REG - Royal Bk Scot.Grp. - Interim Management Statement <Origin Href="QuoteRef">RBS.L</Origin> - Part 1

NatwestAnnouncement

29/04/2016 07:06

RNS Number : 7468W
Royal Bank of Scotland Group PLC
29 April 2016
The Royal Bank of Scotland Group plc
Q1 2016 Results
Contents
Page
Introduction
1
Highlights
3
Analysis of results
9
Segment performance
19
Selected statutory financial statements
27
Notes
32
Forward-looking statements 
37
Appendix 1 - Additional segment information
Appendix 2 - Additional capital resources, RWA and leverage information
Introduction
Presentation of information
In this document, 'RBSG plc' or the 'company' refers to The Royal Bank of Scotland Group plc, and 'RBS' or the 'Group' refers to RBSG plc and its subsidiaries. The results commentary in this document refers to measures of financial performance, principally operating performance before own credit adjustments, loss on redemption of own debt, write down of goodwill, strategic disposals, restructuring costs and litigation and conduct costs, to exclude items which distort period-on-period comparison. These measures, derived from the reported results, are non-GAAP financial measures.
Statutory results
The consolidated income statement, consolidated statement of comprehensive income, consolidated balance sheet, consolidated statement of changes in equity and related notes presented on pages 32 to 36 inclusive are on a statutory basis.
Financial information contained in this document does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006 ('the Act'). The statutory accounts for the year ended 31 December 2015 will be filed with the Registrar of Companies following the company's Annual General Meeting. The report of the auditor on those statutory accounts was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Act.
Restatements
Pension accounting policy
As set out in the 'Basis of preparation', in Q4 2015 RBS revised its accounting policy for determining whether or not it has an unconditional right to a refund of surpluses in its employee pension funds. The change was applied retrospectively and comparatives restated.
RBS also made certain changes to its financial reporting in Q4 2015 as follows.
revised reportable segments;
a change to the treatment of one-off and other items;
allocation of central balance sheet items;
revised treasury allocations; and
revised segmental return on equity.
Comparatives for Q1 2015 have been restated accordingly. For further information refer to the Restatement document issued on 4 February 2016, available on www.investors.rbs.com/restatement.

Introduction 
Analysts and investors conference call
RBS will be hosting a call for analysts and investors on the results for the period ended 31 March 2016. Details are as follows:
Date:
Friday 29 April 2016
Time:
9:00 am UK time 
Conference ID
89104610
Webcast:
www.rbs.com/results
Dial in details:
International - +44 (0) 1452 568 172
UK Free Call - 0800 694 8082
US Toll Free - 1 866 966 8024
Announcement and slides are available on www.rbs.com/results
Financial supplement
A Financial supplement containing income statement and balance sheet information for each of the nine quarters ended 31 March 2016 is available on www.rbs.com/results.
Globally Systemically Important Institutionstemplate as of and for the year ended 31 December 2015 is available onwww.rbs.com/results.
Contacts 
For analyst enquiries:
Richard O'Connor
Head of Investor Relations
+44 (0) 20 7672 1758
For media enquiries:
RBS Press Office
+44 (0) 131 523 4205
Highlights
RBS continues to deliver on its plan to build a strong, simple and fair bank for both customers and shareholders, and remains committed to delivering its 2016 targets. RBS reported a profit before tax of 421 million for Q1 2016. An attributable loss of 968 million included payment of the final Dividend Access Share (DAS) dividend of 1,193 million to the UK Government. 
Income was broadly stable compared with Q1 2015 across our core Personal & Business Banking (PBB) and Commercial & Private Banking (CPB) franchises. In Q1 2016, core PBB and CPB net loans and advances grew by 15% on an annualised basis with strong growth in both the mortgage and commercial businesses. RBS has made good progress on customer Net Promoter Score (NPS) in the last year, although there still remains much to do. Common Equity Tier 1 ratio (CET1) of 14.6% remains in excess of target. Adjusted return on equity(1) across our core PBB, CPB and CIB franchises was 10.9% in Q1 2016. 
As a result of further extensive analysis on the separation and divestment of Williams & Glyn throughout Q1 2016, we have recently concluded that there is a significant risk that this will not be achieved by 31 December 2017 and alternative means to achieve this are being explored.
An attributable loss(2) of 968 million in Q1 2016 compared with 459 million in Q1 2015. Excluding the final DAS dividend of 1,193 million, the Bank made an attributable profit(2) of 225 million notwithstanding IFRS volatility(3) losses of 356 million, restructuring costs of 238 million and an impairment charge of 223 million largely related to its shipping portfolio. An own credit adjustment gain of 256 million was recorded in Q1 2016.
Operating profit was 421 million in Q1 2016 compared with 37 million in Q1 2015. Adjusted operating profit(4) of 440 million in Q1 2016 was down from 1,355 million in Q1 2015 primarily due to Capital Resolution and the IFRS volatility charge.
UK Personal & Business Banking (UK PBB) adjusted operating profit(5) of 531 million was 54 million, or 9%, lower than in Q1 2015. Adjusting for the impact of business transfers(6), net loans and advances increased by 11.2 billion compared with Q1 2015 primarily driven by strong mortgage growth. Total income fell by 3% compared with Q1 2015 reflecting margin pressure and reduced fee income, but was 2% higher than Q4 2015 as margins stabilised. 
Commercial Banking adjusted operating profit(5) of 403 million was 7% up on Q1 2015. Excluding the impact of transfers(7), net loans and advances increased by 4.0 billion helping to drive an 8% increase in income.
Ulster Bank RoI adjusted operating profit(5) was stable at 64 million compared with Q1 2015. 
Private Banking adjusted operating profit(5) was 40% lower at 26 million, as the business continues to invest in its infrastructure, whilst RBS International adjusted operating profit(5) was stable compared with Q1 2015 at 53 million, with return on equity remaining strong at 16%.
CIB recorded income of 341 million in Q1 2016. Adjusted income of 277 million was 165 million lower than Q1 2015, excluding a 42 million transfer of portfolios to Commercial Banking, reflecting difficult market conditions and the reduced scale of the business. An adjusted operating loss(5) of 54 million compared with a 100 million profit in Q1 2015. Adjusted expenses reduced by 16% as CIB moves towards a sustainable cost base.
Capital Resolution reported an adjusted operating loss(5) of 377 million, compared with an operating profit of 143 million in Q1 2015. A net impairment charge of 196 million was recognised in Q1 2016, principally in relation to the shipping portfolio. RWAs reduced by 36.7 billion from Q1 2015 to 47.6 billion. 

Highlights
Net interest margin (NIM) was stable compared with Q1 2015 at 2.15% as the benefit from reductions in the low yielding non-core assets has been largely offset by modest asset margin pressure and mix impacts across the core franchises. 
Adjusted operating expenses(5) were down by 157 million compared with Q1 2015. Excluding expenses associated with Williams & Glyn and write down of intangible assets, adjusted operating expenses were down 189 million.
Restructuring costs were 238 million in the quarter, down 209 million, or 47%, compared with Q1 2015. Litigation and conduct costs of 31 million compared with 856 million in Q1 2015 and 2,124 million in Q4 2015, which included additional provisions for mortgage-backed securities and foreign exchange litigation in the US, additional PPI provisions and other customer redress. 
Further to the announcement on 27 January 2016, RBS made a payment of 4.2 billion during March to The Royal Bank of Scotland Group Pension Fund, being an accelerated payment of existing committed future contributions. The impact of the 4.2 billion accelerated payment was largely reflected in the year end financial statements; the incremental impact of the accelerated payment being made during March was to reduce the CET1 ratio by around 30 basis points. 
Tangible net asset value (TNAV) was 351p per ordinary share at 31 March 2016, broadly stable in the quarter. A 14p reduction due to the payment of the final Dividend Access Share dividend and the accelerated pension payment was offset by gains recognised in foreign exchange reserves (5p) reflecting the strengthening of the US dollar and the euro, and cash flow hedging reserves (8p) as swap rates decreased.
Progress on 2016 targets
RBS remains committed to achieving all its priority targets for 2016
Strategy goal 
2016 target 
Q1 2016 Progress 
Strength and sustainability
Maintain Bank CET1 ratio of 13%
CET1 ratio of 14.6%
2 billion AT1 issuance
Continue to plan to issue in 2016, subject to market conditions
Capital Resolution RWAs around 30 billion
RWAs down 1.4 billion to 47.6 billion despite adverse exchange rate and interest rate movements
Customer experience 
Narrow the gap to No.1 in NPS in every primary UK brand
Year on year Ulster Bank Personal (NI) has narrowed the gap, and our NatWest and Royal Bank brands show improvements in NPS
Simplifying the bank
Reduce operating expenses by 800 million
Operating expenses down 189 million(8); on track
Supporting growth
Net 4% growth in PBB and CPB customer loans
Net lending in PBB and CPB up 15% on an annualised basis in the quarter
Employee engagement
Raise employee engagement to within two points of the GFS norm
Reviewed annually during Q3
Notes:
(1)
Excluding restructuring costs, litigation and conduct costs, write down of goodwill, own credit adjustments, loss on redemption of own debt and strategic disposals.
(2)
Attributable to ordinary shareholders.
(3)
IFRS volatility relates to loans which are economically hedged but for which hedge accounting is not permitted under IFRS.
(4)
Operating profit/(loss) before tax, own credit adjustments, loss on redemption of own debt, strategic disposals and excluding restructuring costs, litigation and conduct costs and write down of goodwill.
(5)
For unadjusted operating profit and expenses see segment performance on pages 19 to 21.
(6)
The transfer of Ulster Bank Northern Ireland commercial activities to Commercial Banking on 1 January 2016 represented 1.1 billion of net loans and advances.
(7)
The portfolio transfers included net loans and advances to customers of 7.3 billion (6.2 billion at point of transfer)
(8)
Excluding litigation and conduct costs, restructuring costs, write down of goodwill and other intangible assets and the operating costs of Williams & Glyn.

Highlights
Building a stronger RBS
RBS remains on track with its plan to build a strong, simple, fair bank for customers and shareholders.
CET1 ratio remains ahead of our 13% target. The 90 basis points reduction in the CET1 ratio during the quarter was largely due to the payment of the final Dividend Access Share dividend, 50 basis points, and the accelerated pension payment, 30 basis points, actions that have been taken to normalise the ownership structure and increase the long-term resilience of the Bank. 
RWAs increased by 6.9 billion during the quarter to 249.5 billion driven by strong loan growth alongside market volatility and exchange rate movements as sterling weakened over the quarter. Although market conditions have been difficult in Q1 2016, we remain on track to reduce RWAs by 19 billion in Capital Resolution to around 30 billion by the end of 2016.
RBS's leverage ratio reduced from 5.6% to 5.3% principally due to the attributable loss in the quarter. RBS continues to plan to issue 2 billion AT1 capital notes in 2016, subject to market conditions, which will provide further balance sheet resilience.
RBS successfully completed two senior unsecured debt issuances: 1.5 billion seven year 2.5% notes and $1.5 billion ten year 4.8% notes. The debt will be eligible to meet RBS's Minimum Requirement for Own Funds and Eligible Liabilities (MREL) and forms a significant part of our targeted 3-5 billion senior debt issuance for 2016. 
On 8 April 2016, RBS successfully completed the cash tender of 2.3 billion of certain US dollar, sterling and euro senior debt securities. The tender offers were part of the on-going transition to a holding company capital and term funding model in line with regulatory requirements and included securities that RBS considers non-compliant for MREL purposes. RBS will recognise a loss of c.66 million in its Q2 2016 results in relation to the tender offer. Over the last six months to the end of April, RBS has reduced term funding by 11.7 billion. 
On 11 April 2016, we completed the successful transfer of the Coutts International businesses in Asia and the Middle East to Union Bancaire Prive, the final milestone in the sale of our International Private Bank. We also completed the sale of our Russian subsidiary in early April.
RBS continued to deliver strong support for both household and business customers. Within UK PBB, gross new mortgage lending almost doubled from a subdued Q1 2015 performance to 7.0 billion. Our flow market share in Q1 2016 was approximately 11.4% compared with stock share of 8.3%. Buy-to-let new mortgage lending was 1.5 billion compared with 0.8 billion in Q1 2015 and 1.3 billion in Q4 2015. We now have nearly 1,000 mortgage advisors supporting our customers, an increase of over 20% since the beginning of 2015. Net new lending in Commercial Banking totalled 6.5 billion. Q1 2016 represents the fifth successive quarter of net lending growth in Commercial Banking.
The Reward account continues to show positive momentum and now has 539,000 fee-paying customers compared with 202,000 at 31 December 2015.
We continue to make better use of our digital channels to make it simpler to serve our customers and for them to do business with us. Online mortgage renewals more than doubled to 3.0 billion compared with Q1 2015, and NatWest customers can now apply for personal loans or credit cards via the mobile app. Active users of our mobile app increased by 20% over the last year, with over 200,000 new users in Q1 2016.

Highlights
Customer
RBS remains committed to achieving its target of being number one bank for customer service, trust and advocacy by 2020.
We use independent surveys to measure our customers' experience and track our progress against our goal in each of our markets.
Net Promoter Score (NPS)
Customers are asked how likely they would be to recommend their bank to a friend or colleague, and respond based on a 0-10 scale with 10 indicating 'extremely likely' and 0 indicating 'not at all likely'. Customers scoring 0 to 6 are termed detractors and customers scoring 9 to 10 are termed promoters. NPS is established by subtracting the proportion of detractors from the proportion of promoters.
The table below lists all of the businesses for which we have an NPS for 2016. Year-on-year, NatWest Personal Banking, NatWest Business Banking and Royal Bank of Scotland Personal Banking have seen significant improvements in NPS. 
In recent years, the bank has launched a number of initiatives to make it simpler, fairer and easier to do business, and it continues to deliver on the commitments that it made to its customers in 2014.
Q1 2015
Q4 2015
Q1 2016
Year end 2016 target
Personal Banking
NatWest (England & Wales)(1)
5
9
13
15
Royal Bank of Scotland (Scotland)(1)
-18
-9
-6
-5
Ulster Bank (Northern Ireland)(2)
-18
-9
-14
-3
Ulster Bank (Republic of Ireland)(2)
-16
-14
-12
-10
Business Banking
NatWest (England & Wales)(3)
-6
9
9
13
Royal Bank of Scotland (Scotland)(3)
-17
-7
-7
2
Ulster Bank Corporate
Ulster Bank (Northern Ireland) (4)
n/a
-19
-10
-4
Ulster Bank (Republic of Ireland) (5)
n/a
-21
n/a
-15
Commercial Banking(6)
12
9
15
17

Highlights
Customer Trust
We also use independent experts to measure our customers' trust in the bank. Each quarter we ask customers to what extent they trust or distrust their bank to do the right thing. The score is a net measure of those customers that trust their bank (a lot or somewhat) minus those that distrust their bank (a lot or somewhat).
Customer trust in RBS has continued to improve and is at its highest in two years. NatWest has not changed since last quarter - both are currently on track to meet the 2016 year end target. 
Q1 2015
Q4 2015
Q1 2016
Yearend 2016 target
Customer trust(7)
NatWest (England & Wales)
44%
48%
48%
51%
Royal Bank of Scotland (Scotland)
10%
14%
21%
26%
Notes:
(1)
Source: GfK FRS 6 month rolling data. Latest base sizes: NatWest (England & Wales) (3464) Royal Bank of Scotland (Scotland) (607). Based on the question: "How likely is it that you would recommend (brand) to a relative, friend or colleague in the next 12 months for current account banking?"
(2)
Source: Coyne Research 12 month rolling data. Latest base sizes: Ulster Bank NI (359) Ulster Bank RoI (344) Question: "Please indicate to what extent you would be likely to recommend (brand) to your friends or family using a scale of 0 to 10 where 0 is not at all likely and 10 is extremely likely". 
(3)
Source: Charterhouse Research Business Banking Survey (GB), based on interviews with businesses with an annual turnover up to 2 million. Quarterly rolling data. Latest base sizes: NatWest England & Wales (1347), RBS Scotland (425). Weighted by region and turnover to be representative of businesses in England & Wales/Scotland, 4 quarter rolling data.
(4)
Source: Charterhouse Research Business Banking Survey (NI). Latest base size: Ulster (383) Weighted by turnover and industry sector to be representative of businesses in Northern Ireland, 4 quarter rolling data.
In 2016 we switched the source of advocacy measurement for Ulster Bank Corporate NI to the Charterhouse Business Banking Study. Charterhouse is a recognised, independent syndicate study that provides more frequent reporting of NPS as well as additional diagnostic customer feedback to help us improve the customer experience. The Q4 2015 figure has been restated to reflect this.
(5)
Source: PWC Republic of Ireland Business Banking Tracker. Data collected annually. Latest base sizes: Ulster Bank RoI (222). Weighted by turnover to be representative of businesses in the Republic of Ireland.
(6)
Source: Charterhouse Research Business Banking Survey (GB), based on interviews with businesses with annual turnover between 2 million and 1 billion. Latest base size: RBSG Great Britain (888). Weighted by region and turnover to be representative of businesses in Great Britain, 4 quarter rolling data.
(7)
Source: Populus. Latest quarter's data. Measured as a net of those that trust RBS/NatWest to do the right thing, less those that do not. Latest base sizes: NatWest, England & Wales (920), RBS Scotland (199).

Highlights
Outlook
We expect PBB and CPB income to be broadly stable in 2016 compared with 2015 as strong planned balance sheet growth, particularly in mortgages but also in core commercial lending, is balanced by headwinds from low interest rates and the uncertain macroeconomic environment. In Q1 2016 income was broadly stable across the combined PBB and CPB business. Compared with 2015, we expect to see modest income erosion in CIB following a difficult Q1 2016, albeit performance improved towards the end of the quarter.
RBS remains on track to achieve an 800 million cost reduction in 2016 after achieving a 189 million reduction in the first quarter. We retain our expectation that cost reduction will exceed any income erosion across our combined core businesses. We will incur a charge of approximately 50 million in respect of the Financial Services Compensation Scheme (FSCS) levy in our Q2 2016 results.
We anticipate a modest net impairment charge for the year in our core franchises. The impairment charge taken in the quarter largely related to the shipping portfolio and we continue to anticipate additional net impairments in the Capital Resolution business. We also recognise the increased risk of large single name events across our portfolios given the uncertain macroeconomic environment.
Restructuring costs are expected to remain high in 2016, totalling over 1 billion. 
We expect Capital Resolution disposal losses of approximately 1.5 billion over the period 2015-19, and we anticipate that we will incur most of the remaining losses in 2016 (2015 - 367 million). Losses in Q1 2016 almost entirely comprise the 226 million impairment relating to the shipping portfolio. Although market conditions have been difficult in Q1 2016, Capital Resolution remains on track to reduce RWAs to around 30 billion by the end of 2016 following a 1.4 billion reduction in Q1 2016. 
We continue to deal with a range of uncertainties in the external environment, not least those caused by the forthcoming referendum on the UK's continuing membership of the European Union. We will also have to manage conduct-related investigations and litigation, including US RMBS, throughout 2016, and substantial related incremental provisions may be recognised during the year.
Williams & Glyn
RBS announced an update on its plans to divest Williams & Glyn on 28 April 2016. Since the last update provided with the 2015 Annual Results, we have undertaken further extensive analysis on the separation and divestment of Williams & Glyn. As a result of this analysis, we have concluded that there is a significant risk that the separation and divestment to which we are committed will not be achieved by 31 December 2017. Due to the complexities of Williams & Glyn's customer and product mix, the programme to create a cloned banking platform continues to be very challenging and the timetable to achieve separation is uncertain. RBS is exploring alternative means to achieve separation and divestment. The overall financial impact on RBS is now likely to be significantly greater than previously estimated.
Analysis of results
Summary consolidated income statement for the period ended 31 March 2016
Quarter ended 
31 March
31 December
31 March
2016
2015
2015*
m
m
m
Net interest income
2,156
2,162
2,203
Own credit adjustments
256
(115)
120
Loss on redemption of own debt
-
(263)
-
Strategic disposals
(6)
(22)
(135)
Other operating income
658
722
1,331
Non-interest income
908
322
1,316
Total income 
3,064
2,484
3,519
Litigation and conduct costs 
(31)
(2,124)
(856)
Restructuring costs
(238)
(614)
(447)
Write down of goodwill
-
(498)
-
Other costs
(2,151)
(2,525)
(2,308)
Operating expenses
(2,420)
(5,761)
(3,611)
Profit/(loss) before impairment (losses)/releases
644
(3,277)
(92)
Impairment (losses)/releases
(223)
327
129
Operating profit/(loss) before tax
421
(2,950)
37
Tax (charge)/credit
(80)
261
(190)
Profit/(loss) from continuing operations
341
(2,689)
(153)
Profit/(loss) from discontinued operations, net of tax
-
90
(316)
Profit/(loss) for the period
341
(2,599)
(469)
Attributable to:
Non-controlling interests
22
20
(84)
Other owners
94
121
74
Dividend access share 
1,193
-
-
Loss attributable to ordinary shareholders
(968)
(2,740)
(459)
Memo:
Total income - adjusted (1)
2,814
2,884
3,534
Operating expenses - adjusted (2)
(2,151)
(2,525)
(2,308)
Operating profit - adjusted (1,2)
440
686
1,355
*Restated, refer to Note 1 on page 32 for further details.
Key metrics and ratios
Net interest margin 
2.15%
2.10%
2.15%
Cost:income ratio 
79%
232%
103%
Cost:income ratio - adjusted (1,2)
76%
88%
65%
(Loss)/earnings per ordinary share from continuing operations
 - basic
(8.3p)
(24.5p)
(2.2p)
 - adjusted (1,2)
(8.1p)
5.1p
8.6p
Return on tangible equity (3)
(9.6%)
(26.5%)
(4.3%)
Return on tangible equity - adjusted (1,2,3)
(9.4%)
6.6%
7.4%
Average tangible equity (3)
40,383m
41,319m
42,392m
Average number of ordinary shares outstanding during the period (millions)
11,606
11,554
11,451
Notes:
(1)
Excluding own credit adjustments, loss on redemption of own debt and strategic disposals.
(2)
Excluding restructuring costs, litigation and conduct costs and write down of goodwill.
(3)
Tangible equity is equity attributable to ordinary shareholders less intangible assets.
Analysis of results
Summary consolidated balance sheet as at 31 March 2016
31 March
31 December
2016
2015
m
m
Cash and balances at central banks
72,083
79,404
Net loans and advances to banks (1)
19,295
18,361
Net loans and advances to customers (1)
317,088
306,334
Reverse repurchase agreements and stock borrowing
42,356
39,843
Debt securities and equity shares
88,877
83,458
Assets of disposal groups (2)
3,405
3,486
Other assets 
27,609
22,008
Funded assets
570,713
552,894
Derivatives
312,217
262,514
Total assets
882,930
815,408
Bank deposits (3)
31,774
28,030
Customer deposits (3)
352,344
343,186
Repurchase agreements and stock lending
39,030
37,378
Debt securities in issue
29,576
31,150
Subordinated liabilities
20,870
19,847
Derivatives
304,789
254,705
Liabilities of disposal groups (2)
2,816
2,980
Other liabilities 
47,566
43,985
Total liabilities
828,765
761,261
Non-controlling interests
788
716
Owners' equity
53,377
53,431
Total liabilities and equity
882,930
815,408
Contingent liabilities and commitments
150,729
153,752
Balance sheet related key metrics and ratios
Tangible net asset value per ordinary share (4)
351p
352p
Loan:deposit ratio (3,5)
90%
89%
Short-term wholesale funding (3,6)
16.6bn
17.2bn
Wholesale funding (3,6)
58.9bn
58.7bn
Liquidity portfolio
157bn
156bn
Liquidity coverage ratio (LCR) (7)
121%
136%
Net stable funding ratio (NSFR) (8)
119%
121%
Tangible equity (9)
40,892m
40,943m
Number of ordinary shares in issue (millions) (10)
11,661
11,625
Common Equity Tier 1 ratio
14.6%
15.5%
Risk-weighted assets
249.5bn
242.6bn
Leverage ratio (11)
5.3%
5.6%
Notes:
(1)
Excludes reverse repurchase agreements and stock borrowing.
(2)
Primarily international private banking business.
(3)
Excludes repurchase agreements and stock lending.
(4)
Tangible net asset value per ordinary share represents tangible equity divided by the number of ordinary shares in issue.
(5)
Includes disposal groups.
(6)
Excludes derivative collateral.
(7)
On 1 October 2015 the LCR became the PRA's primary regulatory liquidity standard; UK banks are required to meet a minimum standard of 80% initially, rising to 100% by 1 January 2018. The published LCR excludes Pillar 2 add-ons. RBS calculates the LCR using its own interpretation of the EU LCR Delegated Act, which may change over time and may not be fully comparable with that of other institutions.
(8)
NSFR for all periods have been calculated using RBS's current interpretations of the revised BCBS guidance on NSFR issued in late 2014. Therefore, reported NSFR will change over time with regulatory developments. Due to differences in interpretation, RBS's ratio may not be comparable with those of other financial institutions.
(9)
Tangible equity is equity attributable to ordinary shareholders less intangible assets.
(10)
Includes 36 million Treasury shares (31 December 2015 - 26 million).
(11)
Based on end-point CRR Tier 1 capital and leverage exposure under the CRR Delegated Act.
Analysis of results
Quarter ended
31 March
31 December
31 March
2016
2015
2015
Net interest income
m
m
m
Net interest income (1)
RBS
2,156
2,162
2,203
 - UK Personal & Business Banking
1,019
1,030
1,032
 - Ulster Bank RoI
105
85
95
 - Commercial Banking
536
512
482
 - Private Banking
113
108
110
 - RBS International
75
78
76
 - Corporate & Institutional Banking
19
28
14
 - Capital Resolution
86
6
157
 - Williams & Glyn
162
165
163
 - Central items & other
41
150
74
Average interest-earning assets (IEA)
RBS
403,384
407,061
415,380
 - UK Personal & Business Banking
135,793
134,687
127,973
 - Ulster Bank RoI
24,178
23,195
23,244
 - Commercial Banking
114,855
111,600
103,479
 - Private Banking
16,259
16,025
15,575
 - RBS International
21,075
20,773
20,639
 - Corporate & Institutional Banking
11,568
10,190
14,227
 - Capital Resolution
30,767
39,875
82,990
 - Williams & Glyn
23,356
23,327
22,636
 - Central items & other
25,533
27,389
4,617
Yields, spreads and margins of the banking business
Gross yield on interest-earning assets of the banking business (2)
2.82%
2.78%
3.00%
Cost of interest-bearing liabilities of banking business
(1.01%)
(1.00%)
(1.22%)
Interest spread of banking business (3)
1.81%
1.78%
1.78%
Benefit from interest-free funds
0.34%
0.32%
0.37%
Net interest margin (1,4)
RBS
2.15%
2.10%
2.15%
 - UK Personal & Business Banking (5)
3.02%
3.03%
3.27%
 - Ulster Bank RoI (5)
1.75%
1.45%
1.66%
 - Commercial Banking (5)
1.88%
1.82%
1.89%
 - Private Banking (5)
2.80%
2.67%
2.86%
 - RBS International (5)
1.43%
1.49%
1.49%
 - Corporate & Institutional Banking
0.66%
1.09%
0.40%
 - Capital Resolution
1.12%
0.06%
0.77%
 - Williams & Glyn
2.79%
2.81%
2.92%
Third party customer rates (6)
Third party customer asset rate
 - UK Personal & Business Banking
3.95%
4.00%
4.21%
 - Ulster Bank RoI (7)
2.33%
2.19%
2.28%
 - Commercial Banking
2.87%
2.84%
2.98%
 - Private Banking
3.01%
3.06%
3.19%
 - RBS International
3.29%
3.09%
3.15%
Third party customer funding rate
 - UK Personal & Business Banking
(0.62%)
(0.63%)
(0.71%)
 - Ulster Bank RoI (7)
(0.59%)
(0.74%)
(1.05%)
 - Commercial Banking
(0.35%)
(0.36%)
(0.39%)
 - Private Banking
(0.23%)
(0.25%)
(0.28%)
 - RBS International
(0.24%)
(0.24%)
(0.45%)

Analysis of results
Key points
 
Net interest income of 2,156 million was down 47 million, or 2%, compared with 2,203 million in Q1 2015 principally driven by a 45% reduction in Capital Resolution to 86 million in line with the planned shrinkage of the balance sheet. Partially offsetting, Commercial Banking net interest income increased 54 million, or 11%, to 536 million reflecting increased asset volumes. Q1 2016 net interest income benefits from one additional day compared with Q1 2015, 24 million, and is impacted by one fewer day compared with Q4 2015, 24 million. 
 
NIM for RBS of 2.15% was stable compared with Q1 2015 as the benefit associated with reductions in the low yielding 'non-core' assets has been offset by modest asset margin pressure and mix impacts across the core franchises. NIM was 5 basis points higher than Q4 2015 principally reflecting rundown of the low yielding 'non-core' assets.
 
NIM for our combined core PBB and CPB franchises was 2.38% in Q1 2016 compared with 2.50% in Q1 2015 and 2.35% in Q4 2015.
 
In UK PBB, NIM declined by 25 basis points to 3.02% compared with Q1 2015 reflecting lower current account hedge income, the impact of the overall portfolio mix being increasingly weighted towards secured lending and mortgage customers switching from standard variable rate (SVR) to lower rate products. SVR balances represented 16% of the mortgage book at 31 March 2016 compared with 20% a year earlier and 17% at the end of Q4 2015. NIM was broadly stable compared with Q4 2015.
 
Commercial Banking NIM was broadly stable compared with Q1 2015.
Notes: 
(1)
For the purpose of net interest margin (NIM) calculations, no decrease (Q4 2015 - 3 million; Q1 2015 - 5 million) was made in respect of interest on financial assets and liabilities designated as at fair value through profit or loss. Related average interest-earning assets and average interest-bearing liabilities have also been adjusted.
(2)
Gross yield is the interest earned on average interest-earning assets as a percentage of average interest-earning assets.
(3)
Interest spread is the difference between the gross yield and interest paid on average interest-bearing liabilities as a percentage of average interest-bearing liabilities. 
(4)
Net interest margin is net interest income as a percentage of average interest-earning assets.
(5)
PBB NIM was 2.83% (Q4 2015 - 2.80%; Q1 2015 - 3.02%); CPB NIM was 1.91% (Q4 2015 - 1.87%; Q1 2015 - 1.94%).
(6)
Net interest margin includes Treasury allocations and interest on intercompany borrowings, which are excluded from third party customer rates.
(7)
Ulster Bank Ireland Limited manages its funding and liquidity requirements locally. Its liquid asset portfolios and non-customer related funding sources are included within its net interest margin, but excluded from its third party asset and liability rates.

Analysis of results
Quarter ended
31 March
31 December
31 March
2016
2015
2015
Non-interest income
m
m
m
Net fees and commissions
654
653
812
Income from trading activities
(110)
59
235
Own credit adjustments
256
(115)
120
Loss on redemption of own debt
-
(263)
-
Strategic disposals
(6)
(22)
(135)
Other operating income
114
10
284
Total non-interest income
908
322
1,316
Memo:
IFRS volatility in Treasury
(356)
59
(123)
Note:
(1)
IFRS volatility relates to loans which are economically hedged but for which hedge accounting is not permitted under IFRS.
Key points
 
Non-interest income was 908 million, a reduction of 408 million, or 31%, compared with 1,316 million in Q1 2015. The reduction principally reflects a 234 million fall in Capital Resolution due to planned asset disposals, a 233 million increase in the charge for volatile items under IFRS (356 million in Q1 2016 compared with 123 million in Q1 2015) and a 194 million reduction in CIB, reflecting a challenging market and the reduced scale of the business. Partially offsetting, strategic disposal losses were 135 million in Q1 2015, largely in respect of International Private Banking.
 
Compared with Q4 2015, non-interest income was 586 million higher principally reflecting an own credit adjustment gain of 256 million compared with a charge of 115 million in Q4 2015, a 263 million loss on redemption of own debt in Q4 2015 and a reduction in Capital Resolution losses. Partially offsetting, a 356 million charge for volatile items under IFRS was reported in the quarter compared with a gain of 59 million in Q4 2015.
 
Net fees and commissions fell by 158 million, or 19%, compared with Q1 2015 to 654 million reflecting the planned Capital Resolution asset run-down, 59 million, lower CIB income, down 104 million, and lower interchange fees in UK PBB, down 25 million. 
 
Losses from trading activities totalled 110 million in Q1 2016 compared with income of 235 million in Q1 2015, reflecting an increased charge for volatile items under IFRS as well as income reductions across CIB and Capital Resolution. 
 
Other operating income of 114 million was 170 million lower than Q1 2015 principally reflecting planned Capital Resolution run-down. 

Analysis of results
Quarter ended
31 March
31 December
31 March
2016
2015
2015*
Operating expenses
m
m
m
Staff costs 
1,202
1,072
1,285
Premises and equipment
315
422
411
Other administrative expenses
446
786
380
Restructuring costs (see below)
238
614
447
Litigation and conduct costs
31
2,124
856
Administrative expenses
2,232
5,018
3,379
Depreciation and amortisation
178
170
232
Write down of goodwill
-
498
-
Write down of other intangible assets
10
75
-
Operating expenses
2,420
5,761
3,611
Adjusted operating expenses (1)
2,151
2,525
2,308
Restructuring costs comprise:
 - staff expenses
121
205
56
 - premises, equipment, depreciation and amortisation 
9
41
288
 - other
108
368
103
238
614
447
Staff costs as a % of total income 
39%
43%
37%
Cost:income ratio
79%
232%
103%
Cost:income ratio - adjusted (2)
76%
88%
65%
Employee numbers (FTE - thousands)
92.4
91.5
91.7
*Restated, refer to Note 1 on page 32 for further details.
Notes:
(1)
Excluding restructuring costs, litigation and conduct costs, and write down of goodwill.
(2)
Excluding restructuring costs, litigation and conduct costs, write down of goodwill, own credit adjustments, loss on redemption of own debt and strategic disposals.
Key points
 
Total operating expenses of 2,420 million were 1,191 million, or 33%, lower than Q1 2015 principally reflecting lower litigation and conduct costs of 31 million (Q1 2015 - 856 million) and lower restructuring costs of 238 million (Q1 2015 - 447 million).
 
Adjusted operating expenses fell by 157 million, or 7%, from Q1 2015 to 2,151 million. Excluding expenses associated with Williams & Glyn and the write down of intangible assets, adjusted operating expenses reduced by 189 million and remain on target to achieve an 800 million reduction for the year.
 
Staff costs of 1,202 million were down 83 million, or 6%, on Q1 2015 reflecting reduced headcount in CIB and Capital Resolution.
 
Restructuring costs of 238 million in the quarter principally related to the Williams & Glyn separation, 158 million.
 
Litigation and conduct costs of 31 million were significantly lower than recorded in previous quarters which included additional provisions for mortgage-backed securities and foreign exchange litigation in the US, additional PPI provisions and other customer redress.

Analysis of results
Quarter ended
31 March
31 December
31 March
2016
2015
2015
Impairment losses/(releases)
m
m
m
Loan impairment losses/(releases)
 - individually assessed
186
(271)
(15)
 - collectively assessed
16
(27)
12
 - latent
21
(28)
(225)
Total loan impairment losses/(releases)
223
(326)
(228)
Securities
-
(1)
99
Total impairment losses/(releases)
223
(327)
(129)
31 March
31 December
31 March
Credit metrics (1)
2016
2015
2015
Gross customer loans
325,339m
315,111m
413,900m
Loan impairment provisions
6,701m
7,139m
13,785m
Risk elements in lending (REIL)
11,867m
12,157m
22,278m
Provisions as a % of REIL
57%
59%
62%
REIL as a % of gross customer loans
3.6%
3.9%
5.4%
Note:
(1)
Includes disposal groups and excludes reverse repos.
Key points 
 
A net impairment loss of 223 million was reported in Q1 2016 compared with a release of 129 million in Q1 2015 and a release of 327 million in Q4 2015.
 
Capital Resolution reported an impairment loss of 196 million compared with a release of 145 million in Q1 2015. The charge for the quarter included 226 million (Q4 2015 - 83 million; Q1 2015 - 59 million) in relation to exposures in the shipping portfolio reflecting difficult conditions in some parts of the sector.
 
Provision coverage decreased from 59% at 31 December 2015 to 57% at 31 March 2016.

Analysis of results 
Selected credit risk portfolios
31 March 2016
31 December 2015
CRA (1)
TCE (2)
EAD (3)
CRA (1)
TCE (2)
EAD (3)
Natural Resources
m
m
m
m
m
m
Oil & Gas
3,518
6,735
5,225
3,533
6,609
5,606
Mining & Metals
1,050
1,998
1,465
1,134
2,105
1,555
Electricity
3,606
8,344
6,055
2,848
7,454
5,205
Water & Waste
5,125
6,290
6,242
4,835
5,948
5,873
13,299
23,367
18,987
12,350
22,116
18,239
Commodity Traders (4)
668
1,187
1,215
749
1,117
1,350
Of which: Natural Resources
506
889
796
548
772
776
Shipping 
6,894
7,380
7,140
7,140
7,688
7,509
Notes:
(1)
Credit risk assets (CRA) consist of lending gross of impairment provisions and derivative exposures after netting and contingent obligations.
(2)
Total committed exposure (TCE) comprises CRA, securities financing transactions after netting, banking book debt securities and committed undrawn facilities.
(3)
Exposure at default (EAD) reflects an estimate of the extent to which a bank will be exposed under a specific facility on the default of a customer or counterparty.
Uncommitted undrawn facilities are excluded from TCE but included within EAD; therefore EAD can exceed TCE.
(4)
Commodity Traders represent customers in a number of industry sectors, predominantly Natural Resources above.
Key points
 
Oil & Gas - The portfolio remained broadly unchanged. Non-performing loans increased to 182 million (31 December 2015 - 138 million) reflecting the continued challenging market environment. 
 
Mining & Metals - Exposure continued to reduce in Q1 2016 predominantly due to proactive credit management. The sector remains under stress and continues to be subject to heightened monitoring. Non-performing loans increased to 101 million (31 December 2015 - 48 million).
 
Commodity Traders - Exposure is mainly to the largest independent physical commodity traders, funding is predominantly short-dated and used for working capital. 
Shipping - Following deterioration in market values and charter rates to historic lows in the dry bulk sector, provisions increased from 181 million to 374 million in Q1 2016. Non-performing loans increased to 827 million (31 December 2015 - 434 million).
31 March 2016
31 December 2015
Balance 
Total 
Balance 
Total 
sheet
exposure
sheet
exposure
Emerging markets (1)
m
m
m
m
India
1,412
1,646
1,563
1,879
China
1,004
1,028
1,054
1,094
Note:
(1)
Balance sheet and total exposures include banking and trading book debt securities and are net of impairment provisions in respect of lending - refer to the Capital and
Risk management section of the 2015 Annual Report and Accounts for detailed definitions and additional disclosures.
Key points
 
Exposure to most emerging markets decreased in Q1 2016 in line with the RBS strategy to focus on home markets in the UK and the Republic of Ireland. 
 
Exposure in China was stable in Q1 2016. The drop in exposure to India mainly reflected reductions in corporate lending.

Analysis of results
Capital and leverage ratios
End-point CRR basis (1)
PRA transitional basis
31 March
31 December
31 March
31 December
2016
2015
2016
2015
Risk asset ratios
%
%
%
%
CET1 
14.6
15.5
14.6
15.5
Tier 1
15.4
16.3
17.7
19.1
Total
18.8
19.6
22.9
24.7
Capital
m
m
m
m
Tangible equity
40,892
40,943
40,892
40,943
Expected loss less impairment provisions
(936)
(1,035)
(936)
(1,035)
Prudential valuation adjustment
(408)
(381)
(408)
(381)
Deferred tax assets
(1,075)
(1,110)
(1,075)
(1,110)
Own credit adjustments
(371)
(104)
(371)
(104)
Pension fund adjustment
(458)
(161)
(458)
(161)
Other deductions
(1,214)
(544)
(1,214)
(522)
Total deductions
(4,462)
(3,335)
(4,462)
(3,313)
CET1 capital
36,430
37,608
36,430
37,630
AT1 capital
1,997
1,997
7,756
8,716
Tier 1 capital
38,427
39,605
44,186
46,346
Tier 2 capital
8,422
8,002
13,028
13,619
Total regulatory capital
46,849
47,607
57,214
59,965
Risk-weighted assets
Credit risk
 - non-counterparty
171,600
166,400
 - counterparty
27,100
23,400
Market risk
21,200
21,200
Operational risk
29,600
31,600
Total RWAs
249,500
242,600
Leverage (2)
Derivatives
312,200
262,500
Loans and advances
338,600
327,000
Reverse repos
42,500
39,900
Other assets
189,600
186,000
Total assets
882,900
815,400
Derivatives
 - netting
(303,500)
(258,600)
 - potential future exposures
75,900
75,600
Securities financing transactions gross up
7,100
5,100
Undrawn commitments
62,300
63,500
Regulatory deductions and other adjustments
3,600
1,500
Leverage exposure 
728,300
702,500
Tier 1 capital
38,427
39,605
Leverage ratio %
5.3
5.6
Notes:
(1)
Capital Requirements Regulation (CRR) as implemented by the Prudential Regulation Authority in the UK, with effect from 1 January 2014. All regulatory adjustments and deductions to CET1 have been applied in full for both bases with the exception of unrealised gains on AFS securities which have been included from 2015 under the PRA transitional basis.
(2)
Based on end-point CRR Tier 1 capital and leverage exposure under the CRR Delegated Act.

Analysis of results
Key points
CET1 ratio of 14.6% fell by 90 basis points in the quarter reflecting lower CET1 capital as well as higher RWAs.
CET1 capital decreased by 1.2 billion due to the payment of the final DAS dividend (50 basis points impact on CET1 ratio) and the accelerated pension payment (30 basis points).
RWAs have increased by 6.9 billion in the quarter to 249.5 billion reflecting loan growth in the core franchises alongside market volatility and exchange rate movements as sterling weakened (3.3 billion). 
Increases in non-counterparty credit risk RWAs (5.2 billion) and counterparty risk RWAs (3.7 billion) were partly offset by a 2.0 billion reduction associated with the annual recalculation of operational risk RWAs.
The increase in credit risk RWAs was principally across Commercial Banking (3.9 billion), UK PBB (1.5 billion) and RBSI (0.8 billion). Partially offsetting, Capital Resolution reduced by 1.8 billion in line with planned run-down.
Commercial Banking and RBSI credit risk RWAs increased as a result of asset growth and the impact of foreign exchange movements. 
UK PBB credit risk RWAs increased due to mortgage lending growth and a recalibration of mortgage risk parameter models.
Counterparty risk RWAs increased in the quarter in CIB and Capital Resolution driven by market volatility and the implementation of new risk parameter models.
Leverage ratio decreased in the quarter from 5.6% to 5.3% due to lower Tier 1 capital (as discussed above) and an increase in funded assets reflecting loan growth.
Segment performance
Quarter ended 31 March 2016
PBB
CPB 
Central
Ulster
Commercial
Private
RBS
Capital
Williams
items &
Total
UK PBB
Bank RoI
Banking
Banking
International
CIB 
Resolution
& Glyn
other (1)
RBS
m
m 
m
m
m
m
m
m
m
m
Income statement 
Net interest income
1,019 
105 
536 
113 
75 
19 
86 
162 
41 
2,156 
Other non-interest income
256 
50 
317 
52 
15 
258 
(35)
43 
(298)
658 
Total income - adjusted (2)
1,275 
155 
853 
165 
90 
277 
51 
205 
(257)
2,814 
Own credit adjustments
-
3 
-
-
-
64 
108 
-
81 
256 
Strategic disposals
-
-
-
-
-
-
(6)
-
-
(6)
Total income 
1,275 
158 
853 
165 
90 
341 
153 
205 
(176)
3,064 
Direct expenses - staff costs
(181)
(51)
(131)
(40)
(10)
(67)
(45)
(62)
(615)
(1,202)
 - other costs
(63)
(11)
(49)
(14)
(5)
(14)
(33)
(15)
(745)
(949)
Indirect expenses
(484)
(42)
(256)
(83)
(20)
(250)
(154)
(21)
1,310 
- 
Operating expenses - adjusted (3) 
(728)
(104)
(436)
(137)
(35)
(331)
(232)
(98)
(50)
(2,151)
Restructuring costs - direct
(13)
(6)
(1)
(1)
-
-
(7)
(20)
(190)
(238)
 - indirect
(9)
-
1 
(15)
(1)
(12)
(9)
-
45 
-
Litigation and conduct costs
-
-
(2)
-
-
(18)
(10)
-
(1)
(31)
Operating expenses
(750)
(110)
(438)
(153)
(36)
(361)
(258)
(118)
(196)
(2,420)
Profit/(loss) before impairment losses
525 
48 
415 
12 
54 
(20)
(105)
87 
(372)
644 
Impairment releases/(losses)
(16)
13 
(14)
(2)
(2)
-
(196)
(6)
-
(223)
Operating profit/(loss)
509 
61 
401 
10 
52 
(20)
(301)
81 
(372)
421 
Operating profit/(loss) - adjusted (2,3)
531 
64 
403 
26 
53 
(54)
(377)
101 
(307)
440 
Additional information
Return on equity (4)
26.1% 
8.8% 
11.1% 
1.5% 
16.0% 
(2.6%)
nm
nm
nm
(9.6%)
Return on equity - adjusted (2,3,4)
27.3% 
9.2% 
11.2% 
5.1% 
16.3% 
(4.4%)
nm
nm
nm
(9.4%)
Cost:income ratio
59%
70%
51%
93%
40%
106%
nm
58%
nm
79%
Cost:income ratio - adjusted (2,3)
57%
67%
51%
83%
39%
119%
nm
48%
nm
76%
Total assets (bn)
146.3
22.7
139.4
17.4
23.7
255.9
218.8
24.2
34.5
882.9
Funded assets (bn)
146.3
22.6
139.4
17.3
23.7
116.0
50.2
24.2
31.0
570.7
Net loans and advances to customers (bn)
121.8
17.9
96.4
11.6
8.0
18.6
22.4
20.1
1.8
318.6
Risk elements in lending (bn)
2.4
4.5
2.2
0.1 
0.1 
-
2.2 
0.4 
-
11.9 
Impairment provisions (bn)
(1.6)
(2.7)
(1.1)
-
-
-
(1.0)
(0.3)
-
(6.7)
Customer deposits (bn)
136.9
13.7
97.1 
23.2
21.6
6.7
24.9
24.3
6.6
355.0
Risk-weighted assets (RWAs) (bn)
34.7
20.4
75.7 
8.6
9.1
36.1
47.6
9.7
7.6
249.5
RWA equivalent (bn) 
37.5
21.7
79.7 
8.6
9.1
36.7
48.4
10.1
7.8
259.6
Employee numbers (FTEs - thousands)
21.4
3.2
6.0
1.8
0.7
1.3
1.0
5.5
51.5
92.4
For the notes to this table refer to page 21. nm = not meaningful

Segment performance
Quarter ended 31 December 2015
PBB
CPB 
Central
Ulster
Commercial
Private
RBS
Capital
Williams
items &
Total
UK PBB
Bank RoI
Banking
Banking
International
CIB 
Resolution
& Glyn
other (1)
RBS
m
m 
m
m
m
m
m
m
m
m
Income statement 
Net interest income
1,030
85
512
108
78
28
6
165
150
2,162
Other non-interest income
224
31
285
50
17
224
(239)
43
87
722
Total income adjusted (2)
1,254
116
797
158
95
252
(233)
208
237
2,884
Own credit adjustments
-
-
-
-
-
(66)
(5)
-
(44)
(115)
Loss on redemption of own debt
-
-
-
-
-
-
-
-
(263)
(263)
Strategic disposals
-
-
-
-
-
-
(24)
-
2
(22)
Total income
1,254
116
797
158
95
186
(262)
208
(68)
2,484
Direct expenses - staff costs
(199)
(40)
(124)
(43)
(12)
(63)
(54)
(61)
(476)
(1,072)
 - other costs
(82)
(28)
(80)
(7)
(5)
(50)
(54)
(24)
(1,123)
(1,453)
Indirect expenses
(596)
(49)
(380)
(109)
(24)
(251)
(286)
(22)
1,717
-
Operating expenses - adjusted (3) 
(877)
(117)
(584)
(159)
(41)
(364)
(394)
(107)
118
(2,525)
Restructuring costs - direct
(31)
7
(40)
(7)
-
-
(21)
(28)
(494)
(614)
 - indirect
(56)
(1)
(14)
12
1
(62)
(83)
-
203
-
Litigation and conduct costs
(607)
4
8
(10)
-
(5)
(1,498)
-
(16)
(2,124)
Write down of goodwill 
-
-
-
(498)
-
-
-
-
-
(498)
Operating expenses
(1,571)
(107)
(630)
(662)
(40)
(431)
(1,996)
(135)
(189)
(5,761)
(Loss)/profit before impairment losses
(317)
9
167
(504)
55
(245)
(2,258)
73
(257)
(3,277)
Impairment releases/(losses)
27
10
(27)
(12)
-
-
356
(20)
(7)
327
Operating (loss)/profit
(290)
19
140
(516)
55
(245)
(1,902)
53
(264)
(2,950)
Operating profit/(loss) - adjusted (2,3)
404
9
186
(13)
54
(112)
(271)
81
348
686
Additional information
Return on equity (4)
(16.8%)
3.0%
3.1%
(118.9%)
19.1%
(15.1%)
nm
nm
nm
(26.5%)
Return on equity - adjusted (2,3,4)
19.8%
1.4%
4.6%
(4.4%)
18.7%
(7.6%)
nm
nm
nm
6.6%
Cost:income ratio
125%
92%
79%
419%
42%
232%
nm
65%
nm
232%
Cost:income ratio - adjusted (2,3)
70%
101%
73%
101%
43%
144%
nm
51%
nm
88%
Total assets (bn)
143.9
21.3
133.5
17.0
23.1
215.3
201.5
24.1
35.7
815.4
Funded assets (bn)
143.9
21.2
133.5
17.0
23.1
103.3
53.4
24.1
33.4
552.9
Net loans and advances to customers (bn)
119.8
16.7
91.3
11.2
7.3
16.1
23.6
20.0
2.0
308.0
Risk elements in lending (bn)
2.7
3.5
1.9
0.1
0.1
-
3.4
0.5
-
12.2
Impairment provisions (bn)
(1.8)
(1.9)
(0.7)
-
(0.1)
-
(2.3)
(0.3)
-
(7.1)
Customer deposits (bn)
137.8
13.1
88.9
23.1
21.3
5.7
26.0
24.1
6.0
346.0
Risk-weighted assets (RWAs) (bn) 
33.3
19.4
72.3
8.7
8.3
33.1
49.0
9.9
8.6
242.6
RWA equivalent (bn) 
35.5
20.4
77.6
8.7
8.3
33.4
50.3
10.4
8.8
253.4
Employee numbers (FTEs - thousands)
22.4
2.5
5.8
1.9
0.7
1.3
1.4
5.1
50.4
91.5
For the notes to this table refer to page 21. nm = not meaningful

Segment performance
Quarter ended 31 March 2015
PBB
CPB 
Central
Ulster
Commercial
Private
RBS
Capital
Williams
items &
Total
UK PBB
Bank RoI
Banking
Banking
International
CIB 
Resolution
& Glyn
other (1)
RBS
m
m 
m
m
m
m
m
m
m
m
Income statement 
Net interest income
1,032
95
482
110
76
14
157
163
74
2,203
Other non-interest income
282
43
307
55
17
470
250
41
(134)
1,331
Total income - adjusted (2)
1,314
138
789
165
93
484
407
204
(60)
3,534
Own credit adjustments 
-
-
-
-
-
46
65
-
9
120
Strategic disposals
-
-
-
-
-
-
(14)
-
(121)
(135)
Total income
1,314
138
789
165
93
530
458
204
(172)
3,519
Direct expenses - staff costs
(200)
(40)
(123)
(46)
(10)
(109)
(92)
(45)
(620)
(1,285)
 - other costs
(64)
(18)
(51)
(9)
(4)
(26)
(57)
(6)
(788)
(1,023)
Indirect expenses
(445)
(43)
(241)
(68)
(24)
(257)
(260)
(25)
1,363
-
Operating expenses - adjusted (3) 
(709)
(101)
(415)
(123)
(38)
(392)
(409)
(76)
(45)
(2,308)
Restructuring costs - direct
-
-
-
-
-
-
(16)
-
(431)
(447)
 - indirect
(30)
1
1
3
(2)
(91)
(184)
-
302
-
Litigation and conduct costs
(354)
-
-
(2)
-
(334)
(166)
-
-
(856)
Operating expenses
(1,093)
(100)
(414)
(122)
(40)
(817)
(775)
(76)
(174)
(3,611)
Profit/(loss) before impairment losses
221
38
375
43
53
(287)
(317)
128
(346)
(92)
Impairment (losses)/releases
(20)
25
1
1
(2)
8
145
21
(50)
129
Operating profit/(loss)
201
63
376
44
51
(279)
(172)
149
(396)
37
Operating profit/(loss) - adjusted (2,3)
585
62
375
43
53
100
143
149
(155)
1,355
Additional information *
Return on equity (4)
8.4% 
10.1% 
12.4% 
7.8% 
18.8% 
(13.3%)
nm
nm
nm
(4.3%)
Return on equity - adjusted (2,3,4)
27.2% 
9.9% 
12.4% 
7.5% 
19.5% 
3.0% 
nm
nm
nm
7.4% 
Cost:income ratio
83% 
72% 
52% 
74% 
43% 
154% 
nm
37% 
nm
103% 
Cost:income ratio - adjusted (2,3)
54% 
73% 
53% 
75% 
41% 
81% 
nm
37% 
nm
65% 
Total assets (bn)
137.8
21.7
131.1
17.3
24.3
308.7
338.7
23.7
101.6
1,104.9
Funded assets (bn)
137.8
21.6
131.1
17.3
24.3
152.1
108.3
23.7
97.7
713.9
Net loans and advances to customers (bn)
111.7
16.7
86.2
11.1
7.2
31.6
48.5
19.5
67.7
400.2
Risk elements in lending (bn)
3.4
4.0
2.3
0.1
0.1
-
10.4
0.6
1.4
22.3
Impairment provisions (bn)
(2.4)
(2.1)
(0.8)
(0.1)
(0.1)
-
(7.3)
(0.4)
(0.6)
(13.8)
Customer deposits (bn)
131.6
13.5
90.0
22.0
22.7
11.2
34.6
22.1
74.9
422.6
Risk-weighted assets (RWAs) (bn)
35.9
20.4
63.1
8.4
7.9
43.8
84.3
10.5
74.3
348.6
RWA equivalent (bn) 
38.6
19.3
69.7
8.4
7.9
44.5
90.1
11.1
74.7
364.3
Employee numbers (FTEs - thousands)
22.7
2.4
5.8
2.0
0.6
1.6
2.3
4.4
49.9
91.7
nm = not meaningful. *Restated - refer to page 32 for further details.
Notes:
(1)
Central items includes unallocated costs and assets which principally comprise volatile items under IFRS and balances in relation to Citizens for Q1 2015 and international private banking.
(2)
Excluding own credit adjustments, gains/(losses) on redemption of own debt and strategic disposals. Tax on these items was a 59 million charge in Q1 2016 (Q4 2015 - 72 million credit; Q1 2015 - 25 million charge).
(3) 
Excluding restructuring costs, litigation and conduct costs and write down of goodwill. Tax on these items was 60 million in Q1 2016 (Q4 2015 - 141 million; Q1 2015 - 104 million).
(4)
RBS's CET 1 target is 13% but for the purposes of computing segmental return on equity (ROE), to better reflect the differential drivers of capital usage, segmental operating profit after tax and adjusted for preference dividends is divided by notional equity allocated at different rates of 11% (Commercial Banking and Ulster Bank RoI), 12% (RBS International) and 15% for all other segments, of the monthly average of segmental risk-weighted assets after capital deductions (RWAes). Franchise adjusted (2,3) return on equity was 10.9% (Return on equity for Personal & Business Banking (PBB), Commercial & Private Banking (CPB) and CIB combined). 
Segment performance
Q1 2016 compared to Q1 2015
UK Personal & Business Banking
UK PBB operating profit of 509 million improved from a 201 million profit in Q1 2015 and a 290 million loss in Q4 2015 largely due to the absence of litigation and conduct costs. Adjusted operating profit of 531 million was down 54 million, or 9%, from Q1 2015, but was 127 million, or 31%, higher than Q4 2015 principally reflecting the UK bank levy charge, 45 million, and write down of intangible assets, 48 million, in Q4 2015.
Mortgage activity continued to strengthen with applications up 61% from 6.4 billion in Q1 2015 to 10.3 billion providing a strong forward pipeline for Q2 2016. Gross new lending almost doubled to 7.0 billion. Market share of new mortgages was approximately 11.4% compared with a stock share of 8.3% helping to support mortgage balance growth of 13%. 
Further steps were taken during the quarter to enhance customer experience in digital channels, including the ability for NatWest customers to apply for a personal loan or credit card via our mobile app. 
The Reward account continues to show positive momentum and now has 539,000 fee-paying customers, compared with 202,000 at 31 December 2015. We are seeing positive evidence of increased levels of engagement and continue to embed the product across our population of main bank customers.
Excluding the impact of business transfers(1),net loans and advances grew by 11.2 billion, or 10%, from Q1 2015, principally driven by mortgages, and increased by 3.2 billion from Q4 2015 with continued strong mortgage growth and positive momentum in business and personal unsecured lending.
Income of 1,275 million was 3% down on Q1 2015, or 2% excluding the impact of business transfers(1), but was 2% higher than Q4 2015 as margins stabilised. Net interest margin was 25bps lower than Q1 2015 at 3.02% reflecting lower current account hedge income, the impact of asset growth being skewed towards mortgages, and mortgage customers switching from standard variable rate (SVR) to lower rate products. SVR balances represented16% of the mortgage book at 31 March 2016 compared with 20% a year earlier and 17% at the end of Q4 2015. Non-interest income reduced by 26 million, or 9%, to 256 million reflecting reduced interchange fees on credit and debit cards after regulatory changes and cash-back payments following the launch of the Reward account.
Total expenses were 31% lower than Q1 2015 at 750 million principally driven by the absence of litigation and conduct charges. Adjusted operating expenses increased by 3% to 728 million reflecting increased technology investment in the business partly offset by lower direct staff costs as headcount efficiencies continue.
In addition, plans were announced to reorganise our investment advice and protection businesses, including the launch of an online investment platform, and to enhance and streamline our distribution model. 
The net impairment charge of 16 million reflects continued benign credit conditions.
Note:
(1)
The business transfers included: net loans and advances of 1.1 billion, customer deposits of 2.0 billion and total income of 13 million in Q1 2015 comparatives have not been restated.

Segment performance
Ulster Bank RoI
Ulster Bank RoI recorded an operating profit of 78 million, down 6% on Q1 2015 due to a lower level of impairment releases. Adjusted operating profit was stable at 82 million compared with Q1 2015 and was 66 million higher than Q4 2015. 
A non-recurring profit of 28 million relating to asset disposals has been recognised in Q1 2016, of which 14 million was reported in income.
Income increased by 11% from Q1 2015 to 205 million. Excluding the benefit of asset disposals, underlying business income growth, driven by deposit re-pricing and new business lending, was partly offset by reduced income on free funds. Net interest margin increased by 9 basis points to 1.75%.
Adjusted operating expenses remained flat at 136 million compared with Q1 2015 despite a 6 million increase in regulatory levies. Total operating expenses increased by 7% reflecting higher restructuring costs primarily relating to asset disposals. The adjusted cost:income ratio reduced to 67% compared with 73% in Q1 2015. A realignment of costs within direct expenses resulted in an increase in staff costs in Q1 2016 with an offsetting reduction in other costs. This reflects the re-allocation of 640 staff from UK PBB to align with current management responsibilities following the separation of the Northern Ireland and Republic of Ireland businesses. 
A net impairment release of 17 million was largely driven by asset disposals which benefited from improved market conditions. Underlying credit metrics also continue to benefit from the improving economic environment and RWAs reduced by 9% to 25.7 billion compared with Q1 2015.
New lending indicators remain positive, underpinned by the continued improvement in Irish economic conditions, with gross new mortgage lending increasing by 32% to 0.2 billion compared with Q1 2015. Net loans and advances to customers(1) reduced by 0.6 billion from Q1 2015 and include a reduction of 0.9 billion in the low yielding tracker mortgage portfolio to 11.6 billion.
Commercial Banking
Commercial Banking reported an operating profit of 401 million, up 7% from Q1 2015. Return on equity was 11% compared with 12% in the prior year.
Net loans and advances, adjusting for the impact of transfers(2), increased by 4.0 billion from Q1 2015 to 96.4 billion and increased by 3.9 billion compared with Q4 2015, principally reflecting increased borrowing by large UK and Western Europe corporate customers. The increase compared with Q1 2015 comprised 6.5 billion of net new lending, partially offset by 2.5 billion of strategic run-off and disposals. Excluding the transferred businesses, customer deposits of 97.1 billion were up 5.0 billion on Q1 2015 and 6.1 billion on Q4 2015. 
Total income of 853 million was 8% higher than Q1 2015 largely reflecting increased asset volumes, supplemented by the impact of portfolio transfers. Net interest margin of 1.88% remained broadly stable compared with Q1 2015 but has increased by 6 basis points compared with Q4 2015 driven by reduced funding costs. 
Operating expenses increased by 6% from Q1 2015 to 438 million largely due to the impact of the portfolio transfers. Adjusted operating expenses fell by 148 million from Q4 2015 principally due to the UK bank levy charge of 103 million in the prior quarter.
Net impairment losses were 14 million compared with a release of 1 million in Q1 2015. Impairments remained at low levels. 
RWAs were 75.7 billion, an increase of 12.6 billion on Q1 2015 reflecting asset growth and portfolio transfers of 9.9 billion partially offset by active portfolio management. 
Notes:
(1)
Gross loans and advances to customers at 31 March 2016 include 1.0 billion (0.2 billion net of impairment provisions) of largely non-performing balances transferred from Capital Resolution on 1 January 2016. Comparatives have not been restated.
(2)
The portfolio transfers included: total income of 51 million (Q4 2015 - 47 million; Q1 2015 - nil); operating expenses of 25 million (Q4 2015 - 12 million; Q1 2015 - nil); net loans and advances to customers of 7.3 billion (31 December 2015 - 5.0 billion; 31 March 2015 - nil); customer deposits of 2.0 billion (31 December 2015 and 31 March 2015 - nil); and RWAs of 9.9 billion (31 December 2015 - 8.4 billion; 31 March 2015 - nil). The portfolio transfers were as follows: Q2 2015 - UK corporate loan; Q4 2015 - Western European corporate loan; Q1 2016 - Ulster Bank NI commercial and RCR residual portfolios. Comparatives have not been restated. Asset growth in transferred businesses achieved since Q4 is included in underlying commercial business.

Segment performance
Private Banking
Private Banking made an operating profit of 10 million, 34 million lower than Q1 2015. The 516 million loss reported in Q4 2015 included a 498 million goodwill impairment charge.
Net loans and advances increased 5% to 11.6 billion, due to increased mortgage lending, and customer deposits grew by 5% to 23.2 billion from Q1 2015. Assets under management reduced by 0.3 billion to 14.0 billion reflecting adverse market conditions.
Total income at 165 million was in line with Q1 2015 as the benefit of an increase in net interest margin was offset by a more competitive market in investments and transactional flows driving down net fees and commissions. Income was up 7 million compared with Q4 2015 due to an increase in net interest margin reflecting reduced funding costs.
Adjusted operating expenses were 11% higher than Q1 2015 at 137 million reflecting increased infrastructure costs absorbed from the sale of the international business, partially offset by reduced staff costs as employee numbers declined by over 10%. Adjusted operating expenses fell by 22 million from Q4 2015 driven by the Q4 2015 UK bank levy charge of 22 million.
RBS International
RBS International (RBSI) reported an operating profit of 52 million, broadly in line with Q1 2015.
Net loans and advances to customers increased by 11% to 8.0 billion from Q1 2015 principally reflecting balance drawdowns in the corporate lending portfolio. Customer deposits fell by 1.1 billion to 21.6 billion due to planned re-pricing activity. 
Total income fell 3% from Q1 2015 to 90 million driven by lower deposit margins partially offset by increased asset volumes.
Corporate & Institutional Banking (CIB)
CIB reported an operating loss of 20 million compared with an operating loss of 279 million in Q1 2015. The adjusted operating loss for the quarter was 54 million compared with a profit of 100 million in Q1 2015. The reductionwas driven by lower income partially offset by lower adjusted expenses, down 61 million, or 16%, compared with Q1 2015.
Total income reduced by 189 million, or 36%, to 341 million compared with 530 million in Q1 2015. Adjusted income of 277 million was 165 million lower than Q1 2015, excluding a 42 million movement associated with the transfer of portfolios to Commercial Banking, driven by reductions in Rates and Financing reflecting the difficult market conditions in Q1 2016 and the reduced scale of the business. Currencies performed robustly in Q1 2016, which contrasted with Q1 2015 when a loss relating to the removal of the Swiss Franc's peg to the Euro was incurred. Adjusted income was 10% higher than in Q4 2015 (277 million compared with 252 million).
Operating expenses reduced by 456 million, or 56%, to 361 million compared with 817 million in Q1 2015. Adjusted operating expenses fell by 61 million, or 16%, to 331 million as business reshaping and headcount reductions continued. Adjusted operating expenses fell by 33 million compared with Q4 2015 principally reflecting the UK bank levy charge of 24 million in the prior quarter.
Funded assets fell by 36.1 billion to 116.0 billion compared with 152.1 billion in Q1 2015. Excluding the impact of transfers(1), funded assets fell by 15.1 billion as business reshaping continues.
RWAs were stable compared with Q1 2015 at 36.1 billion, adjusting for the impact of transfers to Commercial Banking. The 3.0 billion increase from Q4 2015 was principally due to model updates and the impact of market volatility in Q1 2016.
Note:
(1)
The portfolio transfers included third party assets of 16 billion of Short Term Money markets business to Treasury and 5 billion to Commercial Banking. Comparatives have not been restated.

Segment performance
Capital Resolution 
RWAs reduced by 1.4 billion in the quarter to 47.6 billion reflecting a moderate level of disposal activity, partially offset by an increase associated with the weakening of sterling in the quarter and the lowering of rates. 
Funded assets reduced by 3.2 billion in Q1 2016 to 50.2 billion with the most significant reductions across Markets and Shipping. 
An operating loss of 301 million was recorded in Q1 2016 compared with a 172 million loss in Q1 2015. Total income of 153 million has fallen by 305 million compared with Q1 2015 but increased by 415 million compared with Q4 2015 primarily due to lower disposal losses and favourable own credit adjustments. Q1 income includes 109 million in respect of an expected distribution to successful plaintiffs in the Madoff related class action. 
Adjusted expenses of 232 million reduced 177 million, or 43%, compared with Q1 2015, principally reflecting the impact of a 1,300 reduction in headcount, and by 162 million, or 41%, compared with Q4 2015. 
A net impairment charge of 196 million was recorded in the quarter principally comprising charges relating to a number of shipping assets (226 million). Impairment releases of 145 million and 356 million were reported in Q1 2015 and Q4 2015 respectively. 
RWAs have fallen by 36.7 billion to 47.6 billion from Q1 2015, primarily due to run-off and loan portfolio disposals. Funded assets have reduced by 58.1 billion to 50.2 billion for the same period. 
Central items & other
Central items not allocated represented a charge of 372 million in the quarter compared with a 396 million charge in Q1 2015. Treasury funding costs, including a 356 million charge for volatile items under IFRS, were a charge of 286 million, versus a charge of 108 million in Q1 2015. Restructuring costs in the quarter include a 138 million charge relating to Williams & Glyn. These were offset in part by an OCA gain of 81 million as spreads widened, and a gain of 2 million on the disposal of available-for-sale securities in Treasury (Q1 2015 - 27 million charge). 

Segment performance
Williams & Glyn
W&G's reported segmental results reflect the contribution made by W&G's ongoing business to RBS. These figures do not reflect the cost base, funding, liquidity and capital profile of W&G as a standalone bank and do not contain certain customer portfolios which are currently reported through other segments within RBS.
Progress has been made in a number of areas necessary to becoming a standalone bank including the majority of employee roles having now been filled, the transfer of over 5,000 people onto W&G terms and conditions and the resegmentation of commercial customers to an operating model fit for a challenger bank.
New lending increased by 50% to 1.4 billion compared with Q1 2015. Notably, new mortgages were up 107% to 581 million, driven by a more buoyant market, greater productivity and more competitive pricing, while commercial increased by 29% to 740 million.
This momentum has been a key driver of the 3% year on year increase in net loans and advances to 20.1 billion at the end of Q1 2016. 
Momentum continued across both personal and commercial deposits delivering a 2.2 billion, or 10%, increase in total deposits over the last 12 months to 24.3 billion. 
Operating profit of 81 million was down 46% from Q1 2015 largely due to increased operating expenses, as the business continued to build central functions incurring restructuring costs to do so, and increased impairments following a significant release in Q1 2015.
Total income was stable at 205 million compared with Q1 2015 as mortgage margin pressures have largely been offset by increased asset volumes.
Operating expenses were 118 million, an increase of 42 million, or 55%, on Q1 2015 as the business continued to build central functions and operations, including 20 million of IT restructuring spend.
Net impairment losses totalled 6 million compared with a net release of 21 million in Q1 2015. The charge was 14 million lower due to a large specific impairment taken in Q4 2015.
Selected statutory financial statements 
Consolidated income statement for the period ended 31 March 2016
Quarter ended
31 March
31 December
31 March
2016
2015
2015*
m
m
m
Interest receivable
2,829
2,855
3,076
Interest payable
(673)
(693)
(873)
Net interest income
2,156
2,162
2,203
Fees and commissions receivable
866
904
989
Fees and commissions payable
(212)
(251)
(177)
Income from trading activities
38
15
330
Loss on redemption of own debt
-
(263)
-
Other operating income
216
(83)
174
Non-interest income
908
322
1,316
Total income
3,064
2,484
3,519
Staff costs
(1,323)
(1,277)
(1,341)
Premises and equipment
(324)
(447)
(419)
Other administrative expenses
(575)
(3,192)
(1,339)
Depreciation, amortisation and write downs
(178)
(186)
(512)
Write down of goodwill and other intangible assets
(20)
(659)
-
Operating expenses
(2,420)
(5,761)
(3,611)
Profit/(loss) before impairment losses
644
(3,277)
(92)
Impairment (losses)/releases
(223)
327
129
Operating profit/(loss) before tax
421
(2,950)
37
Tax (charge)/credit
(80)
261
(190)
Profit/(loss) from continuing operations
341
(2,689)
(153)
Profit/(loss) from discontinued operations, net of tax
-
90
(316)
Profit/(loss) for the period
341
(2,599)
(469)
Attributable to:
Non-controlling interests
22
20
(84)
Preference share and other dividends
94
121
74
Dividend access share
1,193
-
-
Ordinary shareholders
(968)
(2,740)
(459)
341
(2,599)
(469)
Loss per ordinary share (EPS)
Basic and diluted EPS from continuing and discontinued operations
(8.3p)
(23.6p)
(4.0p)
Basic and diluted EPS from continuing operations 
(8.3p)
(24.5p)
(2.2p)
* Restated, refer to Note 1 on page 32 for further details.
Selected statutory financial statements 
Consolidated statement of comprehensive income for the period ended 31 March 2016
Quarter ended
31 March
31 December
31 March
2016
2015
2015*
m
m
m
Profit/(loss) for the period
341
(2,599)
(469)
Items that do not qualify for reclassification
(Loss)/gain on remeasurement of retirement benefit schemes
(529)
(93)
3
Tax
143
310
-
(386)
217
3
Items that do qualify for reclassification
Available-for-sale financial assets
(8)
139
202
Cash flow hedges
946
(398)
124
Currency translation
582
(4)
11
Tax
(238)
2
(102)
1,282
(261)
235
Other comprehensive income/(loss) after tax
896
(44)
238
Total comprehensive income/(loss) for the period
1,237
(2,643)
(231)
Total comprehensive income/(loss) is attributable to:
Non-controlling interests
72
13
47
Preference shareholders
56
74
70
Paid-in equity holders
38
47
4
Dividend access share
1,193
-
-
Ordinary shareholders
(122)
(2,777)
(352)
1,237
(2,643)
(231)
* Restated, refer to Note 1 on page 32 for further details.
Key points
Following payment of theoutstanding deficit reduction contributions of 4.2 billion, there was asurplus in RBS's main pension schemewhich has been restricted to the recoverable amount(413 million- refer to Note 3 on page 32), resulting in a pre-tax charge of 529 million during the quarter.
Cash flow hedging gains in the quarter principally result from decreases in sterling swap rates across the maturity profile of the portfolio.
Currency translation gains for the quarter have primarily resulted from the weakening of sterling against the euro and the US dollar.
Selected statutory financial statements 
Consolidated balance sheet as at 31 March 2016
31 March
31 December
2016
2015
m
m
Assets
Cash and balances at central banks
72,083
79,404
Net loans and advances to banks
19,295
18,361
Reverse repurchase agreements and stock borrowing
15,037
12,285
Loans and advances to banks
34,332
30,646
Net loans and advances to customers
317,088
306,334
Reverse repurchase agreements and stock borrowing
27,319
27,558
Loans and advances to customers
344,407
333,892
Debt securities
87,622
82,097
Equity shares
1,255
1,361
Settlement balances
9,331
4,116
Derivatives
312,217
262,514
Intangible assets
6,534
6,537
Property, plant and equipment
4,552
4,482
Deferred tax
2,160
2,631
Prepayments, accrued income and other assets
5,032
4,242
Assets of disposal groups
3,405
3,486
Total assets
882,930
815,408
Liabilities
Bank deposits
31,774
28,030
Repurchase agreements and stock lending
12,120
10,266
Deposits by banks
43,894
38,296
Customer deposits
352,344
343,186
Repurchase agreements and stock lending
26,910
27,112
Customer accounts
379,254
370,298
Debt securities in issue
29,576
31,150
Settlement balances
8,808
3,390
Short positions
22,666
20,809
Derivatives
304,789
254,705
Provisions, accruals and other liabilities
14,748
15,115
Retirement benefit liabilities
519
3,789
Deferred tax
825
882
Subordinated liabilities
20,870
19,847
Liabilities of disposal groups
2,816
2,980
Total liabilities
828,765
761,261
Equity
Non-controlling interests
788
716
Owners' equity*
Called up share capital
11,662
11,625
Reserves
41,715
41,806
Total equity
54,165
54,147
Total liabilities and equity
882,930
815,408
* Owners' equity attributable to:
Ordinary shareholders
47,426
47,480
Other equity owners
5,951
5,951
53,377
53,431
The parent company's distributable reserves at 31 March 2016 were 15.3 billion (31 December 2015 - 16.3 billion).
Selected statutory financial statements 
Consolidated statement of changes in equity for the period ended 31 March 2016
Quarter ended
31 March
31 December
31 March
2016
2015
2015*
m
m
m
Called-up share capital
At beginning of period
11,625
6,984
6,877
Ordinary shares issued
37
51
48
Conversion of B shares (1)
-
4,590
-
At end of period
11,662
11,625
6,925
Paid-in equity
At beginning of period
2,646
2,646
784
Redeemed/reclassified
-
-
(150)
At end of period
2,646
2,646
634
Share premium account
At beginning of period
25,425
25,315
25,052
Ordinary shares issued
85
110
112
At end of period
25,510
25,425
25,164
Merger reserve
At beginning of period
10,881
13,222
13,222
Transfer to retained earnings
-
(2,341)
-
At end of period
10,881
10,881
13,222
Available-for-sale reserve
At beginning of period
307
210
299
Unrealised (losses)/gains
(3)
139
39
Realised (gains)/losses
(5)
2
106
Tax
(1)
(44)
(26)
Transfer to retained earnings
-
-
(47)
At end of period
298
307
371
Cash flow hedging reserve
At beginning of period
458
810
1,029
Amount recognised in equity
1,233
(65)
498
Amount transferred from equity to earnings
(287)
(333)
(386)
Tax
(263)
46
(41)
Transfer to retained earnings
-
-
9
At end of period
1,141
458
1,109
Foreign exchange reserve
At beginning of period
1,674
1,679
3,483
Retranslation of net assets
628
17
494
Foreign currency losses on hedges of net assets
(67)
(26)
(566)
Tax
26
-
(14)
Transfer to retained earnings
-
-
(618)
Recycled to profit or loss on disposal of businesses
(29)
4
-
At end of period
2,232
1,674
2,779
Capital redemption reserve
At beginning of period
4,542
9,132
9,131
Conversion of B shares (1)
-
(4,590)
-
At end of period
4,542
4,542
9,131
* Restated, refer to Note 1 on page 32 for further details.
Notes:
(1)
In October 2015, all B shares were converted into ordinary shares of 1 each.
(2)
See Note 3 - Pensions.
(3)
Relates to the secondary offering of Citizens in March 2015.

Selected statutory financial statements 
Consolidated statement of changes in equity for the period ended 31 March 2016
Quarter ended
31 March
31 December
31 March
2016
2015
2015*
m
m
m
Retained earnings
At beginning of period
(4,020)
(3,851)
(4,001)
Profit/(loss) attributable to ordinary shareholders and other equity owners
- continuing operations
319
(2,709)
(174)
- discontinued operations
-
90
(211)
Equity preference dividends paid
(56)
(74)
(70)
Paid-in equity dividends paid, net of tax
(38)
(47)
(4)
Dividend access share dividend
(1,193)
-
-
Transfer from available-for-sale reserve
-
-
47
Transfer from cash flow hedging reserve
-
-
(9)
Transfer from foreign exchange reserve
-
-
618
Transfer from merger reserve
-
2,341
-
Costs of placing Citizens equity
-
-
(29)
(Loss)/gain on remeasurement of retirement benefit schemes (2)
- gross
(529)
(87)
3
- tax
143
310
-
Shares issued under employee share schemes
(7)
(1)
(56)
Share-based payments
- gross
(25)
12
4
- tax
-
(4)
-
Reclassification of paid-in equity
-
-
(27)
At end of period
(5,406)
(4,020)
(3,909)
Own shares held
At beginning of period
(107)
(108)
(113)
Disposal of own shares
11
1
2
Shares issued under employee share schemes
(33)
-
-
At end of period
(129)
(107)
(111)
Owners' equity at end of period
53,377
53,431
55,315
Non-controlling interests 
At beginning of period
716
703
2,946
Currency translation adjustments and other movements
50
1
83
Profit/(loss) attributable to non-controlling interests
- continuing operations
22
20
21
- discontinued operations
-
-
(105)
Dividends paid
-
-
(11)
Movements in available-for-sale securities
- unrealised (losses)/gains
-
(2)
57
- tax
-
-
(21)
Movements in cash flow hedging reserve
- amount recognised in equity
-
-
12
Actuarial losses recognised in retirement benefit schemes
- gross
-
(6)
-
Equity raised (3)
-
-
2,491
At end of period
788
716
5,473
Total equity at end of period
54,165
54,147
60,788
Total equity is attributable to:
Non-controlling interests
788
716
5,473
Preference shareholders
3,305
3,305
4,313
Paid-in equity holders
2,646
2,646
634
Ordinary shareholders
47,426
47,480
50,368
54,165
54,147
60,788
* Restated, refer to Note 1 on page 32 for further details.
Notes
1. Basis of preparation 
The consolidated financial statements should be read in conjunction with RBS's 2015 Annual Report and Accounts which were prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and interpretations issued by the IFRS Interpretations Committee of the IASB as adopted by the European Union (EU) (together IFRS). 
Accounting policies 
RBS's principal accounting policies are set out on pages 267 to 280 of the 2015 Annual Report and Accounts. Amendments to IFRSs effective for 2016 have not had a material effect on RBS's Q1 2016 results.
Pensions
In the fourth quarter of 2015, the Group changed its accounting policy for the recognition of surpluses in its defined benefit pension schemes: in particular, the policy for determining whether or not it has an unconditional right to a refund of surpluses in its employee pension funds. Where the Group has a right to a refund, this is not deemed unconditional if pension fund trustees can enhance benefits for plan members. The amended policy was been applied retrospectively and prior periods restated. For further details, see pages 267 to 268 of RBS's 2015 Annual Report and Accounts.
Critical accounting policies and key sources of estimation uncertainty
The judgements and assumptions that are considered to be the most important to the portrayal of RBS's financial condition are those relating to pensions, goodwill, provisions for liabilities, deferred tax, loan impairment provisions and fair value of financial instruments. These critical accounting policies and judgements are described on pages 276 to 280 of RBS's 2015 Annual Report and Accounts.
Going concern
Having reviewed RBS's forecasts, projections and other relevant evidence, the directors have a reasonable expectation that RBS will continue in operational existence for the foreseeable future. Accordingly, the financial information for the period ended 31 March 2016 have been prepared on a going concern basis.
2. Dividend Access Share
In March 2016, RBS completed the normalisation of its capital structure: the final dividend of 1.2 billion was paid in respect of the Dividend Access Share (DAS) owned by the UK Government and the DAS re-designated a single B ordinary share which was then cancelled.
3. Pensions
In the first quarter of 2016 RBS agreed with the Trustee of the RBS main pension scheme a statement of funding principles in relation to an actuarial valuation as at 31 December 2015. RBS and the Trustee also updated the existing schedule of contributions and recovery plan to reflect the 4.2 billon contribution paid to the fund in March 2016. At 31 March 2016 413 million of the surplus in the fund has been recognised on the consolidated balance sheet: the amount recoverable from the scheme in the form of future economic benefits.
Notes
4. Provisions for liabilities and charges
Regulatory and legal actions
Other
FX
Other
customer
investigations/
regulatory
Property
PPI
IRHP
redress (1)
litigation
provisions
Litigation
and other
Total
m
m
m
m
m
m
m
m
At 1 January 2016
996
149
672
306
41
3,944
1,258
7,366
Transfer from accruals and other liabilities
-
-
-
-
-
-
19
19
Transfer 
-
-
21
(35)
(21)
106
(71)
-
Currency translation and other movements
-
-
-
10
2
124
28
164
Charge to income statement (2)
-
-
11
-
1
33
79
124
Releases to income statement (2)
-
-
(8)
-
-
(1)
(19)
(28)
Provisions utilised
(85)
(41)
(63)
-
-
(24)
(69)
(282)
At 31 March 2016
911
108
633
281
23
4,182
1,225
7,363
Notes:
(1)
Closing provision predominantly relates to investment advice and packaged accounts. 
(2)
Relates to continuing operations. 
There are uncertainties as to the eventual cost of redress in relation to the provisions contained in the table above. Assumptions relating to these are inherently uncertain and the ultimate financial impact may be different from the amount provided.
5. Litigation, investigations and reviews 
RBS's 2015 Annual Report & Accounts issued on 26 February 2016 included comprehensive disclosures about RBS's litigation, investigations and reviews in Note 30. Set out below are the material developments in these matters since the 2015 Annual Report & Accounts was published.
Litigation
Interest rate swaps antitrust litigation
On 18 April 2016, an antitrust complaint was filed in the United States District Court for the Southern District of New York against RBS plc and other members of the Group, as well as a number of other interest rate swap dealers. The plaintiff, TeraExchange, alleges that it would have successfully established exchange-like trading of interest rate swaps if the defendant dealers had not unlawfully conspired to prevent that from happening through boycotts and other means, in violation of the U.S. antitrust laws. The complaint contains allegations of collusion between the dealers similar to those contained in the interest rate swap antitrust class actions that RBS has previously disclosed.RBS anticipates moving to dismiss the claims asserted in these matters. 
Weiss v. National Westminster Bank Plc (NatWest)
As previously disclosed, NatWest is defending a lawsuit filed by a number of US nationals (or their estates, survivors, or heirs) who were victims of terrorist attacks in Israel. The plaintiffs allege that NatWest is liable for damages arising from those attacks pursuant to the US Anti-terrorism Act because NatWest previously maintained bank accounts and transferred funds for the Palestine Relief & Development Fund, an organisation which plaintiffs allege solicited funds for Hamas, the alleged perpetrator of the attacks. On 28 March 2013, the trial court (the United States District Court for the Eastern District of New York) granted summary judgment in favour of NatWest on the issue of scienter, but on 22 September 2014, that summary judgment ruling was vacated by the United States Court of Appeals for the Second Circuit. The appeals court returned the case to the trial court for consideration of NatWest's other asserted grounds for summary judgment and, if necessary, for trial. On 31 March 2016, the trial court denied a motion by NatWest to dismiss the case in which NatWest had argued that the court lacked personal jurisdiction over NatWest. The schedule for the remainder of the matter, including trial, has not been set, but NatWest intends to assert other grounds for summary judgment that the trial court has not previously ruled upon.

Notes
5. Litigation, investigations and reviews 
Investigations and reviews 
Loan securitisation business investigations
As previously disclosed, ongoing matters include, among others, an active investigation by the attorney general of Connecticut, on behalf of the Connecticut Department of Banking, relating primarily to due diligence on and disclosure related to loans purchased for, or otherwise included in, securitisations and related disclosures. On 31 August 2015, the Connecticut Department of Banking issued two letters to RBS Securities Inc., indicating that it is has concluded that RBS Securities Inc. may have violated the Connecticut Uniform Securities Act when underwriting MBS, noting RBS plc's May 2015 FX-related guilty plea. Discussions relating to a possible resolution are ongoing.
Foreign exchange related investigations
As previously disclosed, in July 2014 the Serious Fraud Office in the UK (SFO) announced that it was launching a criminal investigation into allegations of fraudulent conduct in the foreign exchange market, apparently involving multiple financial institutions. On 15 March 2016, the SFO announced that it was closing its investigation, having concluded that, based on the information and material obtained, there was insufficient evidence for a realistic prospect of conviction.
FCA review of RBS's treatment of SMEs
As previously disclosed, in January 2014, the FCA appointed a Skilled Person to review RBS's treatment of UK small and medium sized business customers with credit exposures of up to 20 million whose relationship was managed within RBS's Global Restructuring Group or within similar units within RBS's Corporate Banking Division that were focussed on customers in financial difficulties. RBS is cooperating fully with the FCA in its review. 
On 13 April 2016 the FCA announced that it had received the Skilled Person's draft final report, is carefully considering the contents and will discuss the findings with the Skilled Person. RBS will have an opportunity to respond to the Skilled Person's findings before any substantive announcement by the FCA, the timing of which has not been determined.
UK retail banking
As previously disclosed, in November 2014 the Competition & Markets Authority (CMA) made its final decision to proceed with a market investigation reference (MIR) in respect of retail banking. In October 2015, the CMA published its summary of provisional findings, concluding that there are a number of competition concerns in the provision of personal current accounts (PCAs), business current accounts and SME lending. At the same time, the CMA published a notice of possible remedies to address its concerns, including measures to make it easier for customers to compare products, and requiring banks to help raise public awareness of, and confidence in, switching bank accounts. 
On 7 March 2016, the CMA announced that it is extending the MIR by 3 months with a revised statutory deadline of 12 August 2016. The CMA also published a supplemental notice of possible remedies which sets out four additional remedies focussed on PCA overdrafts, in addition to the remedies set out in the October 2015 notice of possible remedies. The provisional decision on remedies is now expected to be published in May 2016.

Notes
5. Litigation, investigations and reviews 
FCA wholesale sector competition review
As previously disclosed, on 9 July 2014, the FCA launched a review of competition in the wholesale sector to identify any areas which may merit further investigation through an in-depth market study. 
The initial review was an exploratory exercise and focused primarily on competition in wholesale securities and investment markets, and related activities such as corporate banking. It commenced with a three month consultation exercise, including a call for inputs from stakeholders. Following this consultation period, the FCA published its feedback statement on 19 February 2015 which announced that the FCA was to undertake a market study into investment and corporate banking and potentially into asset management. The terms of reference for the investment and corporate banking market study were published on 22 May 2015. On 13 April 2016, the FCA published its interim report on the investment and corporate banking market study which sets out various proposed remedies, including the following: measures designed to improve clients' ability to appoint banks that best suit their needs; measures to ensure that conflicts are properly managed; and improvements to the Initial Public Offering (IPO) process. The FCA has indicated that it will publish its final report in Summer 2016. 
On 18 November 2015, the FCA also announced that a market study would be undertaken into asset management. The FCA has said that it intends to publish an interim report in Summer 2016 with the final report expected in early 2017. At this stage, as there remains considerable uncertainty around the outcome of these reviews it is not practicable reliably to estimate the aggregate impact, if any, on RBS which may be material.
FCA request concerning Mossack Fonseca
In common with other banks, RBS received a letter from the FCA on 4 April 2016 requesting information about any relationship RBS has with the Panama-based law firm Mossack Fonseca or any individuals named in recent media coverage in connection with the same. RBS has responded to the FCA setting out details of the limited services provided to Mossack Fonseca and its clients and is continuing its internal review, as well as monitoring all new information published.
Opening of enforcement proceedings by FINMA against Coutts & Co Ltd
The Swiss Financial Market Supervisory Authority (FINMA) has opened enforcement proceedings against Coutts & Co Ltd (Coutts), a member of the RBS Group incorporated in Switzerland, with regard to certain client accounts held with Coutts. Coutts is also cooperating with authorities in other jurisdictions in relation to connected accounts. 
Review and investigation of treatment of tracker mortgage customers in Ulster Bank Ireland Limited
On 22 December 2015, the Central Bank of Ireland (CBI) announced that it had written to a number of lenders requiring them to put in place a robust plan and framework to review the treatment of customers who have been sold mortgages with a tracker interest rate or with a tracker interest rate entitlement. The CBI stated that the intended purpose of the review was to identify any cases where customers' contractual rights under the terms of their mortgage agreements were not fully honoured, or where lenders did not fully comply with various regulatory requirements and standards regarding disclosure and transparency for customers. The CBI has required Ulster Bank Ireland Limited (UBIL), a member of the RBS Group, incorporated in the Republic of Ireland, to participate in this review and UBIL is co-operating with the CBI in this regard. Separately, on 15 April, the CBI notified UBIL that it was also commencing an investigation under its Administrative Sanctions Procedure into suspected breaches of the Consumer Protection Code 2006 during the period 4 August 2006 to 30 June 2008 in relation to certain customers who switched from tracker mortgages to fixed rate mortgages. 
Notes
6. Recent developments 
Liability management exercise
In April 2016, RBS completed cash tenders of certain US dollar, sterling and euro senior debt securities totalling 2.3 billion (equivalent).
Issue of new ordinary shares
In April 2016, 37.6 million new ordinary shares were issued for 85 million for the purposes of partly neutralising the impact of 2016 coupon payments on discretionary hybrid capital from a Common Equity Tier 1 capital perspective, as explained in the Full Year 2015 results announcement.
March 2016 Budget
In the Budget on 16 March 2016, the UK Government announced its intention to further restrict the use of tax losses carried forward by UK banks. If these measures are enacted, they would be taken into consideration in any future reviews of the recoverability of the bank's deferred tax assets associated with UK tax losses. The Budget is likely to be enacted around July 2016.
7. Post balance sheet events
Other than matters disclosed, there have been no further significant events between 31 March 2016 and the date of approval of this announcement.
Forward-looking statements
Certain sections in this document contain 'forward-looking statements' as that term is defined in the United States Private Securities Litigation Reform Act of 1995, such as statements that include the words 'expect', 'estimate', 'project', 'anticipate', 'believe', 'should', 'intend', 'plan', 'could', 'probability', 'risk', 'Value-at-Risk (VaR)', 'target', 'goal', 'objective', 'may', 'endeavour', 'outlook', 'optimistic', 'prospects' and similar expressions or variations on these expressions.
In particular, this document includes forward-looking statements relating, but not limited to: The Royal Bank of Scotland Group's (RBS) restructuring which includes the separation and divestment of Williams & Glyn, the proposed restructuring of RBS's CIB business, the implementation of the UK ring-fencing regime, the implementation of a major development program to update RBS's IT infrastructure and the continuation of its balance sheet reduction programme, as well as capital and strategic plans, divestments, capitalisation, portfolios, net interest margin, capital and leverage ratios and requirements liquidity, risk-weighted assets (RWAs), RWA equivalents (RWAe), Pillar 2A, return on equity (ROE), profitability, cost:income ratios, loan:deposit ratios, AT1 and other funding plans, funding and credit risk profile; litigation, government and regulatory investigations RBS's future financial performance; the level and extent of future impairments and write-downs; including with respect to Goodwill; future pension contributions and RBS's exposure to political risks, operational risk, conduct risk and credit rating risk and to various types of market risks, such as interest rate risk, foreign exchange rate risk and commodity and equity price risk. These statements are based on current plans, estimates, targets and projections, and are subject to inherent risks, uncertainties and other factors which could cause actual results to differ materially from the future results expressed or implied by such forward-looking statements. For example, certain market risk disclosures are dependent on choices relying on key model characteristics and assumptions and are subject to various limitations. By their nature, certain of the market risk disclosures are only estimates and, as a result, actual future gains and losses could differ materially from those that have been estimated.
Other factors that could adversely affect our results and the accuracy of forward-looking statements in this document include the risk factors and other uncertainties discussed in the Annual Report and Accounts 2015. These include the significant risks for RBS presented by the outcomes of the legal, regulatory and governmental actions and investigations that RBS is subject to (including active civil and criminal investigations) and any resulting material adverse effect on RBS of unfavourable outcomes (including where resolved by settlement); the uncertainty relating to the referendum on the UK's membership of the European Union and the consequences of it; the separation and divestment of Williams & Glyn; RBS's ability to successfully implement the various initiatives that are comprised in its restructuring plan, particularly the proposed restructuring of its CIB business and the balance sheet reduction programme as well as the significant restructuring required to be undertaken by RBS in order to implement the UK ring fencing regime; the significant changes, complexity and costs relating to the implementation of its restructuring, the separation and divestment of Williams & Glyn and the UK ring-fencing regime; whether RBS will emerge from its restructuring and the UK ring-fencing regime as a viable, competitive, customer focused and profitable bank; RBS's ability to achieve its capital and leverage requirements or targets which will depend on RBS's success in reducing the size of its business and future profitability; ineffective management of capital or changes to regulatory requirements relating to capital adequacy and liquidity or failure to pass mandatory stress tests; the ability to access sufficient sources of capital, liquidity and funding when required; changes in the credit ratings of RBS or the UK government; declining revenues resulting from lower customer retention and revenue generation in light of RBS's strategic refocus on the UK the impact of global economic and financial market conditions (including low or negative interest rates) as well as increasing competition. In addition, there are other risks and uncertainties. These include operational risks that are inherent to RBS's business and will increase as a result of RBS's significant restructuring; the potential negative impact on RBS's business of actual or perceived global economic and financial market conditions and other global risks; the impact of unanticipated turbulence in interest rates, yield curves, foreign currency exchange rates, credit spreads, bond prices, commodity prices, equity prices; basis, volatility and correlation risks; heightened regulatory and governmental scrutiny and the increasingly regulated environment in which RBS operates; the risk of failure to realise the benefit of RBS's substantial investments in its information technology and systems, the risk of failing to preventing a failure of RBS's IT systems or to protect itself and its customers against cyber threats, reputational risks; risks relating to the failure to embed and maintain a robust conduct and risk culture across the organisation or if its risk management framework is ineffective; risks relating to increased pension liabilities and the impact of pension risk on RBS's capital position; increased competitive pressures resulting from new incumbents and disruptive technologies; RBS's ability to attract and retain qualified personnel; HM Treasury exercising influence over the operations of RBS; limitations on, or additional requirements imposed on, RBS's activities as a result of HM Treasury's investment in RBS; the extent of future write-downs and impairment charges caused by depressed asset valuations; deteriorations in borrower and counterparty credit quality; the value and effectiveness of any credit protection purchased by RBS; risks relating to the reliance on valuation, capital and stress test models and any inaccuracies resulting therefrom or failure to accurately reflect changes in the micro and macroeconomic environment in which RBS operates, risks relating to changes in applicable accounting policies or rules which may impact the preparation of RBS's financial statements; the impact of the recovery and resolution framework and other prudential rules to which RBS is subject the recoverability of deferred tax assets by the Group; and the success of RBS in managing the risks involved in the foregoing.
The forward-looking statements contained in this document speak only as at the date hereof, and RBS does not assume or undertake any obligation or responsibility to update any forward-looking statement to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
The information, statements and opinions contained in this document do not constitute a public offer under any applicable legislation or an offer to sell or solicit of any offer to buy any securities or financial instruments or any advice or recommendation with respect to such securities or other financial instruments.
Appendix 1
Additional segment information
Appendix 1 UK Personal & Business Banking
Quarter ended
31 March 
31 December 
31 March 
2016
2015
2015
Income statement
m
m
m
Net interest income
1,019
1,030
1,032
Net fees and commissions
255
220
267
Other non-interest income
1
4
15
Non-interest income
256
224
282
Total income
1,275
1,254
1,314
Direct expenses
 - staff costs
(181)
(199)
(200)
 - other costs
(63)
(82)
(64)
Indirect expenses
(484)
(596)
(445)
Restructuring costs
 - direct
(13)
(31)
-
 - indirect 
(9)
(56)
(30)
Litigation and conduct costs
-
(607)
(354)
Operating expenses
(750)
(1,571)
(1,093)
Operating profit/(loss) before impairment (losses)/releases
525
(317)
221
Impairment (losses)/releases
(16)
27
(20)
Operating profit/(loss)
509
(290)
201
Operating expenses - adjusted (1)
(728)
(877)
(709)
Operating profit - adjusted (1)
531
404
585
Analysis of income by product
Personal advances
204
177
199
Personal deposits
166
181
181
Mortgages
564
569
571
Cards
142
140
168
Business banking
175
180
180
Other
24
7
15
Total income
1,275
1,254
1,314
Analysis of impairments by sector
Personal advances
6
13
31
Mortgages
4
5
5
Business banking
-
(24)
(40)
Cards
6
(1)
5
Other
-
(20)
19
Total impairment losses/(releases)
16
(27)
20
31 March
31 December
31 March
2016
2015
2015
Balance sheet
bn
bn
bn
Loans and advances to customers (gross)
 - Personal advances
6.0 
6.0
6.4
 - Mortgages
108.0 
104.8
96.0
 - Business banking
5.5 
5.3
5.9
 - Cards
3.9 
4.1
4.3
 - Others
-
1.4
1.5
Total loans and advances to customers (gross)
123.4 
121.6
114.1
Notes:
(1)
Excluding restructuring costs, litigation and conduct costs and write down of goodwill.
(2)
Excluding own credit adjustments, gains/(losses) on redemption of own debt and strategic disposals.
(3)
Does not reflect the cost base, funding, liquidity and capital profile of a standalone bank. Operating expenses include charges based on an attribution of support provided by RBS to Williams & Glyn.
(4)
Asia-Pacific portfolio.
(5)
European, the Middle East and Africa portfolio.

Appendix 1 Ulster Bank RoI 
Quarter ended
31 March
31 December
31 March
2016
2015
2015
Income statement
m
m
m
Net interest income
136 
118 
128 
Net fees and commissions
27 
28 
29 
Other non-interest income
38 
16 
28 
Own credit adjustment
4 
- 
- 
Non-interest income
69 
44 
57 
Total income
205 
162 
185 
Direct expenses
 - staff costs
(66)
(55)
(54)
 - other costs
(15)
(37)
(25)
Indirect expenses
(55)
(68)
(57)
Restructuring costs
 - direct
(8)
9 
- 
 - indirect 
-
(1)
1 
Litigation and conduct costs
-
5 
- 
Operating expenses
(144)
(147)
(135)
Operating profit before impairment releases
61 
15 
50 
Impairment releases
17 
14 
33 
Operating profit
78 
29 
83 
Total income - adjusted (2)
201 
162 
185 
Operating expenses - adjusted (1)
(136)
(160)
(136)
Operating profit - adjusted (1,2)
82 
16 
82 
Analysis of income by business
Corporate
73 
53
50
Retail
130 
105
103
Other
2 
4
32
Total income
205 
162
185
Analysis of impairments by sector
Mortgages
2 
29
(25)
Commercial real estate
 - investment
(6)
4
1
 - development
(2)
(2)
-
Other corporate
(12)
(42)
(9)
Other lending
1 
(3)
-
Total impairment releases
(17)
(14)
(33)
31 March
31 December
31 March
2016
2015
2015
Balance sheet
bn
bn
bn
Loans and advances to customers (gross)
 - Mortgages
18.6 
18.8
19.5
 -Commercial real estate
 - investment
1.2 
0.9
1.4
 - development
0.7 
0.3
0.4
 - Other corporate
5.0 
4.8
4.2
 - Other lending
0.5 
0.5
0.6
Total loans and advances to customers (gross)
26.0 
25.3
26.1
For the notes to this table refer to page 1.
Appendix 1 Commercial Banking
Quarter ended
31 March
31 December
31 March
2016
2015
2015
Income statement
m
m
m
Net interest income
536
512
482
Net fees and commissions
262
258
230
Other non-interest income
55
27
77
Non-interest income
317
285
307
Total income
853
797
789
Direct expenses
 - staff costs
(131)
(124)
(123)
 - other costs
(14)
(44)
(15)
 - operating lease costs
(35)
(36)
(36)
Indirect expenses
(256)
(380)
(241)
Restructuring costs
 - direct
(1)
(40)
-
 - indirect 
1
(14)
1
Litigation and conduct costs
(2)
8
-
Operating expenses
(438)
(630)
(414)
Operating profit before impairment (losses)/releases
415
167
375
Impairment (losses)/releases
(14)
(27)
1
Operating profit
401
140
376
Operating expenses - adjusted (1)
(436)
(584)
(415)
Operating profit - adjusted (1)
403
186
375
Analysis of income by business
Commercial lending
436 
411
388
Deposits
125 
125
111
Asset and invoice finance
177 
168
178
Other
115 
93
112
Total income
853 
797
789
Analysis of impairments by sector
Commercial real estate
(2)
8
(4)
Asset and invoice finance
3 
8
1
Private sector services (education, health, etc)
1 
4
3
Banks & financial institutions 
-
(1)
-
Wholesale and retail trade repairs
3 
-
(2)
Hotels and restaurants
-
(2)
(3)
Manufacturing
1 
-
1
Construction
1 
1
-
Other
7 
9
3
Total impairment losses/(releases)
14 
27
(1)
31 March
31 December
31 March
2016
2015
2015
Balance sheet
bn
bn
bn
Loans and advances to customers (gross)
 - Commercial real estate
17.5 
16.7
16.7
 - Asset and invoice finance
14.4 
14.4
13.9
 - Private sector services (education, health etc)
7.0 
6.7
7.0
 - Banks & financial institutions
7.4 
7.1
5.3
 - Wholesale and retail trade repairs
8.3 
7.5
7.0
 - Hotels and restaurants
3.5 
3.3
3.3
 - Manufacturing
6.4 
5.3
4.2
 - Construction
2.2 
2.1
1.8
 - Other
30.8 
28.9
27.8
Total loans and advances to customers (gross)
97.5 
92.0
87.0
For the notes to this table refer to page 1.

Appendix 1 Private Banking
Quarter ended
31 March
31 December
31 March
2016
2015
2015
Income statement
m
m
m
Net interest income
113
108
110
Net fees and commissions
46
44
50
Other non-interest income
6
6
5
Non-interest income
52
50
55
Total income
165
158
165
Direct expenses
 - staff costs
(40)
(43)
(46)
 - other costs
(14)
(7)
(9)
Indirect expenses
(83)
(109)
(68)
Restructuring costs
 - direct
(1)
(7)
-
 - indirect
(15)
12
3
Litigation and conduct costs
-
(10)
(2)
Write down of goodwill
-
(498)
-
Operating expenses
(153)
(662)
(122)
Operating profit/(loss) before impairment (losses)/releases
12
(504)
43
Impairment (losses)/releases
(2)
(12)
1
Operating profit/(loss)
10
(516)
44
Operating expenses - adjusted (1)
(137)
(159)
(123)
Operating profit/(loss) - adjusted (1)
26
(13)
43
Analysis of income by business
Investments
28
21
24
Banking
137
137
141
Total income
165
158
165
31 March
31 December
31 March
2016
2015
2015
Balance sheet
bn
bn
bn
Loans and advances to customers (gross)
 - Personal
2.6 
2.7
2.7
 - Mortgages
6.8 
6.5
6.3
 - Other
2.2 
2.0
2.2
Total loans and advances to customers (gross)
11.6 
11.2
11.2
For the notes to this table refer to page 1.
Appendix 1 RBS International
Quarter ended
31 March
31 December
31 March
2016
2015
2015
Income statement
m
m
m
Net interest income
75
78
76
Net fees and commissions
11
12
10
Other non-interest income
4
5
7
Non-interest income
15
17
17
Total income
90
95
93
Direct expenses
 - staff costs
(10)
(12)
(10)
 - other costs
(5)
(5)
(4)
Indirect expenses
(20)
(24)
(24)
Restructuring costs
 - indirect
(1)
1
(2)
Operating expenses
(36)
(40)
(40)
Operating profit before impairment losses
54
55
53
Impairment losses
(2)
-
(2)
Operating profit
52
55
51
Operating expenses - adjusted (1)
(35)
(41)
(38)
Operating profit - adjusted (1)
53
54
53
31 March
31 December
31 March
2016
2015
2015
Balance sheet
bn
bn
bn
Loans and advances to customers (gross)
 - Corporate
5.4 
4.5
4.6
 - Mortgages
2.6 
2.5
2.5
 - Other
-
0.4
0.2
Total loans and advances to customers (gross)
8.0 
7.4
7.3
For the notes to this table refer to page 1.
Appendix 1 Corporate & Institutional Banking
Quarter ended
31 March
31 December
31 March
2016
2015
2015
Income statement
m
m
m
Net interest income from banking activities
19
28
14
Net fees and commissions
11
66
115
Income from trading activities
246
203
340
Other operating income
1
(45)
15
Own credit adjustments
64
(66)
46
Non-interest income 
322
158
516
Total income
341
186
530
Direct expenses
 - staff costs
(67)
(63)
(109)
 - other costs
(14)
(50)
(26)
Indirect expenses
(250)
(251)
(257)
Restructuring costs
 - indirect
(12)
(62)
(91)
Litigation and conduct costs
(18)
(5)
(334)
Operating expenses
(361)
(431)
(817)
Operating loss before impairment releases
(20)
(245)
(287)
Impairment releases
- 
- 
8
Operating loss
(20)
(245)
(279)
Total income - adjusted (2)
277
252
484
Operating expenses - adjusted (1)
(331)
(364)
(392)
Operating (loss)/profit - adjusted (1,2)
(54)
(112)
100
Analysis of income by product
Rates
114
136
222
Currencies
144
95
90
Financing
49
23
155
Banking/Other
(30)
(2)
(25)
Total excluding own credit adjustments
277
252
442
Own credit adjustments
64
(66)
46
Businesses transferred to Commercial Banking
-
-
42
Total income
341
186
530
31 March
31 December
31 March
2016
2015
2015
Balance sheet
bn
bn
bn
Loans and advances to customer (gross, excluding reverse repos)
18.6
16.1
31.6
Loans and advances to banks (excluding reverse repos) 
5.2
5.7
2.5
Reverse repos
40.4
38.6
60.1
Securities
29.5
23.7
34.3
Cash and eligible bills 
12.2
14.3
10.5
Other 
10.1
4.9
13.0
Funded assets
116.0
103.3
152.1
For the notes to this table refer to page 1.
Appendix 1 Capital Resolution
Quarter ended
31 March
31 December
31 March
2016
2015
2015
Income statement
m
m
m
Net interest income
86
6
157
Net fees and commissions
30
5
89
Income from trading activities
(74)
(264)
(26)
Other operating income
9
20
187
Own credit adjustments
108
(5)
65
Strategic disposals
(6)
(24)
(14)
Non-interest income
67
(268)
301
Total income
153
(262)
458
Direct expenses
- staff costs
(45)
(54)
(92)
- other costs
(33)
(54)
(57)
Indirect expenses
(154)
(286)
(260)
Restructuring costs
 - direct
(7)
(21)
(16)
 - indirect
(9)
(83)
(184)
Litigation and conduct costs
(10)
(1,498)
(166)
Operating expenses
(258)
(1,996)
(775)
Operating loss before impairment (losses)/releases
(105)
(2,258)
(317)
Impairment (losses)/releases
(196)
356
145
Operating loss
(301)
(1,902)
(172)
Total income - adjusted (2)
51
(233)
407
Operating expenses - adjusted (1)
(232)
(394)
(409)
Operating (loss)/profit - adjusted (1,2)
(377)
(271)
143
Analysis of income by portfolio
APAC portfolio (4)
1
6 
25 
Americas portfolio
7
8 
23 
EMEA portfolio (5)
10
14 
26 
Legacy loan portfolio
(14)
(26)
107 
Shipping
16
14 
24 
Markets
(29)
(32)
95 
GTS
48
69 
126 
Other
8
(130)
(46)
Income excluding disposals and own credit adjustments
47
(77)
380 
Disposal (losses)/gains
(2)
(180)
13 
Own credit adjustments
108
(5)
65 
Total income
153
(262)
458 

Appendix 1 Capital Resolution
31 March
31 December
31 March
2016
2015
2015
Analysis of RWA by portfolio
bn
bn
bn
APAC portfolio (4)
0.3
0.5
3.9
Americas portfolio
0.6
1.0
8.6
EMEA portfolio (5)
1.2
1.2
5.1
Legacy loan portfolio
3.1
3.7
7.9
Shipping
4.2
4.5
5.5
Markets
22.4
20.7
30.4
GTS
3.3
3.6
8.7
Saudi Hollandi Bank
7.3
6.9
6.4
Other
2.4
2.9
3.8
Total credit and market risk 
44.8
45.0
80.3
Operational risk
2.8
4.0
4.0
Total RWAs
47.6
49.0
84.3
Balance sheet
Total loans and advances to customers (gross)
23.4
25.9
55.8
Loan impairment provisions
(1.0)
(2.3)
(7.3)
Net loans and advances to customers 
22.4
23.6
48.5
Funded assets
50.2
53.4
108.3
For the notes to this table refer to page 1.
Appendix 1 Williams & Glyn 
Quarter ended
31 March 
31 December 
31 March 
2016
2015
2015
Income statement (3)
m
m
m
Net interest income
162
165
163
Net fees and commissions
40
40
38
Other non-interest income
3
3
3
Non-interest income
43
43
41
Total income
205
208
204
Direct expenses
 - staff costs
(62)
(61)
(45)
 - other costs
(15)
(24)
(6)
Indirect expenses
(21)
(22)
(25)
Restructuring costs
 - direct
(20)
(28)
-
Operating expenses
(118)
(135)
(76)
Operating profit before impairment (losses)/releases
87
73
128
Impairment (losses)/releases
(6)
(20)
21
Operating profit
81
53
149
Operating expenses - adjusted (1)
(98)
(107)
(76)
Operating profit - adjusted (1)
101
81
149
Analysis of income by product
Retail
115
117
117
Commercial
90
91
87
Total income
205
208
204
Analysis of impairments by sector
Retail
5
1
5
Commercial
1
19
(26)
Total impairment losses/(releases)
6
20
(21)
31 March
31 December
31 March
2016
2015
2015
Balance sheet (3)
bn
bn
bn
Loans and advances to customers (gross)
 - Retail
11.7 
11.6
11.2
 - Commercial
8.7 
8.7
8.7
Total loans and advances to customers (gross)
20.4 
20.3
19.9
For the notes to this table refer to page 1.
Appendix 2
Additional capital resources, RWA and leverage information
Appendix 2 Additional capital resources, RWA and leverage information
Capital resources, RWAs and leverage based on the relevant local regulatory capital transitional arrangements for the significant legal entities within the Group are set at below.
31 March 2016
31 December 2015
RBS plc 
NatWest Plc 
UBIL (1)
RBS plc 
NatWest Plc 
UBIL (1)
Risk asset ratios
% 
% 
% 
% 
% 
% 
CET1 
14.3
11.9
29.8
16.0
11.6
29.6
Tier 1
15.3
11.9
29.8
17.1
11.6
29.6
Total
23.5
19.4
32.5
25.3
19.6
32.1
Capital (2)
m
m
m
m
m
m
Tangible equity
49,181
12,255
6,316
49,212
10,784
5,753
Expected loss less impairment provisions
(299)
(634)
-
(395)
(703)
(22)
Prudential valuation adjustment
(403)
(1)
-
(349)
(1)
-
Deferred tax assets
(198)
(621)
(226)
(252)
(622)
(210)
Own credit adjustments
(176)
-
-
17
-
-
Pension fund adjustment
(143)
(285)
89
(138)
-
142
Instruments of financial sector entities where 
 the institution has a significant investment
(20,079)
(3,067)
-
(15,680)
(2,837)
-
Other adjustments for regulatory purposes
(203)
(35)
(112)
1
533
27
Total deductions
(21,501)
(4,643)
(249)
(16,796)
(3,630)
(63)
CET1 capital
27,680
7,612
6,067
32,416
7,154
5,690
AT1 capital
1,976
-
-
2,318
17
-
Tier 1 capital
29,656
7,612
6,067
34,734
7,171
5,690
Tier 2 capital
15,777
4,806
540
16,607
4,966
485
Total regulatory capital
45,433
12,418
6,607
51,341
12,137
6,175
Risk-weighted assets
Credit risk
 - non-counterparty - advanced IRB
58,665
42,300
17,534
57,790
39,231
16,761
 - non-counterparty - standardised
75,605
13,437
1,184
88,654
15,191
968
 - counterparty
25,278
434
459
21,769
402
345
Market risk
18,808
524
39
19,073
570
7
Operational risk
14,861
7,209
1,124
15,615
6,361
1,148
Total RWAs
193,217
63,904
20,340
202,901
61,755
19,229
Leverage 
Derivatives
315,940
2,780
753
265,601
2,086
657
Loans and advances
181,522
209,834
21,101
175,906
207,632
19,876
Reverse repos
34,515
-
-
31,096
-
-
Other assets
201,615
10,570
2,378
196,579
10,674
2,245
Total assets
733,592
223,184
24,232
669,182
220,392
22,778
Derivatives
 - netting
(305,353)
(2,011)
(122)
(260,076)
(1,451)
(99)
 - potential future exposures
77,234
186
249
76,804
196
246
Securities financing transactions gross up
8,462
-
-
5,162
-
-
Undrawn commitments
43,916
10,064
1,204
46,309
9,890
1,021
Regulatory deductions and other adjustments
(19,509)
(5,371)
(226)
(15,827)
(5,221)
(212)
Exclusion of core UK-group exposures
(20,433)
(67,899)
-
(18,919)
(70,752)
-
Leverage exposure 
517,909
158,153
25,337
502,635
153,054
23,734
Tier 1 capital
29,656
7,612
6,067
34,734
7,171
5,690
Leverage ratio % 
5.7
4.8
23.9
6.9
4.7
24.0
Notes:
(1)
Ulster Bank Ireland Limited (UBIL) broadly aligns with the segment Ulster Bank RoI.
(2)
Capital Requirements Regulation (CRR) as implemented by the Prudential Regulation Authority in the UK, with effect from 1 January 2014. All regulatory adjustments and deductions to CET1 have been applied in full for both bases with the exception of unrealised gains on AFS securities which have been included from 2015 under the PRA transitional basis.

Appendix 2 Additional capital resources, RWA and leverage information
Key points
The key driver of the movements is the annual phasing-in of the CRR transition rules. The significant investment deduction has increased reflecting an incremental 10% increase in the percentage of significant investments which are treated as a capital deduction and a commensurate 10% decrease in the percentage of significant investments which are treated as risk-weighted assets.
RBS plc - The impact of the annual phasing-in is a reduction of 80 basis points. Also, CET1 has decreased as a result of the capital injection into NatWest Plc in the period. RWAs have decreased by 9.7 billion predominantly as a result of the significant investment change referred to above which reduced RWAs by 14.8 billion partly offset by an increase in counterparty risk RWAs of 3.5 billion.
NatWest Plc - The impact of the annual phasing-in is a reduction of 50 basis points. Also, CET1 has increased as a result of the capital injection from RBS plc offset by the impact of the pension payment of 4.2 billion to the Main Scheme, being an accelerated payment of existing committed future contributions. RWAs increased by 2.1 billion driven by the risk parameter recalibration of mortgage PDs and annual recalculation of operational risk RWAs offset by the changed treatment of significant investments referred to above.
UBIL - CET1 ratio has increased to 29.8% in the period. RWAs have decreased from 26.2 billion to 25.7 billion as a result of reduced exposures and risk parameter improvements. In sterling terms, RWAs have increased by 1.1 billion as a result of the appreciation of the euro against sterling. 

This information is provided by RNS
The company news service from the London Stock Exchange
  END
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