REG - Royal Bk Scot.Grp. - Interim Management Statement <Origin Href="QuoteRef">RBS.L</Origin> - Part 3
30/10/2015 07:01
- Part 3: For the preceding part double click ID:nRSd9427Db
Profit/(loss) before impairment losses 676 28 704 426 (80) 346 (1,321) 159 (8) (120)
Impairment (losses)/releases (9) 52 43 (26) 2 (24) (13) 2 184 192
Operating profit/(loss) 667 80 747 400 (78) 322 (1,334) 161 176 72
Additional information
Operating expenses - adjusted (2) (763) (139) (902) (390) (177) (567) (734) 49 (53) (2,207)
Operating profit/(loss) - adjusted (2) 697 91 788 476 32 508 (227) 309 176 1,554
Return on equity (3) 32.1% 9.9% 24.7% 11.3% (20.1%) 7.5% (33.0%) nm nm 2.7%
Return on equity - adjusted (2,3) 33.6% 11.3% 26.1% 13.7% 5.6% 12.7% (6.9%) nm nm 14.1%
Cost:income ratio 54% 84% 57% 52% 139% 69% 354% nm nm 103%
Cost:income ratio - adjusted (2) 52% 78% 55% 44% 86% 52% 141% nm nm 62%
Total assets (£bn) 135.4 26.5 161.9 94.5 17.0 111.5 482.4 192.4 16.5 964.7
Funded assets (£bn) 135.4 26.4 161.8 94.5 16.9 111.4 211.1 189.7 8.4 682.4
Net loans and advances to customers (£bn) 128.6 20.2 148.8 90.1 13.5 103.6 57.8 63.4 5.9 379.5
Risk elements in lending (£bn) 3.2 4.2 7.4 2.3 0.2 2.5 0.2 1.2 7.4 18.7
Impairment provisions (£bn) (2.1) (2.4) (4.5) (0.9) - (0.9) (0.1) (0.7) (5.1) (11.3)
Customer deposits (£bn) 151.0 18.7 169.7 97.0 29.8 126.8 49.2 65.8 1.0 412.5
Risk-weighted assets (RWAs) (£bn) 41.0 21.2 62.2 66.9 9.8 76.7 88.0 85.1 14.4 326.4
RWA equivalent (£bn) (4) 44.6 20.7 65.3 72.0 9.8 81.8 89.7 85.4 17.9 340.1
Employee numbers (FTEs - thousands) 25.4 4.2 29.6 6.2 2.7 8.9 3.1 49.5 0.5 91.6
For the notes to this table refer to page 22. nm= not meaningful
Segment performance
Quarter ended 30 September 2014
PBB CPB CIB
Ulster Commercial Private Central Total
UK PBB Bank Total Banking Banking Total items (1) RCR RBS
£m £m £m £m £m £m £m £m £m £m
Income statement
Net interest income 1,198 163 1,361 521 172 693 230 109 (23) 2,370
Non-interest income 345 51 396 290 98 388 601 (257) 145 1,273
Total income 1,543 214 1,757 811 270 1,081 831 (148) 122 3,643
Direct expenses - staff costs (236) (57) (293) (124) (76) (200) (179) (647) (37) (1,356)
- other costs (81) (20) (101) (54) (18) (72) (50) (833) (24) (1,080)
Indirect expenses (465) (61) (526) (196) (109) (305) (593) 1,448 (24) -
Restructuring costs - direct (2) - (2) - - - (22) (143) - (167)
- indirect (63) (12) (75) (18) (7) (25) 6 98 (4) -
Litigation and conduct costs (118) - (118) - - - (562) (100) - (780)
Operating expenses (965) (150) (1,115) (392) (210) (602) (1,400) (177) (89) (3,383)
Profit/(loss) before impairment losses 578 64 642 419 60 479 (569) (325) 33 260
Impairment (losses)/releases (79) 318 239 (12) 4 (8) 12 (1) 605 847
Operating profit/(loss) 499 382 881 407 64 471 (557) (326) 638 1,107
Additional information
Operating expenses - adjusted (2) (782) (138) (920) (374) (203) (577) (822) (32) (85) (2,436)
Operating profit/(loss) - adjusted (2) 682 394 1,076 425 71 496 21 (181) 642 2,054
Return on equity (3) 22.8% 47.1% 28.5% 12.3% 11.1% 12.2% (11.3%) nm nm 8.2%
Return on equity - adjusted (2,3) 31.5% 48.5% 35.0% 12.9% 12.5% 12.9% (0.8%) nm nm 16.0%
Cost:income ratio 63% 70% 63% 48% 78% 56% 168% nm nm 93%
Cost:income ratio - adjusted (2) 51% 64% 52% 46% 75% 53% 99% nm nm 67%
Total assets (£bn) 134.2 26.5 160.7 89.7 21.1 110.8 572.9 170.4 31.3 1,046.1
Funded assets (£bn) 134.2 26.3 160.5 89.7 21.0 110.7 274.9 168.1 17.9 732.1
Net loans and advances to customers (£bn) 127.0 22.0 149.0 85.0 16.7 101.7 73.1 57.1 13.2 394.1
Risk elements in lending (£bn) 4.1 4.8 8.9 2.6 0.2 2.8 0.1 1.3 17.4 30.5
Impairment provisions (£bn) (2.7) (2.9) (5.6) (1.0) (0.1) (1.1) (0.2) (0.5) (12.6) (20.0)
Customer deposits (£bn) 146.0 19.7 165.7 87.0 36.2 123.2 57.1 58.4 1.2 405.6
Risk-weighted assets (RWAs) (£bn) 44.7 23.9 68.6 64.9 12.2 77.1 123.2 82.2 30.6 381.7
RWA equivalent (£bn) (4) 47.3 21.4 68.7 71.6 12.2 83.8 125.0 82.2 38.3 398.0
Employee numbers (FTEs - thousands) 25.0 4.5 29.5 6.8 3.4 10.2 4.0 48.8 0.8 93.3
nm = not meaningful
Notes:
(1) Central items include unallocated transactions, principally Treasury AFS portfolio sales of £67 million loss in the nine months ended 30 September 2015 (nine months ended 30 September 2014 - £143 million gain; Q3 2015 - £2 million gain; Q2 2015 - £42 million loss; Q3 2014 - £73 million loss) and profit and loss on hedges that do not qualify for hedge accounting. Balance sheet items for periods up to and including June 2015 include Citizens which was within assets of disposal groups.
(2) Excluding restructuring costs and litigation and conduct costs.
(3) Segmental return on equity based on operating profit after tax adjusted for preference share dividends divided by average notional equity (based on 13% of the monthly average RWA equivalents (RWAe)).
(4) RWAe is an internal metric based on target CET 1 ratio of 13%, for all segments except RCR, set at 10% at creation. RWAe converts performing and non-performing exposures into a consistent capital measure comprising RWAs and capital deductions.
Segment performance
Key points
UK Personal & Business Banking
● UK PBB operating profit of £638 million was up 28% from Q3 2014. Return on equity in the quarter was 32%, compared with 23% in the prior year principally due to lower litigation and conduct costs.
● Mortgage activity strengthened further in Q3, with applications up 66% from £6.2 billion in Q3 2014 to £10.2 billion and new business market share of approvals increasing to 15%. Total loans and advances increased by £3.8 billion during the quarter, with
total mortgage balances at 30 September 2015 up 6% compared with Q3 2014.
● In Q3 our existing private and packaged current account customers were invited to receive 3% cash back on their household direct debits, for free, until the end of the year in advance of the launch of our new current account range. Around one million
customers are now enrolled in this free offer. Those on the free offer can opt into the paid-for new product at the turn of the year. The fee for this product will be £3 per account per month. The new Reward current accounts launched on 12 October 2015 to
non-packaged and new customers.
● Income trends were slightly weaker. Net interest margin was 4 basis points lower than Q2 2015 and 18 basis points lower than in Q3 2014, largely driven by the significantly increased proportion of lower margin secured lending in the portfolio mix. New
business mortgage margins have fallen as a result of increasingly competitive pricing. Standard variable rate balances continued to transfer to lower rate products and represented 15% of the mortgage book at 30 September 2015 compared with 23% a year
earlier. Non-interest income was lower, reflecting reduced interchange fees on credit and debit cards, reduced advisory income and the non-repeat of a £7 million profit on the sale of NatWest Stockbrokers in Q3 2014.
● Operating expenses were down 16% from Q3 2014, with minimal net conduct expenses in the quarter. Staff costs were 1% lower, with headcount down 2%. The cost:income ratio was 56% compared with 63% in Q3 2014.
● Credit conditions remained stable, with the charge from bad debt flows down 26% from Q3 2014. The net impairment charge of £11 million continued to benefit from provision releases, though at lower levels than seen in the first half of the year.
Ulster Bank
● Improving economic conditions across the island of Ireland have contributed to stronger new business volumes, particularly in the corporate and personal mortgage segments. However, this has been offset by continued customer deleveraging and the sale of a
portfolio of buy-to-let mortgages. Balances also reflect the weakening of the euro over the last year. Excluding the impact of euro exchange rate movements, net loans and advances were down £0.2 billion from Q2 2015. The low yielding tracker mortgage book
reduced by £0.3 billion to £9.4 billion with associated RWAs of £8.1 billion.
● Operating profit of £114 million was down 70% from Q3 2014, which benefited from materially larger net impairment provision releases.
● The Q3 2015 results included a £23 million profit on the sale of the buy-to-let mortgage portfolio, as well as a £24 million gain realised on the closure of a foreign exchange exposure. Return on equity was 14%.
● Income was flat against Q3 2014 as the income benefits from these one-off items were offset by exchange rate movements and a lower return on free funds. While deposit margins have improved steadily from Q3 2014, new business lending margins have begun to
tighten across the market.
● Operating expenses have increased by £8 million from Q3 2014 with headcount reductions partly offsetting the impact of higher pension costs and regulatory levies. The cost:income ratio was 74%, slightly higher than Q3 2014.
● Results benefited from a further £58 million release of impairment provisions, compared with £318 million in Q3 2014. This reflects continued positive trends on collections and Irish property prices albeit the pace of improvement has slowed since Q3 2014.
Segment performance
Commercial Banking
● Commercial Banking reported an operating profit of £412 million, up 1% from Q3 2014. Return on equity was stable at 12%.
● New business volumes in Q3 were strong, with net new lending of £1.5 billion during the quarter. Further enhancements to Commercial Banking's lending capability are expected with the launch of a new lending platform in Q4 2015.
● Comparisons with prior periods are affected by a number of internal business transfers, including the transfer to Commercial Banking of RBS International (RBSI) from Private Banking on 1 January 2015 and the CIB UK corporate loan portfolio on 1 May 2015(1,3). The transfers of the Western Europe loan portfolio and UK Transaction Services from CIB to Commercial Banking are on track for completion in Q4 2015.
● Total income was 2% higher than in Q3 2014, benefiting from increased loan and deposit volumes combined with higher deposit margins partially offset by lower asset margins. Non-interest income was lower, principally reflecting lower equity gains.
● Total expenses were up 3% from Q3 2014, reflecting higher indirect costs. Staff costs were flat, with reduced headcount offsetting normal inflation adjustments. The cost:income ratio was stable at 49%.
● Net impairment losses increased £3 million, reflecting increased individual charges and lower net provision releases.
Private Banking
● Operating profit of £15 million was down 77% from Q3 2014. Return on equity was 2%. Coutts remains an area of management focus.
● The disposal of Private Banking International continues to make good progress, with the sale of the European, the Middle East and Africa business, including Switzerland, scheduled to close in Q4 2015 and the sale of the business in the Far East scheduled to close next year.
● On 1 January 2015, the RBSI business in Private Banking was transferred to Commercial Banking. This transfer affects comparisons with prior periods(2,3).
● Operating performance was adversely affected by financial market conditions and also reflected the business transfer. Adjusting for this transfer, income was £31 million lower principally as a result of hedging activities and lower investment and transactional income.
● Total expenses were 12% lower than Q3 2014 due to the transfer of the RBSI business. The cost:income ratio was 91% compared with 78% in Q3 2014.
● Assets under management were down £1.5 billion from Q2 2015 and £3.3 billion from Q3 2014, principally reflecting lower stock market valuations.
Corporate & Institutional Banking
● The reshaping of the Go-forward business is proceeding in line with plans. Funded assets fell by £23 billion during the quarter, including the £17 billion transfer(3) of the Short Term Markets Business to Treasury. The business remains on track to achieve the previously disclosed income target of £1.3 billion in the full year.
● Adjusted operating loss for the first nine months of 2015 for CIB was £445 million compared with a profit of £570 million for the same period in 2014 and for Q3 2015 a loss of £268 million compared with a profit of £21 million for Q3 2014, reflecting CIB's planned reshaping as income declined and disposal losses were incurred.
Notes:
(1) The business transfers included: total income of £158 million (nine months ended 30 September 2014 - £153 million; Q3 2015 - £49 million; Q2 2015 - £56 million; Q3 2014 - £54 million); operating expenses of £67 million (nine months ended 30 September 2014
- £87 million; Q3 2015 - £21 million; Q2 2015 - £24 million; Q3 2014 - £29 million); net loans and advances to customers of £4.7 billion (30 June 2015 - £4.5 billion; 31 December 2014 - £4.4 billion); customer deposits of £6.3 billion (30 June 2015 - £6.4
billion; 31 December 2014 - £6.5 billion); and RWAs of £4.4 billion (30 June 2015 - £3.8 billion; 31 December 2014 - £3.5 billion).
(2) The business transfer included: total income of £111 million (nine months ended 30 September 2014 - £109 million; Q3 2015 - £35 million; Q2 2015 - £37 million; Q3 2014 - £40 million); operating expenses of £64 million (nine months ended 30 September 2014 -
£80 million; Q3 2015 - £20 million; Q2 2015 - £23 million; Q3 2014 - £27 million); net loans and advances to customers of £2.6 billion (30 June 2015 - £2.4 billion; 31 December 2014 - £2.6 billion); customer deposits of £6.3 billion (30 June 2015 - £6.4
billion; 31 December 2014 - £6.5 billion); and RWAs of £1.9 billion (30 June 2015 - £1.5 billion; 31 December 2014 - £1.4 billion).
(3) Comparatives have not been restated.
Segment performance
Corporate & Institutional Banking
● Adjusted operating profit in the Go-forward business for the first nine months of 2015 was £125 million and for Q3 2015 a loss of £5 million. Adjusted profit in the Go-forward business for the first nine months of the year, excluding the Western Europe
loan portfolio and the UK Transaction Services business that will transfer to Commercial Banking in Q4 2015, was broadly breakeven(1).
● Compared with Q2 2015, Go-forward income was flat, notwithstanding the seasonal slow-down in client activity and uncertain market conditions. Rates and Currencies were broadly in line with Q2 with some weakness in Credit, principally due to lower levels of
primary issuance. In line with the reduction in risk and resources allocated to CIB, Go-forward income was down 28% compared with Q3 2014.
● The transfer to Commercial Banking of the CIB UK corporate loan portfolio on 1 May 2015(2) and the transfer of the Short Term Markets Business to Treasury on 1 August 2015 affects comparisons with prior periods.
● Adjusted expenses for CIB were down £113 million compared with Q3 2014 to £709 million with staff costs down £40 million from Q3 2014 reflecting a reduction in headcount. Restructuring costs were £637 million, down slightly from £734 million the prior
quarter as the business reshapes.
● CIB Capital Resolution made good progress in Q3 2015, with the sale of North American portfolios to Mizuho largely complete and a further APAC portfolio sale announced to China Construction Bank Corporation. Disposal losses for the quarter were £77
million.
● A charge of $150 million (£95 million) was incurred in Q3 2015 in relation to US mortgage-backed securities litigation, but overall litigation and conduct charges were significantly lower than in Q3 2014.
● RWAs were reduced by £10 billion during Q3 2015 and have fallen by £29 billion since 31 December 2014 (£26 billion excluding the impact of the transferred businesses following the strategic changes announced in February 2015). The business has now achieved
its previously announced target of a £25 billion reduction in 2015 three months ahead of schedule. In the Go-forward business RWAs of £39 billion as at 30 September 2015 include £8 billion that will transfer out during Q4 2015 to Commercial Banking. The
steady state RWAs of the Go-forward business are expected to be around £30 billion.
RBS Capital Resolution
● RCR funded assets have fallen to £6.5 billion, down 83% since the initial pool of assets was identified. RCR is targeting an 85% reduction by the end of 2015, a year earlier than originally planned.
● During Q3 2015 RWA equivalents fell by £4.0 billion to £13.9 billion, driven by disposals and repayments. Disposal activity continues across the portfolio, with 101 deals completed during Q3 2015 at an average price of 104% of book value.
● An operating loss of £16 million was recorded in Q3 2015, compared with an operating profit of £638 million in Q3 2014. This reflected significantly reduced impairment releases as well as lower realisations on disposals and fair value gains.
● The net effect of the operating loss of £16 millionand RWA equivalent reduction of £4.0 billion(3) was CET1 accretion of £0.4 billion.
Central items
● Central items not allocated represented a charge of £285 million compared with a charge of £326 million in Q3 2014. This includes volatile items under IFRS, which were a charge of £126 million in the quarter, in line with Q3 2014 but a movement of £331 million compared with Q2 2015. A £190 million restructuring charge was incurred relating to Williams & Glyn.
Notes:
(1) The CIB segment is being restructured into CIB Go-forward and CIB Capital Resolution elements. The split is subject to further refinement.
(2) The business transfer from CIB to Commercial Banking was effective from 1 May 2015. Comparatives were
not restated and for the whole period the financials of the UK large corporate business were: total
income of £47 million for the nine months ended 30 September 2015 (nine months ended 30 September 2014
- £44 million; Q3 2015 - £14 million; Q2 2015 - £19 million; Q3 2014 - £14 million); operating
expenses of £3 million for the nine months ended 30 September 2015 (nine months ended 30 September
2014 - £7 million; Q3 2015 - £1 million; Q2 2015 - £1 million; Q3 2014 - £2 million); net loans and
advances to customers of £2.1 billion (30 June 2015 - £2.1 billion; 31 December 2014 - £1.8 billion);
and RWAs of £2.5 billion (30 June 2015 - £2.3 billion; 31 December 2014 - £2.1 billion).
(3) Capital equivalent £400 million at an internal CET1 ratio of 10%.
Selected statutory financial statements
Condensed consolidated income statement for the period ended 30 September 2015
Nine months ended Quarter ended
30 September 30 September 30 September 30 June 30 September
2015 2014 2015 2015 2014
£m £m £m £m £m
Interest receivable 9,070 9,841 2,963 3,031 3,297
Interest payable (2,465) (2,965) (776) (816) (927)
Net interest income 6,605 6,876 2,187 2,215 2,370
Fees and commissions receivable 2,838 3,359 880 969 1,116
Fees and commissions payable (558) (671) (195) (186) (196)
Income from trading activities 1,045 1,688 170 545 238
Gain on redemption of own debt - 20 - - -
Other operating income 509 913 141 194 108
Non-interest income 3,834 5,309 996 1,522 1,266
Total income 10,439 12,185 3,183 3,737 3,636
Staff costs (4,401) (4,432) (1,546) (1,530) (1,435)
Premises and equipment (1,380) (1,601) (635) (326) (475)
Other administrative expenses (3,096) (2,569) (730) (1,027) (1,212)
Depreciation and amortisation (994) (727) (282) (200) (261)
Write down of goodwill and other intangible assets (673) (212) (67) (606) -
Operating expenses (10,544) (9,541) (3,260) (3,689) (3,383)
(Loss)/profit before impairment releases (105) 2,644 (77) 48 253
Impairment releases 400 682 79 192 847
Operating profit before tax 295 3,326 2 240 1,100
Tax charge (294) (869) (1) (100) (277)
Profit from continuing operations 1 2,457 1 140 823
Profit from discontinued operations, net of tax (2) 1,451 437 1,093 674 117
Profit for the period 1,452 2,894 1,094 814 940
Non-controlling interests (389) 11 (45) (428) 53
Preference shares (223) (231) (80) (73) (91)
Other owners (41) (33) (17) (20) (6)
Dividend access share - (320) - - -
Profit attributable to ordinary and B shareholders 799 2,321 952 293 896
Earnings/(loss) per ordinary and equivalent
B share (EPS) (3)
Basic EPS from continuing and discontinued operations 6.9p 20.5p 8.2p 2.5p 7.9p
Basic EPS from continuing operations (2.8p) 16.9p (0.9p) 0.2p 6.9p
Notes:
(1) A reconciliation between income statement lines in the statutory income statement above and the non-statutory income statement on page 8 is given in Appendix 3 to this announcement.
(2) Refer to Note 2 on page 31 for further details.
(3) Diluted EPS from continuing operations and from continuing and discontinued operations were less than basic EPS in the nine months ended 30 September 2014 (0.2p) and the quarter ended 30 September 2014 (0.1p). There was no dilution in any other period.
Selected statutory financial statements
Condensed consolidated statement of comprehensive income
for the period ended 30 September 2015
Nine months ended Quarter ended
30 September 30 September 30 September 30 June 30 September
2015 2014 2015 2015 2014
£m £m £m £m £m
Profit for the period 1,452 2,894 1,094 814 940
Items that do qualify for reclassification
Available-for-sale financial assets (95) 608 (50) (247) 79
Cash flow hedges (302) 455 408 (834) 207
Currency translation (1,177) (117) (604) (584) 616
Tax 106 (191) (38) 246 (31)
Other comprehensive (loss)/income after tax (1,468) 755 (284) (1,419) 871
Total comprehensive (loss)/income for the period (16) 3,649 810 (605) 1,811
Total comprehensive (loss)/income is
attributable to:
Non-controlling interests 357 42 58 252 12
Preference shareholders 223 231 80 73 91
Paid-in equity holders 41 33 17 20 6
Dividend access share - 320 - - -
Ordinary and B shareholders (637) 3,023 655 (950) 1,702
(16) 3,649 810 (605) 1,811
Key points
● The movement in available-for-sale financial assets in the nine months ended 30 September 2015 reflects unrealised losses on available-for-sale UK, US and Dutch securities, partially offset by realised losses on available-for-sale bonds.
● Cash flow hedging gains in the quarter largely result from decreases in sterling and euro swap rates across the maturity profile of the portfolio.
● Currency translation losses for the nine months ended 30 September 2015 are predominantly related to the reclassification of foreign exchange reserves on loss of control of Citizens and the strengthening of sterling against the euro. In the quarter, the reclassification losses were partially offset by gains from the weakening of sterling against the euro and US dollar.
Selected statutory financial statements
Condensed consolidated balance sheet at 30 September 2015
30 September 30 June 31 December
2015 2015 2014
£m £m £m
Assets
Cash and balances at central banks 77,220 81,900 74,872
Net loans and advances to banks 22,681 20,714 23,027
Reverse repurchase agreements and stock borrowing 15,255 20,807 20,708
Loans and advances to banks 37,936 41,521 43,735
Net loans and advances to customers 311,383 314,993 334,251
Reverse repurchase agreements and stock borrowing 36,545 46,799 43,987
Loans and advances to customers 347,928 361,792 378,238
Debt securities 81,307 77,187 86,649
Equity shares 2,199 3,363 5,635
Settlement balances 9,397 9,630 4,667
Derivatives 296,019 281,857 353,590
Intangible assets 7,151 7,198 7,781
Property, plant and equipment 4,607 4,874 6,167
Deferred tax 1,434 1,479 1,540
Prepayments, accrued income and other assets 4,928 4,829 5,878
Assets of disposal groups 6,300 89,071 82,011
Total assets 876,426 964,701 1,050,763
Liabilities
Bank deposits 30,543 30,978 35,806
Repurchase agreements and stock lending 12,800 21,612 24,859
Deposits by banks 43,343 52,590 60,665
Customer deposits 346,267 342,023 354,288
Repurchase agreements and stock lending 30,555 44,750 37,351
Customer accounts 376,822 386,773 391,639
Debt securities in issue 37,360 41,819 50,280
Settlement balances 8,401 7,335 4,503
Short positions 20,108 24,561 23,029
Derivatives 288,905 273,589 349,805
Accruals, deferred income and other liabilities 14,324 13,962 13,346
Retirement benefit liabilities 1,955 1,869 2,579
Deferred tax 376 363 500
Subordinated liabilities 20,184 19,683 22,905
Liabilities of disposal groups 6,401 80,388 71,320
Total liabilities 818,179 902,932 990,571
Equity
Non-controlling interests 703 5,705 2,946
Owners' equity*
Called up share capital 6,984 6,981 6,877
Reserves 50,560 49,083 50,369
Total equity 58,247 61,769 60,192
Total liabilities and equity 876,426 964,701 1,050,763
* Owners' equity attributable to:
Ordinary and B shareholders 51,593 51,117 52,149
Other equity owners 5,951 4,947 5,097
57,544 56,064 57,246
The company's distributable reserves at 30 September 2015 were £16.6 billion (31 December 2014 - £17.5 billion).
Selected statutory financial statements
Condensed consolidated statement of changes in equity for the period ended 30 September 2015
Nine months ended Quarter ended
30 September 30 September 30 September 30 June 30 September
2015 2014 2015 2015 2014
£m £m £m £m £m
Called-up share capital
At beginning of period 6,877 6,714 6,981 6,925 6,811
Ordinary shares issued 108 118 4 56 21
Preference shares redeemed (1) (1) - (1) - -
At end of period 6,984 6,832 6,984 6,981 6,832
Paid-in equity
At beginning of period 784 979 634 634 979
Reclassification (2) (150) - - - -
Additional Tier 1 capital notes issued 2,012 - 2,012 - -
At end of period 2,646 979 2,646 634 979
Share premium account
At beginning of period 25,052 24,667 25,306 25,164 24,885
Ordinary shares issued 263 267 9 142 49
At end of period (1) 25,315 24,934 25,315 25,306 24,934
Merger reserve
At beginning and end of period 13,222 13,222 13,222 13,222 13,222
Available-for-sale reserve
At beginning of period 299 (308) 244 371 138
Unrealised (losses)/gains (108) 807 6 (153) (37)
Realised losses/(gains) 25 (314) (38) (43) 52
Tax 28 (40) (11) 65 28
Reclassified to profit or loss on disposal of businesses (3) - 36 - - -
Reclassified to profit or loss on ceding control of Citizens (4) 9 - 9 - -
Transfer to retained earnings (43) (9) - 4 (9)
At end of period 210 172 210 244 172
Cash flow hedging reserve
At beginning of period 1,029 (84) 435 1,109 94
Amount recognised in equity 777 1,543 803 (524) 575
Amount transferred from equity to earnings (1,021) (1,088) (316) (319) (368)
Tax 52 (114) (76) 169 (44)
Reclassified to profit or loss on ceding control of Citizens (5) (36) - (36) - -
Transfer to retained earnings 9 34 - - 34
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