REG - Royal Bk Scot.Grp. - Half Yearly Report - Part 3 <Origin Href="QuoteRef">RBS.L</Origin> - Part 6
29/10/2014 09:17
- Part 6: For the preceding part double click ID:nRSA9700Ne
Period end Maximum Minimum
Trading VaR (1-day 99%) £m £m £m £m £m £m £m £m £m £m £m £m
Interest rate 16.7 14.9 39.8 10.9 40.3 30.3 78.2 24.6 37.2 44.1 78.2 19.1
Credit spread 28.3 24.4 42.8 20.9 72.9 57.9 86.8 55.8 60.0 37.3 86.8 33.3
Currency 5.4 3.0 8.5 2.0 11.2 9.3 20.6 4.6 8.6 6.5 20.6 3.6
Equity 3.5 2.5 6.0 2.1 6.8 4.8 12.8 4.2 5.8 4.1 12.8 3.2
Commodity 0.6 0.7 1.4 0.3 1.3 0.9 3.7 0.5 0.9 0.5 3.7 0.3
Diversification (1) (24.8) (23.4) (23.7)
Total 30.6 20.7 58.2 20.7 96.4 79.8 118.8 69.5 79.3 68.8 118.8 42.1
CIB 28.2 21.3 48.8 20.5 80.1 64.1 104.6 57.6 64.2 52.4 104.6 35.6
RCR (2) 6.0 3.5 16.2 3.3 n/a n/a n/a n/a n/a n/a n/a n/a
Non-Core n/a n/a n/a n/a 21.1 19.2 24.9 18.1 19.3 15.2 24.9 14.9
Appendix 1 Capital and risk management
Market risk: Trading portfolios:Value-at-risk (continued)
Quarter ended
30 June 2014 31 March 2014 31 December 2013
Average Period end Maximum Minimum Average Period end Maximum Minimum Average Period end Maximum Minimum
Trading VaR £m £m £m £m £m £m £m £m £m £m £m £m
Interest rate 14.3 14.9 17.0 12.0 19.1 14.0 39.8 10.9 32.3 44.1 44.1 19.1
Credit spread 25.0 24.4 31.8 20.9 31.4 25.6 42.8 24.1 40.5 37.3 48.4 33.3
Currency 4.4 3.0 8.3 2.0 6.4 3.7 8.5 3.7 5.9 6.5 9.6 3.6
Equity 3.2 2.5 4.9 2.1 3.8 4.5 6.0 2.7 4.3 4.1 12.6 3.2
Commodity 0.6 0.7 1.4 0.4 0.5 0.4 0.8 0.3 0.7 0.5 2.5 0.4
Diversification (1) (24.8) (21.1) (23.7)
Total 24.8 20.7 28.5 20.7 36.3 27.1 58.2 25.8 58.6 68.8 69.7 42.1
CIB 23.8 21.3 28.7 20.5 32.4 23.6 48.8 22.6 44.1 52.4 54.4 35.6
RCR (2) 4.0 3.5 6.8 3.3 8.0 7.5 16.2 3.5 n/a n/a n/a n/a
Non-Core n/a n/a n/a n/a n/a n/a n/a n/a 15.7 15.2 17.7 14.9
Notes:
(1) The Group benefits from diversification as it reduces risk by allocating positions across various financial instrument types, currencies and markets. The extent of the diversification benefit depends on the correlation between the assets and risk factors in the portfolio at a particular time. The diversification factor is the sum of the VaR on individual risk types less the total portfolio VaR.
(2) The detailed RCR perimeter was not finalised at the start of the year. As average, maximum and minimum VaR are measures that require daily data, they have been prepared on a best efforts basis.
Key points
· The period end and average total VaR were lower in H1 2014 than in H2 2013, driven by continued reductions in credit spread and interest rate VaR, notably during Q1 2014.
· The reduction in credit spread VaR was primarily driven by credit valuation adjustments (CVA) and funding valuation adjustments being included in the internal VaR measure in February 2014. Previously, only associated hedges were included. This approach reflects a more comprehensive economic view of the risk. Continued risk reduction also contributed to the decline in VaR.
· The reduction in interest rate VaR was driven by de-risking and repositioning in CIB, primarily in the Rates business.
Appendix 1 Capital and risk management
Market risk: Trading portfolios (continued)
Capital charges*
The total market risk minimum capital requirement calculated in accordance with CRD IV, £2,669 million at 30 June 2014,
represents 8% of the corresponding RWA amount, £33.4 billion. It comprises a number of regulatory capital requirements
split into two categories: (i) the Pillar 1 model-based position risk requirement (PRR) of £1,717 million, which in turn
comprises several modelled charges and (ii) the standardised PRR of £952 million, which also has several components.
The contributors to the Pillar 1 model-based PRR are presented in the table below.
Following the implementation of CRD IV on 1 January 2014, credit hedges eligible for CVA are no longer included in the
modelled market risk capital charges, namely VaR, stressed VaR and the incremental risk charge. Such hedges are now
included in the CVA capital charge, which forms part of the capital calculation for counterparty credit risk.
CRD IV Basel 2.5
31 March 31 December
CRD IV 2014 2013
Average Maximum Minimum Period end Period end Period end
Half year ended 30 June 2014 £m £m £m £m £m £m
Value-at-risk 372 527 264 264 367 576
Stressed VaR 791 856 650 650 856 841
Incremental risk charge 429 530 360 360 420 443
All price risk 4 6 - - 5 8
Risk not in VaR (RNIV) 435 472 406 443 456 218
Total 1,717 2,104 2,086
Key points
· Overall, the Pillar 1 model-based PRR declined 18% to £1.7 billion in H1 2014, driven by reductions in the VaR and Stressed VaR charges, offset somewhat by an increase in the RNIV charge.
· The decrease in the VaR charge in H1 was primarily driven by the removal of the CVA eligible hedges (as noted above) and ongoing risk reduction.
· The decreases in the VaR and Stressed VaR charges in Q2 were driven primarily by a reduction of the asset backed product portfolio in line with risk reduction strategy.
· Given the reduction in the size of the correlation trading portfolio, RBS ceased using an internal model for all price risk during Q2. With the PRA's approval, all remaining open risk is now capitalised under standardised rules.
· The RNIV charge increased in H1 as, following an agreement with the PRA, the materiality threshold previously in place was removed and all RNIVs are now capitalised.
*Not within the scope of Deloitte LLP's review report
Appendix 1 Capital and risk management
Market risk: Non-trading portfolios (continued)
Non-trading portfolios
Non-trading VaR
The average VaR for the Group's non-trading book, predominantly comprising available-for-sale portfolios, was £4.8 million
during H1 2014 compared with £7.8 million during H2 2013. This was largely driven by a decline in the credit spread VaR in
Q1, which partly reflected a decision to switch some of the securities that RBS holds as collateral from floating-rate
notes issued by financial institutions to government bonds during March as part of efforts to reduce RWAs. The period end
VaR decreased from £5.0 million at 31 December 2013 to £3.3 million at 31 March 2014, for the reason explained above. It
increased to £5.8 million at 30 June 2014, largely due to data quality improvements that expanded the scope of positions
captured in RBS's non-traded VaR metrics.
Structured credit portfolio
The structured credit portfolio is measured on a notional and fair value basis because of its illiquid nature. Notional and
fair value decreased to £0.5 billion and £0.4 billion respectively (31 December 2013 - £0.7 billion and £0.5 billion),
reflecting the sale of underlying assets, primarily consumer ABS (student loans), RMBS and a small amount of CLOs, in line
with RCR strategy.
Non-trading interest rate risk
Non-traded interest rate risk impacts earnings arising from the Group's banking activities. This excludes positions in
financial instruments which are classified as held-for-trading.
The methodology relating to interest rate risk is detailed in the 2013 Annual Report and Accounts.
Non-traded interest rate risk VaR metrics are based on interest rate repricing gap reports as at the reporting date. These
incorporate customer products and associated funding and hedging transactions as well as non-financial assets and
liabilities such as property, plant and equipment, capital and reserves. Behavioural assumptions are applied as
appropriate.
VaR does not provide a dynamic measurement of interest rate risk since static underlying repricing gap positions are
assumed. Changes in customer behaviour under varying interest rate scenarios are captured by way of earnings at risk
measures. VaR relating to non-traded interest rate risk for RBS's retail and commercial banking activities at a 99%
confidence level and a currency analysis at the period end were as follows:
Average Period end Maximum Minimum
£m £m £m £m
30 June 2014 64 68 79 45
31 December 2013 45 51 57 30
30 June 31 December
2014 2013
£m £m
Euro 3 4
Sterling 8 19
US dollar 73 44
Other 3 2
Appendix 1 Capital and risk management
Market risk: Non-trading portfolios (continued)
Key points
· The increase in period end VaR mainly reflects an increase in the duration of the Group's balance sheet, largely due to action taken by CFG to reduce earnings sensitivity to movements in short-term dollar interest rates.
· The decline in sterling VaR over the period did not reflect a reduction in RBS's underlying exposure to sterling fixed rate assets, which was broadly unchanged. Instead, it reflected reduced volatility in sterling interest rates over the period and a smoother maturity profile of the underlying exposures.
· These movements remained well within the Group's approved market risk appetite.
Sensitivity of net interest income*
Earnings sensitivity to rate movements is derived from a central forecast over a twelve month period. Market implied
forward rates and new business volume, mix and pricing consistent with business assumptions are used to generate a base
case earnings forecast.
The following table shows the sensitivity of net interest income, over the next twelve months, to an immediate upward or
downward change of 100 basis points to all interest rates. In addition, the table includes the impact of a gradual 400
basis point steepening (bear steepener) and a gradual 300 basis point flattening (bull flattener) of the yield curve at
tenors greater than a year.
The scenarios represent annualised interest rate stresses of a scale deemed sufficient to trigger a modification in
customer behaviour. The asymmetry in the steepening and flattening scenarios reflects the difference in the expected
behaviour of interest rates as they approach zero.
Euro Sterling US dollar Other Total
30 June 2014 £m £m £m £m £m
+ 100 basis point shift in yield curves 27 413 140 23 603
- 100 basis point shift in yield curves (66) (280) (53) (28) (427)
Bear steepener 387
Bull flattener (229)
31 December 2013
+ 100 basis point shift in yield curves 59 416 175 31 681
- 100 basis point shift in yield curves (29) (333) (82) (15) (459)
Bear steepener 403
Bull flattener (273)
Key points
· The Group's interest rate exposure remains asset sensitive, such that rising rates will have a positive impact on its net interest income.
· The reduction in interest income sensitivity over the period largely reflects action taken by CFG to reduce earnings sensitivity to movements in short-term dollar interest rates.
*Not within the scope of Deloitte LLP's review report
Appendix 1 Capital and risk management
Country risk
Country risk is the risk of losses occurring as a result of either a country event or unfavourable country operating
conditions. As country events may simultaneously affect all or many individual exposures to a country, country event risk
is a concentration risk. For other types of concentration risks such as product, sector or single-name concentration, refer
to the Credit risk section. For a description of the governance, monitoring and management of RBS's country risk framework
and definitions, refer to Risk and balance sheet management - Country risk of RBS's 2013 Annual Report and Accounts.
Overview*
The comments below relate to changes in the six months to 30 June 2014 unless indicated otherwise.
· Net balance sheet and off-balance sheet exposure to most countries shown in the summary tables declined across most broad product categories. RBS maintained a cautious
stance, many clients continued to reduce debt levels, and the US dollar and the euro depreciated against sterling by 3.3% and 3.9% respectively.
· Total eurozone net balance sheet exposure decreased by £4.9 billion or 5% to £97.6 billion. This was caused largely by reductions in cash deposits held with central banks
in Germany and the Netherlands, in corporate lending in Ireland and Germany, and in net held-for-trading (HFT) government bond positions in the Netherlands and Spain. CDS
net bought protection on eurozone exposure increased by £1.1 billion. Net HFT debt securities in Germany, France, Belgium, Austria and Finland increased while exposure to
the Netherlands, Italy and Spain decreased, driven by market opportunities. Net lending in RCR was £4.3 billion for the eurozone as a whole, including £1.4 billion in
Germany, £0.8 billion in Spain and £0.6 billion in both France and Ireland. Commercial real estate sector accounted for broadly half of the total.
· Eurozone periphery net balance sheet exposure decreased by £1.5 billion to £40.3 billion.
○ Ireland - Ulster Bank Ireland moved £2.0 billion of cash deposits with RBS to the Central Bank of Ireland in anticipation of the new CRD IV liquidity coverage ratio requirements, which will come into effect in 2015. Net lending to corporates and households decreased by £1.4 billion and £0.8 billion respectively, reflecting currency movements, repayments, sales and write-offs.
○ Spain - net balance sheet exposure decreased by £1.8 billion, largely as a result of reductions in net HFT and AFS debt securities and lower lending to the commercial real estate sector. The reduction in AFS securities reflected the sale of some of the covered bonds ('cedulas') in the RBS NV liquidity buffer.
○ Italy - net derivatives to banks increased by £1.2 billion, driven by the novation of a portfolio from a counterparty. The novated exposure is fully cash collateralised. Net HFT government bonds exposure declined by £0.8 billion.
○ Portugal - net HFT debt securities increased by nearly £0.2 billion reflecting greater appetite for Portuguese trading exposure.
*Not within the scope of Deloitte LLP's review report
Appendix 1 Capital and risk management
Country risk: Overview* (continued)
· Germany - net balance sheet exposure fell by £3.8 billion, mainly due to a decrease of £2.7 billion in cash deposits with the Bundesbank. Other significant reductions were in commercial real estate lending (£1.3 billion) and in derivatives, notably to
banks, by £0.6 billion reflecting market movements. Off-balance exposure decreased by £1.0 billion, mostly owing to a reduction in the insurance sector.
· France - net balance sheet exposure rose by £0.8 billion, reflecting business fluctuations. Off-balance exposure decreased by £0.4 billion, largely due to reductions in the oil and gas, industrials and insurance sectors.
· Netherlands - net balance sheet exposure fell by £2.8 billion as a result of a drop in HFT government bonds, a decrease in cash deposits held with the central bank, and reductions in AFS debt securities. RBS NV's liquidity needs have decreased in line with
balance sheet reductions, and sales are being executed dependent on market conditions, which were relatively benign in H1. Off-balance sheet exposure increased by £0.2 billion, primarily in the non-bank financial institutions sector.
· Belgium - net balance sheet exposure increased by £1.0 billion, in HFT government bonds. Off balance exposure decreased by £0.3 billion, mostly in the electricity sector.
· Other eurozone - net HFT government bonds increased by £0.6 billion reflecting increased long positions.
· China - lending to banks increased by £0.2 billion, while off-balance sheet exposure to banks fell by a similar amount. The bank undertakes stress testing across both financial institutions and corporate portfolios, with early warning indicators and action
plans for a possible economic downturn.
· Japan - net balance sheet exposure decreased by £0.9 billion as a result of reductions in derivatives exposure to banks and other financial institutions and lower corporate lending.
· India - net balance sheet exposure fell by £0.9 billion, with reductions in lending and AFS debt exposure to banks and in lending to corporate clients.These reductions in part reflected securities and loans sales to reduce risk-weighted assets in
favourable market conditions.
· Russia - net balance sheet exposure decreased by £0.1 billion to £1.8 billion, including £0.9 billion of corporate lending and £0.6 billion of lending to banks. Nearly half of the latter exposure was fully hedged. Following developments in Ukraine, ratings
were reviewed, limits adjusted and additional credit restrictions placed on new business. Exposures are also reviewed against any international sanctions.
· Turkey - lending to banks increased by £0.3 billion, partly reflecting drawings under committed limits.
· Funding mismatches - material estimated funding mismatches at risk of redenomination at 30 June 2014 were: Ireland £7.5 billion (up from £6.5 billion at 31 December 2013 largely due to the £2.0 billion increase in cash held with the central bank and
reduced central bank funding); Spain £5.0 billion (down from £6.5 billion); Italy £0.5 billion (broadly unchanged as assets fell and a central bank funding line was no longer used); and Portugal £0.5 billion (slightly up due to higher debt trading). The
net positions for Greece and Cyprus were minimal. Risks of eurozone break-up (redenomination events) have materially fallen since 2011-2012 owing to major improvements in liquidity conditions, driven by the availability of substantial new tools for the
ECB, the establishment of the European Stability Mechanism and member countries' progress on reducing imbalances.
*Not within the scope of Deloitte LLP's review report
Appendix 1 Capital and risk management
Country risk: Summary of country exposures
Net balance sheet exposure Of which: Off- CDS
Govt Central Other Other Net Debt securities Net balance Total Lending AFS notional less
banks banks FI Corporate Personal Total lending AFS/LAR HFT (net) Derivatives SFT sheet exposure provisions reserves fair value
30 June 2014 £m £m £m £m £m £m £m £m £m £m £m £m £m £m £m £m £m
Eurozone
Ireland 323 2,082 741 510 7,516 14,972 26,144 24,628 220 372 924 - 2,808 28,952 10,209 (1) (65)
Spain 133 2 2,984 1,479 2,573 82 7,253 2,309 3,833 140 970 1 1,849 9,102 181 (215) (279)
Italy 896 16 2,517 671 1,437 27 5,564 1,473 549 501 3,041 - 2,152 7,716 47 (24) (827)
Portugal 136 - 362 130 254 9 891 213 90 215 373 - 317 1,208 95 (2) (156)
Greece - - 223 5 100 17 345 78 - 4 263 - 24 369 26 - (13)
Cyprus 9 - 1 2 107 12 131 103 - 9 19 - 15 146 43 - -
Eurozone
periphery 1,497 2,100 6,828 2,797 11,987 15,119 40,328 28,804 4,692 1,241 5,590 1 7,165 47,493 10,601 (242) (1,340)
Germany 8,111 851 3,948 4,567 2,388 95 19,960 3,595 5,518 3,002 6,815 1,030 6,195 26,155 42 60 (1,451)
France 3,203 2 6,895 2,205 2,235 92 14,632 4,053 1,749 2,218 5,931 681 9,393 24,025 132 (27) (2,326)
Netherlands (224) 892 5,055 5,132 2,264 27 13,146 3,650 3,856 (534) 6,089 85 9,985 23,131 148 646 (552)
Belgium 1,358 1 1,928 96 402 23 3,808 509 369 871 1,994 65 912 4,720 - (29) (237)
Luxembourg - 268 586 465 578 5 1,902 1,024 86 143 526 123 1,201 3,103 47 - (100)
Other 1,906 22 790 181 871 19 3,789 1,082 500 954 1,248 5 1,040 4,829 - (21) (679)
Total
eurozone 15,851 4,136 26,030 15,443 20,725 15,380 97,565 42,717 16,770 7,895 28,193 1,990 35,891 133,456 10,970 387 (6,685)
China 161 126 3,013 282 1,572 45 5,199 4,882 130 12 175 - 1,394 6,593 8 - (7)
Japan 565 1,416 1,294 561 455 35 4,326 2,288 12 518 1,229 279 792 5,118 2 - (21)
India 470 77 486 129 1,635 38 2,835 2,304 366 121 44 - 764 3,599 18 (2) (28)
Russia 81 80 631 45 942 55 1,834 1,738 81 - 15 - 216 2,050 4 (1) (101)
Turkey 97 67 423 110 1,050 18 1,765 1,654 44 9 57 1 169 1,934 17 - (40)
South Korea 241 1 830 51 543 3 1,669 1,192 131 138 208 - 520 2,189 - - 126
Brazil 267 - 901 8 131 3 1,310 966 - 274 70 - 206 1,516 - - (3)
These tables show RBS exposure, at 30 June 2014 and 31 December 2013 by country of operation of the counterparty, except
exposures to governments and individuals which are shown by country of residence. Balance sheet exposures are now shown net
of loan impairment provisions and prior period data are shown on the same basis. Countries shown are those where the
balance sheet exposure exceeded £1 billion and which had ratings of A+ or below from Standard and Poor's, Moody's or Fitch
at 30 June 2014, as well as selected eurozone countries. The exposures are stated before taking into account risk
mitigants, such as guarantees, insurance or collateral (with the exception of reverse repos). Exposures relating to
ocean-going vessels are not included as they cannot be meaningfully assigned to specific countries from a country risk
perspective.
Appendix 1 Capital and risk management
Country risk: Summary of country exposures
Net balance sheet exposure Of which: Off-
Govt Central Other Other Net Debt securities Net balance Total Lending AFS CDS notional
banks banks FI Corporate Personal Total lending AFS/LAR HFT (net) Derivatives SFT sheet exposure provisions reserves less fair value
31 December 2013 £m £m £m £m £m £m £m £m £m £m £m £m £m £m £m £m £m
Eurozone
Ireland 188 116 688 561 8,973 15,821 26,347 24,893 233 248 900 73 2,711 29,058 10,701 (9) (166)
Spain 858 - 3,439 1,405 3,093 293 9,088 3,084 4,162 853 989 - 1,981 11,069 177 (449) (444)
Italy 1,676 22 1,329 891 1,171 26 5,115 1,582 519 1,240 1,774 - 1,962 7,077 46 (43) (734)
Portugal 35 - 310 114 312 6 777 290 93 43 351 - 280 1,057 99 (5) (163)
Greece - 1 228 1 105 14 349 89 - - 260 - 38 387 38 - (12)
Cyprus 2 - 1 - 144 10 157 139 - 2 16 - 18 175 54 - -
Eurozone
periphery 2,759 139 5,995 2,972 13,798 16,170 41,833 30,077 5,007 2,386 4,290 73 6,990 48,823 11,115 (506) (1,519)
Germany 7,215 3,588 5,044 4,265 3,520 90 23,722 8,013 5,168 2,524 7,416 601 7,189 30,911 211 29 (1,340)
France 2,806 - 6,714 1,832 2,427 79 13,858 4,197 1,692 1,678 5,660 631 9,807 23,665 123 (32) (1,747)
Netherlands 1,509 1,713 4,604 5,786 2,303 21 15,936 4,652 4,661 819 5,697 107 9,763 25,699 187 97 (356)
Belgium 106 - 1,995 267 431 2 2,801 713 443 (480) 2,123 2 1,170 3,971 26 (34) (123)
Luxembourg (1) 11 524 659 386 4 1,583 741 75 98 581 88 1,043 2,626 50 - (58)
Other 1,075 22 654 160 783 18 2,712 879 510 331 918 74 1,202 3,914 1 (24) (476)
Total
eurozone 15,469 5,473 25,530 15,941 23,648 16,384 102,445 49,272 17,556 7,356 26,685 1,576 37,164 139,609 11,713 (470) (5,619)
China 345 200 2,794 244 1,518 33 5,134 4,584 166 13 370 1 1,689 6,823 16 (1) (14)
Japan (129) 1,600 2,240 830 687 34 5,262 2,795 72 (172) 2,365 202 352 5,614 2 - 4
India 536 70 949 91 2,050 36 3,732 2,909 571 160 92 - 813 4,545 18 (4) (21)
Russia 152 37 754 6 949 53 1,951 1,781 149 2 19 - 364 2,315 2 - (65)
Turkey 173 59 169 126 1,064 24 1,615 1,404 50 67 94 - 324 1,939 18 - (32)
South Korea 238 4 755 133 576 2 1,708 1,125 179 154 250 - 681 2,389 - - 176
Brazil 262 - 914 2 148 3 1,329 977 - 268 84 - 245 1,574 - - 12
Appendix 2
Income statement reconciliations
Appendix 2 Income statement reconciliations
Half year ended
30 June 2014 30 June 2013
Non- One-off items Presentational Statutory Non- One-off items Presentational Statutory
statutory reallocation adjustments (1) statutory reallocation adjustments (1)
£m £m £m £m £m £m £m £m
Interest receivable 7,621 - - 7,621 8,560 - - 8,560
Interest payable (2,125) (3) - (2,128) (3,118) (5) - (3,123)
Net interest income 5,496 (3) - 5,493 5,442 (5) - 5,437
Fees and commissions receivable 2,605 - - 2,605 2,708 - - 2,708
Fees and commissions payable (487) - - (487) (460) - - (460)
Income from trading activities 1,482 11 - 1,493 1,890 174 - 2,064
Gain on redemption of own debt - 20 - 20 - 191 - 191
Other operating income 882 154 - 1,036 1,028 304 - 1,332
Non-interest income 4,482 185 - 4,667 5,166 669 - 5,835
Total income 9,978 182 - 10,160 10,608 664 - 11,272
Staff costs (3,340) - (196) (3,536) (3,585) - (142) (3,727)
Premises and equipment (1,079) - (196) (1,275) (1,079) - (25) (1,104)
Other administrative expenses (1,292) (1) (369) (1,662) (1,479) 2 (704) (2,181)
Depreciation and amortisation (551) - (3) (554) (716) - (20) (736)
Restructuring costs (514) - 514 - (271) - 271 -
Litigation and conduct costs (250) - 250 - (620) - 620 -
Write-down of goodwill and other intangible assets (82) (130) - (212) - - - -
Operating expenses (7,108) (131) - (7,239) (7,750) 2 - (7,748)
Profit before impairment losses 2,870 51 - 2,921 2,858 666 - 3,524
Impairment losses (269) - - (269) (2,150) - - (2,150)
Operating profit 2,601 51 - 2,652 708 666 - 1,374
For the notes to this table refer to the following page.
Appendix 2 Income statement reconciliations
Half year ended
30 June 2014 30 June 2013
Non- One-off items Presentational Statutory Non- One-off items Presentational Statutory
statutory reallocation adjustments (1) statutory reallocation adjustments (1)
£m £m £m £m £m £m £m £m
Operating profit 2,601 51 - 2,652 708 666 - 1,374
Own credit adjustments (2) (51) 51 - - 376 (376) - -
Gain on redemption of own debt 20 (20) - - 191 (191) - -
Write-down of goodwill (130) 130 - - - - - -
Strategic disposals 191 (191) - - - - - -
RFS Holdings minority interest 21 (21) - - 99 (99) - -
Profit before tax 2,652 - - 2,652 1,374 - - 1,374
Tax charge (733) - - (733) (678) - - (678)
Profit for continuing operations 1,919 - - 1,919 696
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