REG - Royal Bk Scot.Grp. - Final Results - Part 1 <Origin Href="QuoteRef">RBS.L</Origin> - Part 4

NatwestAnnouncement

26/02/2015 07:13

- Part 4: For the preceding part double click  ID:nRSZ9135Fc 

                                                                                                                                                                                                                                                                                                                                                   There are now more ways to bank with UK PBB than ever. With services being extended to the Post Office network, customers now have over 13,000 branches and post offices  
                                                                                                                                                                                                                                                                                                                                                                              across the UK where they can carry out their every day banking.                                                                                                           
                                                                                                                                                                                                                                                                                                                                                                              
 ·  Simpler and fairer products supported by the launch of the 'Goodbye-Hello' campaign:                                                                                                                                                                                                                                                                                      
    ○                                                                                                                                                                                                                                                                                                                                                                         The business committed to responsible and fair lending by removing 0% teaser deals from its  offering and introducing the new Clear Rate and cash-back credit cards in    
                                                                                                                                                                                                                                                                                                                                                                              2014.                                                                                                                                                                     
    ○                                                                                                                                                                                                                                                                                                                                                                         Business banking arrangement fees and surprise overdraft fees have been replaced with fixed rates on new business loans and text alerts when customers are overdrawn to   
                                                                                                                                                                                                                                                                                                                                                                              keep them on track.                                                                                                                                                       
    ○                                                                                                                                                                                                                                                                                                                                                                         Service charges have been reviewed and made simpler and fairer for customers. The business re-introduced access to the LINK ATM network for all basic account customers,  
                                                                                                                                                                                                                                                                                                                                                                              reduced its daily overdraft fees for all customers, placed a 60 day cap on overdraft charges and improved credit card late fee terms.                                     
    ○                                                                                                                                                                                                                                                                                                                                                                         RBS became the first of the main high street banks to ensure all of its savers get the same or better deals as new customers. Those deals are available regardless of how 
                                                                                                                                                                                                                                                                                                                                                                              customers choose to bank (e.g. branch, telephony or digital). With just five personal savings products now on sale the range is the simplest on the high street both for  
                                                                                                                                                                                                                                                                                                                                                                              customers and for front line staff. Teaser savings rates have been removed and the business is committed to helping customers save for the long term rather than luring   
                                                                                                                                                                                                                                                                                                                                                                              them in for the short term.                                                                                                                                               
 ·  Investments in Technology                                                                                                                                                                                                                                                                                                                                                 
    ○                                                                                                                                                                                                                                                                                                                                                                         UK PBB continued with its commitment to invest in technology to make things better for the customer. As its award winning mobile banking application celebrated 5 years,  
                                                                                                                                                                                                                                                                                                                                                                              the business received another gold award for the "Pay your Contacts" service, which was named "Best new service of the year" in July at the 'Best in Biz' International   
                                                                                                                                                                                                                                                                                                                                                                              awards. UK PBB now has over 6.9 million online and mobile banking users, with the mobile app being used more than 23 million times every week.                            
    ○                                                                                                                                                                                                                                                                                                                                                                         Further improvements have been made to the mobile banking application and personal customers are now able to use the new industry-wide Pay-m application that allows      
                                                                                                                                                                                                                                                                                                                                                                              customers to receive payments from customers of other participating banks just by providing their mobile number. Customers will no longer have to divulge their sort code 
                                                                                                                                                                                                                                                                                                                                                                              and account number to receive payment. Pay-m has already enrolled over 1.8 million customers in the service since its launch at the end of April 2014. WiFi in branches   
                                                                                                                                                                                                                                                                                                                                                                              has also been a great success with customers already using the free service over 1 million times since it started in May.                                                 
 
 
UK Personal & Business Banking 
 
Key points (continued) 
 
2014 compared with 2013 
 
 ·  UK PBB recorded an operating profit of £1,450 million, up £631 million, while adjusted operating profit totalled £2,470 million compared with £1,906 million in the prior year. This reflected higher income, up 4% to £6,037 million and lower adjusted expenses, down 3% to £3,299 million, together with substantially lower impairments, down £233 million to £268 million.                                                                                                                                       
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
 ·  Net interest income increased by £193 million or 4% with strong improvements in deposit margins and volume growth. This was partly offset by lower asset margins linked to the continued change in the mix of the loan book towards secured lending and lower mortgage margins.                                                                                                                                                                                                                                       
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
 ·  Non-interest income increased by £31 million or 2%, largely reflecting the transfer of the commercial cards business to UK PBB from CPB in August 2014.                                                                                                                                                                                                                                                                                                                                                               
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
 ·  Operating expenses decreased by £174 million or 4%, reflecting lower restructuring and litigation and conduct costs. Excluding these items, expenses declined by £107 million or 3% supported by a 7% reduction in headcount and lower Financial Services Compensation Scheme (FSCS) accruals. Litigation and conduct costs included additional provisions for Payment Protection Insurance redress (£650 million) and other conduct provisions in respect of legacy investment products and packaged account sales.  
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
 ·  The net impairment charge was down by 47% to £268 million driven by a further decrease in new default charges together with releases of provisions and recoveries on previously written off debt.                                                                                                                                                                                                                                                                                                                     
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
 ·  Mortgage balances increased by £3.9 billion or 4%, to £103.2 billion driven by strong performance as advisor capacity increased. Gross new mortgage business increased by 37% to £19.7 billion, representing a market share of 10% with our stock share of 8% continuing to grow.                                                                                                                                                                                                                                     
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
 ·  RWAs to decline of 16% to £42.8 billion with improved credit quality and lower unsecured balances.                                                                                                                                                                                                                                                                                                                                                                                                                    
 
 
Q4 2014 compared with Q3 2014 
 
 ·  Operating loss totalled £43 million compared with an operating profit of £499 million, primarily as a result of additional conduct costs that included provisions for PPI redress (£400 million) and other conduct provisions in respect of legacy packaged     
    account sales and investment products (£250 million). Adjusted operating profit decreased by £57 million or 8% to £625 million, reflecting the annual charge for bank levy (£38 million) and write-offs of intangible assets (£41 million). This was partly     
    offset by lower impairments down £38 million to £41 million