REG - Royal Bk Scot.Grp. - Final Results - Part 1 <Origin Href="QuoteRef">RBS.L</Origin> - Part 9

NatwestAnnouncement

26/02/2015 07:13

- Part 9: For the preceding part double click  ID:nRSZ9135Fh 

                                                                                                                                                                   
 ●  in May 2014 'Accounting for Acquisitions of interests in Joint Operations', an amendment to IFRS 11 'Joint Arrangements' to clarify that the donor of assets and liabilities to a joint operation should hold its continuing interest in them at the lower of cost and recoverable amount.                       
                                                                                                                                                                                                                                                                                                                     
 ●  in May 2014 'Clarification of Acceptable Methods of Depreciation and Amortisation' amending IAS 16 'Property, Plant and Equipment and IAS 38 'Intangible Assets' to require any policy less prudent than straight line to be justified.                                                                          
 
 
Notes 
 
2. Accounting policies (continued) 
 
Annual Improvements to IFRS 2012 - 2014 cycle was issued in September 2014 making a number of minor amendments to IFRS. Its
effective date is 1 January 2016. 
 
Amendments to IFRS 10 'Consolidated Financial Statements', IFRS 12 'Disclosure of Interests in Other Entities' and IAS 28
'Investments in Associates and Joint Ventures' were issued in September 2014 to clarify the accounting for sales between an
investor, its associates or joint ventures, and in December 2014 to clarify the application of the investment entity
consolidation exception.  Their effective date is 1 January 2016. 
 
An amendment to IAS 1 'Presentation of Financial Statements' was issued in December 2014 to clarify the application of
materiality to financial statements.  Its effective date is 1 January 2016. 
 
The Group is reviewing these requirements to determine their effect, if any, on its financial reporting. 
 
Notes 
 
 3. Analysis of income, expenses and impairment losses                                                        
                                                                                                                                         
                                                        Year ended                Quarter ended  
                                                        31 December  31 December                 31 December  30 September  31 December  
                                                        2014         2013                        2014         2014          2013         
                                                        £m           £m                          £m           £m            £m           
                                                                                                                                         
 Loans and advances to customers                        12,339       13,165                      3,086        3,109         3,192        
 Loans and advances to banks                            367          433                         72           103           107          
 Debt securities                                        373          890                         80           85            138          
                                                                                                                                         
 Interest receivable                                    13,079       14,488                      3,238        3,297         3,437        
                                                                                                                                         
 Customer accounts                                      1,769        2,682                       392          438           535          
 Deposits by banks                                      75           277                         10           7             63           
 Debt securities in issue                               1,010        1,306                       217          237           293          
 Subordinated liabilities                               876          877                         225          223           214          
 Internal funding of trading businesses                 91           329                         12           22            49           
                                                                                                                                         
 Interest payable                                       3,821        5,471                       856          927           1,154        
                                                                                                                                         
 Net interest income                                    9,258        9,017                       2,382        2,370         2,283        
                                                                                                                                         
 Fees and commissions receivable                                                                                                         
 - payment services                                     989          1,090                       241          244           291          
 - credit and debit card fees                           822          892                         215          193           221          
 - lending (credit facilities)                          1,250        1,291                       281          319           321          
 - brokerage                                            321          397                         78           77            88           
 - investment management                                391          434                         96           97            127          
 - trade finance                                        280          269                         75           80            66           
 - other                                                361          305                         69           106           69           
                                                                                                                                         
                                                        4,414        4,678                       1,055        1,116         1,183        
 Fees and commissions payable                           (875)        (923)                       (204)        (196)         (240)        
                                                                                                                                         
 Net fees and commissions                               3,539        3,755                       851          920           943          
                                                                                                                                         
 Foreign exchange                                       849          821                         281          162           198          
 Interest rate                                          339          515                         (300)        (4)           (48)         
 Credit                                                 284          998                         (249)        136           2            
 Own credit adjustments                                 (40)         35                          (84)         33            15           
 Other                                                  (147)        202                         (51)         (89)          8            
                                                                                                                                         
 Income from trading activities                         1,285        2,571                       (403)        238           175          
                                                                                                                                         
 Gain on redemption of own debt                         20           175                         -            -             (29)         
                                                                                                                                         
 Operating lease and other rental income                380          484                         104          98            103          
 Own credit adjustments                                 (106)        (155)                       (60)         16            (15)         
 Changes in the fair value of FVTPL financial assets                                                                                     
 and liabilities and related derivatives (1)            83           (26)                        13           41            (91)         
 Changes in fair value of investment properties         (25)         (281)                       12           6             (258)        
 Profit on sale of:                                                                                                                      
 - securities                                           227          737                         14           (115)         75           
 - property, plant and equipment                        137          35                          74           23            2            
 - subsidiaries, networks and associates                192          168                         (2)          1             171          
 Dividend income                                        30           67                          10           1             42           
 Share of results of associates                         126          320                         40           31            43           
 Other income                                           4            (130)                       (70)         6             (79)         
                                                                                                                                         
 Other operating income                                 1,048        1,219                       135          108           (7)          
 
 
Note: 
 
 (1)  Fair value through profit and loss  
 
 
Notes 
 
3. Analysis of income, expenses and impairment losses 
 
                                                                                                                         
                                        Year ended                Quarter ended  
                                        31 December  31 December                 31 December  30 September  31 December  
 2014                                   2013                      2014           2014         2013          
                                        £m           £m                          £m           £m            £m           
                                                                                                                         
 Total non-interest income              5,892        7,720                       583          1,266         1,082        
                                                                                                                         
 Total income                           15,150       16,737                      2,965        3,636         3,365        
                                                                                                                         
 Staff costs                            (5,757)      (6,086)                     (1,325)      (1,435)       (1,291)      
 Premises and equipment                 (2,081)      (2,038)                     (480)        (475)         (622)        
 Other (1)                              (4,568)      (6,692)                     (1,999)      (1,212)       (3,785)      
                                                                                                                         
 Administrative expenses                (12,406)     (14,816)                    (3,804)      (3,122)       (5,698)      
 Depreciation and amortisation          (930)        (1,247)                     (203)        (261)         (321)        
 Write down of goodwill                 -            (1,059)                     -            -             (1,059)      
 Write down of other intangible assets  (523)        (344)                       (311)        -             (344)        
                                                                                                                         
 Operating expenses                     (13,859)     (17,466)                    (4,318)      (3,383)       (7,422)      
                                                                                                                         
 Loan impairment (releases)/losses      (1,364)      8,105                       (684)        (849)         5,049        
 Securities                             12           15                          14           2             (19)         
                                                                                                                         
 Impairment (releases)/losses           (1,352)      8,120                       (670)        (847)         5,030        
 
 
Note: 
 
 (1)  Includes PPI costs, Interest Rate Hedging Products redress and related costs and litigation and conduct costs - see Note 4 for further details.  
 
 
                                                                                                           
 Staff expenses                                                                      2014   2013   Change  
                                                                                     £m     £m     %       
                                                                                                           
 Salaries                                                                            3,503  3,661  (4)     
 Variable compensation                                                               408    548    (26)    
 Temporary and contract costs                                                        526    650    (19)    
 Social security costs                                                               379    422    (10)    
 Share based compensation                                                            43     49     (12)    
 Pension costs                                                                                             
 - defined benefit schemes                                                           462    508    (9)     
 - curtailment and settlement gains                                                  -      (7)    (100)   
 - defined contribution schemes                                                      87     76     14      
 Severance                                                                           196    69     184     
 Other                                                                               153    110    39      
                                                                                                           
 Staff expenses                                                                      5,757  6,086  (5)     
                                                                                                                                   
 Variable compensation awards                                                                                                      
 The following tables analyse RBS and CIB variable compensation awards for 2014(1).  
                                                                                                                                   
                                                                                     RBS           CIB     
                                                                                     2014   2013   Change      2014  2013  Change  
 £m                                                                                  £m     %      £m      £m  %     
                                                                                                                                   
 Non-deferred cash awards (2)                                                        66     62     6           5     7     (29)    
 Non-deferred share awards                                                           -      -      nm          -     -     nm      
                                                                                                                                   
 Total non-deferred variable compensation                                            66     62     6           5     7     (29)    
                                                                                                                                   
 Deferred bond awards                                                                168    168    -           30    47    (36)    
 Deferred share awards                                                               187    306    (39)        79    191   (59)    
                                                                                                                                   
 Total deferred variable compensation                                                355    474    (25)        109   238   (54)    
                                                                                                                                   
 Total variable compensation (3)                                                     421    536    (21)        114   245   (53)    
                                                                                                                                   
 Variable compensation as a % of operating profit (4)                                6%     24%                23%   30%           
 Proportion of variable compensation that is deferred                                84%    88%                96%   97%           
 - Of which deferred bond awards                                                     47%    35%                28%   20%           
 - Of which deferred share awards                                                    53%    65%                72%   80%