REG - Royal Bk Scot.Grp. - Half Yearly Report: Part 2 <Origin Href="QuoteRef">RBS.L</Origin> - Part 6
30/07/2015 07:10
- Part 6: For the preceding part double click ID:nRSd5088Ue
(1) Bank Banking Banking (2) forward (3) forward (4) forward Resolution (3) & Glyn (5) banking Citizens RCR investments Bank RBS
Quarter ended 30 June 2015 £bn £bn £bn £bn £bn £bn £bn £bn £bn £bn £bn £bn £bn £bn £bn
Total income 1.3 0.2 0.9 0.2 0.4 0.1 3.1 0.1 0.2 0.1 0.8 0.1 - 1.3 4.4
Operating expenses
- adjusted (6) (0.7) (0.2) (0.4) (0.1) (0.4) 0.1 (1.7) (0.3) (0.1) - (0.5) (0.1) - (1.0) (2.7)
Impairment (losses)/releases - - - - - - - - - - (0.1) 0.2 - 0.1 0.1
Operating profit/(loss) - adjusted (6) 0.6 - 0.5 0.1 - 0.2 1.4 (0.2) 0.1 0.1 0.2 0.2 - 0.4 1.8
Funded assets 116 26 95 12 149 105 503 62 20 5 83 8 1 179 682
Net loans and advances to
customers 109 20 90 11 27 2 259 31 20 3 61 6 - 121 380
Customer deposits 128 19 97 23 22 2 291 27 23 7 64 1 - 122 413
Risk-weighted assets (7) 31 21 67 8 43 8 178 45 11 2 70 14 6 148 326
Return on equity - adjusted (6,8,9) 36% 11% 14% 5% nm nm 16% nm nm 9% 7% nm 10% 5% 11%
Quarter ended 31 March 2015
Total income 1.2 0.2 0.8 0.1 0.6 - 2.9 0.3 0.2 - 0.8 0.1 - 1.4 4.3
Operating expenses
- adjusted (6) (0.6) (0.1) (0.4) (0.2) (0.4) - (1.7) (0.4) (0.1) (0.1) (0.5) - - (1.1) (2.8)
Impairment releases - - - - - - - - - - - 0.1 - 0.1 0.1
Operating profit/(loss) - adjusted (6) 0.6 0.1 0.4 (0.1) 0.2 - 1.2 (0.1) 0.1 (0.1) 0.3 0.2 - 0.4 1.6
Funded assets 115 27 93 12 162 94 503 86 20 6 87 11 1 211 714
Net loans and advances to
customers 107 21 89 11 36 1 265 41 20 3 63 8 - 135 400
Customer deposits 126 19 99 22 24 2 292 34 22 8 66 1 - 131 423
Risk-weighted assets 32 22 66 8 45 9 182 58 11 2 72 17 7 167 349
Return on equity - adjusted (6,8,9) 35% 6% 12% 4% nm nm 12% nm nm 8% 7% nm 10% 7% 10%
For notes to these tables refer to page 3.
Appendix 3 Go-forward Bank profile
Go-forward Bank profile Exit Bank
CIB International Total
UK Ulster Commercial Private CIB Go- Other Go- Total Go- Capital Williams private Other Exit Total
Half year ended and as at PBB (1) Bank Banking Banking (2) forward (3) forward (4) forward Resolution (3) & Glyn (5) banking Citizens RCR investments Bank RBS
30 June 2015 £bn £bn £bn £bn £bn £bn £bn £bn £bn £bn £bn £bn £bn £bn £bn
Total income 2.5 0.4 1.7 0.3 1.0 0.1 6.0 0.4 0.4 0.1 1.6 0.2 - 2.7 8.7
Operating expenses
- adjusted (6) (1.3) (0.3) (0.8) (0.3) (0.8) 0.1 (3.4) (0.7) (0.2) (0.1) (1.0) (0.1) - (2.1) (5.5)
Impairment (losses)/releases - - - - - - - - - - (0.1) 0.3 - 0.2 0.2
Operating profit/(loss) - adjusted (6) 1.2 0.1 0.9 - 0.2 0.2 2.6 (0.3) 0.2 - 0.5 0.4 - 0.8 3.4
Funded assets 116 26 95 12 149 105 503 62 20 5 83 8 1 179 682
Net loans and advances to
customers 109 20 90 11 27 2 259 31 20 3 61 6 - 121 380
Customer deposits 128 19 97 23 22 2 291 27 23 7 64 1 - 122 413
Risk-weighted assets (7) 31 21 67 8 43 8 178 45 11 2 70 14 6 148 326
Return on equity - adjusted (6,8,9) 36% 9% 13% 4% nm nm 14% nm nm 9% 7% nm 10% 6% 10%
For the notes to this table refer to the following page.
Appendix 3 Go-forward Bank profile
Go-forward Bank profile Exit Bank
International Total
UK Ulster Commercial Private CIB Go- Other Go- Total Go- CIB Capital Williams private Other Exit Total
Year ended and as at PBB (1) Bank Banking Banking (2) forward (3) forward (4) forward Resolution(3) & Glyn (5) banking Citizens RCR investments Bank RBS
31 December 2014 £bn £bn £bn £bn £bn £bn £bn £bn £bn £bn £bn £bn £bn £bn £bn
Total income 5.2 0.8 3.2 0.9 2.2 (0.1) 12.2 1.7 0.9 0.2 3.1 - 0.1 6.0 18.2
Operating expenses
- adjusted (6) (3.0) (0.6) (1.6) (0.7) (1.9) 0.1 (7.7) (1.7) (0.5) (0.2) (2.0) (0.3) - (4.7) (12.4)
Impairment (losses)/releases (0.2) 0.4 (0.1) - - - 0.1 - (0.1) - (0.2) 1.3 0.1 1.1 1.2
Operating profit - adjusted (6) 2.0 0.6 1.5 0.2 0.3 - 4.6 - 0.3 - 0.9 1.0 0.2 2.4 7.0
Funded assets 115 28 89 15 146 87 480 95 20 5 81 15 1 217 697
Net loans and advances to
customers 108 22 85 13 31 - 259 42 20 3 60 11 - 136 395
Customer deposits 127 21 87 29 23 1 288 36 22 8 61 1 - 128 416
Risk-weighted assets 33 24 64 10 43 10 184 64 10 2 68 22 6 172 356
Return on equity - adjusted (6,8,9) 29% 17% 11% 12% nm nm 11% nm nm 10% 7% nm 3% 7% 9%
Notes:
(1) Excludes Williams & Glyn.
(2) Excludes international private banking reclassified to disposal groups.
(3) The CIB segment is being restructured into Go-forward and CIB Capital Resolution elements. The split is subject to further refinement.
(4) Other Go-forward is primarily Centre, which includes the liquidity portfolio.
(5) Does not reflect the cost base, funding and capital profile of a standalone bank. Operating expenses include charges based on an attribution of support provided by RBS to Williams & Glyn. Expenses incurred by Williams & Glyn were £91 million (Q1 2015 - £80 million; H1 2015 - £171 million; FY 2014 - £352 million).
(6) Excludes restructuring and litigation and conduct costs.
(7) CIB RWAs £43 billion includes £9 billion of RWAs related to businesses that will transfer out of CIB, comprising the Western European large corporate portfolio (expected to move to Commercial Banking in H2 2015) and UK Transaction Services (to Commercial Banking in 2016).
(8) ROE iscalculated using operating profit after tax on a non-statutory basis adjusted for preference share dividends divided by average notional equity (based on 13% of average RWAe).
(9) PBB adjusted ROE Q2 2015 - 29% (Q1 2015 - 27%; H1 2015 - 28%; FY 2014 - 26%). CPB adjusted ROE Q2 2015 - 13% (Q1 2015 - 11%; H1 2015 - 12%; FY 2014 - 11%). Excluding IFRS volatility gain of Q2 2015 - £205 million (Q1 2015 - loss £123 million; H1 2015 - gain £82 million; FY 2014 - loss £468 million), the Go-forward Bank's adjusted return on equity was Q2 2015 - 14% (Q1 2015 - 13%; H1 2015 - 14%; FY 2014 - 13%).
Appendix 3 Go-forward Bank profile
30 June 2015 31 December 2014
TPAs RWAs TPAs RWAs
CIB Capital Resolution by product £m £m £m £m
APAC portfolio (1) 6.1 3.4 7.7 4.2
Americas portfolio 3.4 4.3 4.6 7.8
EMEA portfolio (2) 5.9 4.3 9.9 6.8
Shipping 5.3 4.5 5.7 4.4
Markets 34.1 20.0 54.2 28.6
GTS 6.3 8.0 11.3 11.2
Other 1.2 0.7 1.6 0.8
Total 62.3 45.2 95.0 63.8
Notes:
(1) Asia-Pacific portfolio.
(2) European, the Middle East and Africa portfolio.
Appendix 4
Williams & Glyn
Appendix 4 Williams & Glyn
In accordance with a commitment to the European Commission, RBS agreed to dispose of its Williams & Glyn business (RBS
England and Wales and NatWest Scotland branch-based businesses, along with certain SME and corporate activities across the
UK).
RBS is creating a standalone banking entity supported by a bespoke technology solution to facilitate the disposal of its
Williams & Glyn business through an Initial Public Offering (IPO). Following the conclusion of a £600 million pre-IPO
investment from a consortium of investors led by global financial services specialists Corsair Capital and Centerbridge
Partners, and including the Church Commissioners for England and RIT Capital Partners plc, the Williams & Glyn business
continues to make progress towards its IPO.
The pre-IPO investment took the form of a £600 million bond issued by RBS. This will be exchangeable for a significant
non-controlling interest in Williams & Glyn at the time of its IPO. The bond will convert into Williams & Glyn shares at
the IPO price, subject to a minimum ownership level which will be linked to the tangible book value of Williams & Glyn
prior to the IPO, and in any case no more than a stake of 49%. To the extent the maximum ownership level is reached, the
bond will be partially redeemed in cash such that the consortium of investors will receive a total value of £600 million of
cash and shares at the IPO price. At the IPO, subject to RBS's consent, the Investors will have the option to acquire up to
10% additionally at the IPO price, subject to their pro forma ownership being no more than 49% in aggregate.
Set out below are the income statement and key balance sheet metrics in respect of the Williams & Glyn business. This
represents the financial performance of Williams & Glyn prepared on a carve out internally managed basis illustrating a
current view of the business. During the periods presented, Williams & Glyn has been an integral part of RBS and has not
operated as a separate legal entity. These figures do not necessarily reflect the cost base, funding and capital profile of
a standalone bank.
Half year ended Year ended
30 June 30 June 31 December
2015 2014 2014
£m £m £m
Income statement
Net interest income 328 331 668
Non-interest income 98 104 210
Total income 426 435 878
Operating expenses (1) (232) (253) (512)
Profit before impairment losses 194 182 366
Impairment releases/(losses) 10 (31) (54)
Operating profit (2) 204 151 312
Analysis of income by business
Retail 237 249 503
Corporate 189 186 375
Total income 426 435 878
Analysis of impairments by business
Retail 12 26 47
Corporate (22) 5 7
Total impairment (releases)/losses (10) 31 54
Loan impairment charge as % of gross customer loans and advances (excluding
reverse repurchase agreements) by business
Retail 0.21% 0.46% 0.42%
Corporate (0.51%) 0.11% 0.08%
Total (0.10%) 0.31% 0.27%
Notes:
(1) Does not reflect the cost base, funding and capital profile of a standalone bank. Operating expenses include charges based on an attribution of support provided by RBS to W&G. Expenses incurred by W&G were: H1 2014 - £173 million; FY 2014 - £352 million; H1 2015 - £171 million.
(2) Operating profit includes; £7 million profit in Commercial Banking (H1 2014 - £8 million profit; FY 2014 - £14 million profit); £1 million profit in RCR (H1 2014 - £1 million profit; FY 2014 - £3 million profit); £60 million loss in Central items (H1 2014 - £81 million loss; FY 2014 - £160 million loss); the remainder of W&G is reported in UK PBB.
Appendix 4 Further analysis of Williams & Glyn
Key metrics Half year ended Year
ended
30 June 30 June 31 December
2015 2014 2014
Performance ratio
Net interest margin 3.39% 3.39% 3.43%
30 June 31 December 30 June
2015 2014 2014
£bn £bn Change £bn Change
Capital and balance sheet
Loans and advances to customers (gross)
- Retail 11.3 11.3 - 11.4 (0.9%)
- Corporate 8.6 8.7 (1.1%) 8.8 (2.3%)
Total loans and advances to customers 19.9 20.0 (0.5%) 20.2 (1.5%)
Loan impairment provisions (0.4) (0.4) - (0.4) -
Net loans and advances to customers 19.5 19.6 (0.5%) 19.8 (1.5%)
Total assets 19.8 20.0 (1.0%) 20.2 (2.0%)
Funded assets 19.7 19.7 - 20.0 (1.5%)
Customer deposits
- Retail 10.9 10.3 5.8% 10.0 9.0%
- Corporate 12.5 11.7 6.8% 11.8 5.9%
Total customer deposits 23.4 22.0 6.4% 21.8 7.3%
Loan:deposit ratio (excluding repos) 85% 91% (600bp) 93% (800bp)
Risk-weighted assets (1) 10.5 10.4 1.0% 11.1 (5.4%)
Note:
(1) RWAs on an end-point CRR basis.
Key points
· Operating profit increased to £204 million in H1 2015 compared with £151 million in H1 2014, driven mainly by lower operating expenses and net impairment releases.
· Total income of £426 million compared with £435 million in H1 2014. Net interest income was broadly flat with improved deposit income from higher balances and stronger margins, offset by lower asset income as a result of margin compression. Non-interest income was down £6 million to £98 million reflecting lower fee income.
· Net interest margin has remained flat at 3.39%.
· Operating expenses fell £21 million to £232 million in H1 2015 compared with £253 million in H1 2014 reflecting lower FSCS levy and compensation costs and lower fraud levels, partially offset by an increase in staff expenses as the business prepares for divestment.
· Impairment release for H1 2015 were £10 million compared with a net charge of £31 million for H1 2014, as a result of lower levels of defaults across all portfolios and portfolio provision releases.
· Deposits grew by £1.4 billion to £23.4 billion in H1 2015.
Appendix 5
Parent company financial statements
Appendix 5 Parent company financial statements
RBSG plc - Balance sheet at 30 June 2015
30 June 31 December
2015 2014
£m £m
Assets
Loans and advances to banks 22,720 24,490
Loans and advances to customers 302 299
Debt securities 467 911
Investments in Group undertakings 54,852 54,858
Derivatives 138 179
Prepayments, accrued income and other assets 48 193
Total assets 78,527 80,930
Liabilities
Deposits by banks 1,209 1,202
Debt securities in issue 6,333 7,510
Derivatives 38 30
Accruals, deferred income and other liabilities 21 165
Subordinated liabilities 8,814 10,708
Total liabilities 16,415 19,615
Owners' equity 62,112 61,315
Total liabilities and equity 78,527 80,930
Owners' equity includes £17.9 billion of distributable reserves at 30 June 2015 (31 December 2014 - £17.5 billion). RBS
intends to redeem US$1.9 billion of its outstanding Series M, N, P and Q non-cumulative dollar preference shares,
represented by American depositary shares, on 1 September 2015. The redemption of these securities will reduce the parent
company's distributable reserves by approximately £1.2 billion.
Appendix 5 Parent company financial statements
RBSG plc - Statement of changes in equity for the period ended 30 June 2015
Half year
ended Year ended
30 June 31 December
2015 2014
£m £m
Called-up share capital
At beginning of period 6,877 6,714
Ordinary shares issued 104 163
At end of period 6,981 6,877
Paid-in equity
At beginning and end of period 431 431
Share premium account
At beginning of period 25,052 24,667
Ordinary shares issued 254 385
At end of period 25,306 25,052
Merger reserve
At beginning and end of period 2,341 2,341
Capital redemption reserve
At beginning and end of period 9,131 9,131
Retained earnings
At beginning of period 17,483 17,033
Profit attributable to ordinary and B shareholders and other equity owners 598 1,128
Equity preference dividends paid (143) (330)
Paid-in equity dividends paid, net of tax (16) (28)
Dividend access share dividend - (320)
At end of period 17,922 17,483
Owners' equity at end of period 62,112 61,315
Total equity is attributable to:
Preference shareholders 4,313 4,313
Paid-in equity holders 431 431
Ordinary and B shareholders 57,368 56,571
62,112 61,315
This information is provided by RNS
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