £250 million. Restructuring costs increased by £383 million to £563 million, including a £247 million write-off of intangible assets and £174 million in relation to Williams & Glyn.
Q4 2014 compared with Q4 2013
· Operating expenses decreased by £2,023 million or 29%. Litigation and conduct costs were down 60% to £1,164 million and included provisions for PPI redress (£400 million), provisions relating to investigations into the foreign exchange market (£320 million), Interest Rate Hedging Product redress (£85 million) and other costs (£359 million). Adjusted operating expenses decreased by £695 million or 18% primarily reflecting reductions in operating expenses across a number of businesses, principally CIB.
Analysis of results
Year ended Quarter ended
31 December 31 December 31 December 30 September 31 December
2014 2013 2014 2014 2013
Impairment (releases)/losses £m £m £m £m £m
Loans (1,170) 8,412 (638) (803) 5,131
Securities 15 20 15 2 (19)
Total impairment (releases)/losses (1,155) 8,432 (623) (801) 5,112
Loan impairment (releases)/losses
- individually assessed (799) 6,919 (502) (410) 4,867
- collectively assessed 315 1,464 (85) 52 443
- latent (676) 44 (51) (445) (173)
Customer loans (1,160) 8,427 (638) (803) 5,137
Bank loans (10) (15) - - (6)
Loan impairment (releases)/losses (1,170) 8,412 (638) (803) 5,131
RBS excluding RCR/Non-Core 150 3,766 53 (193) 1,924
RCR (1,320) n/a (691) (610) n/a
Non-Core n/a 4,646 n/a n/a 3,207
RBS (1,170) 8,412 (638) (803) 5,131
Customer loan impairment (releases)/charge
as a % of gross loans and advances (1)
RBS (0.3%) 2.0% (0.6%) (0.8%) 4.9%
RBS excluding RCR/Non-Core - 1.0% 0.1% (0.2%) 2.0%
RCR (6.0%) n/a (12.6%) (9.5%) n/a
Non-Core n/a 12.8% n/a n/a 35.3%
31 December 30 September 31 December
2014 2014 2013
Loan impairment provisions
- RBS £18.0bn £20.0bn £25.2bn
- RBS excluding RCR/Non-Core £7.1bn £7.4bn £11.4bn
- RCR £10.9bn £12.6bn n/a
- Non-Core n/a n/a £13.8bn
Risk elements in lending
- RBS £28.2bn £30.5bn £39.4bn
- RBS excluding RCR/Non-Core £12.8bn £13.1bn £20.4bn
- RCR £15.4bn £17.4bn n/a
- Non-Core n/a n/a £19.0bn
Provisions as a % of REIL
- RBS 64% 66% 64%
- RBS excluding RCR/Non-Core 55% 57% 56%
- RCR 71% 72% n/a
- Non-Core n/a n/a 73%
REIL as a % of gross customer loans
- RBS 6.8% 7.4% 9.4%
- RBS excluding RCR/Non-Core 3.3% 3.4% 5.3%
- RCR 70.3% 67.6% n/a
- Non-Core n/a n/a 51.8%
Note:
(1) Excludes reverse repurchase agreements and includes disposals groups.
Analysis of results
Key points
2014 compared with 2013
· Net impairment releases of £1,155 million were recorded in 2014 compared with a net impairment charge of £8,432 million in the prior year, which included £4,490 million provisions related to the creation of RCR. Releases were recorded principally in RCR (£1,306 million) and in Ulster Bank (£365 million), which benefited from favourable economic and market conditions, supported by rising Irish property values and proactive debt management. Excluding these releases, the underlying charge was low at just over
£500 million.
Q4 2014 compared with Q3 2014
· Net impairment releases totalled £623 million, down £178 million, again principally in RCR and Ulster Bank. Underlying bad debt flows remained low.
Q4 2014 compared with Q4 2013
· Net impairment releases totalled £623 million compared with a net impairment charge of £5,112 million in Q4 2013, which included £4,290 million related to the creation of RCR.
Analysis of results
Capital and leverage ratios
End-point CRR basis (1) PRA transitional basis (1)
31 December 30 September 31 December 31 December 30 September 31 December
2014 2014 2013 (2) 2014 2014 2013 (2)
Risk asset ratios % % % % % %
CET1 11.2 10.8 8.6 11.1 10.8 8.6
Tier 1 11.2 10.8 8.6 13.2 12.7 10.3
Total 13.7 13.1 10.6 17.1 16.3 13.6
Capital £bn £bn £bn £bn £bn £bn
Tangible equity 44.4 44.3 41.1 44.4 44.1 41.1
Expected loss less impairment provisions (1.5) (1.6) (1.7) (1.5) (1.6) (1.7)
Prudential valuation adjustment (PVA) (0.4) (0.4) (0.8) (0.4) (0.4) (0.8)
Deferred tax assets (1.2) (1.6) (2.3) (1.2) (1.6) (2.3)
Own credit adjustments 0.5 0.6 0.6 0.5 0.6 0.6
Pension fund assets (0.2) (0.2) (0.2) (0.2) (0.2) (0.2)
Other deductions (1.7) 0.1 0.1 (2.0) 0.2 0.1
Total deductions (4.5) (3.1) (4.3) (4.8) (3.0) (4.3)
CET1 capital 39.9 41.2 36.8 39.6 41.1 36.8
AT1 capital - - - 7.5 7.5 7.5
Tier 1 capital 39.9 41.2 36.8 47.1 48.6 44.3
Tier 2 capital 8.7 8.8 8.7 13.6 13.6 13.9
Total regulatory capital 48.6 50.0 45.5 60.7 62.2 58.2
Risk-weighted assets £bn £bn £bn £bn £bn £bn
Credit risk
- non-counterparty 264.7 277.0 317.9 264.7 277.0 317.9
- counterparty 30.4 38.2 39.1 30.4 38.2 39.1
Market risk 24.0 29.7 30.3 24.0 29.7 30.3
Operational risk 36.8 36.8 41.8 36.8 36.8 41.8
Total RWAs 355.9 381.7 429.1 355.9 381.7 429.1
Leverage (3) £bn £bn £bn
Derivatives 354.0 314.0 288.0
Loans and advances 419.6 422.1 418.4
Reverse repos 64.7 75.5 76.4
Other assets 212.5 234.5 245.1Recent news on Natwest
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