REG - Royal Bk Scot.Grp. - Interim Management Statement <Origin Href="QuoteRef">RBS.L</Origin> - Part 3
29/04/2016 07:06
- Part 3: For the preceding part double click ID:nRSc7468Wb
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 E78 million, down 6% on Q1 2015 due to a lower level of impairment releases. Adjusted operating profit was stable at E82 million compared with Q1 2015 and was E66 million higher than Q4 2015.
● A non-recurring profit of E28 million relating to asset disposals has been recognised in Q1 2016, of which E14 million was reported in income.
● Income increased by 11% from Q1 2015 to E205 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 E136 million compared with Q1 2015 despite a E6 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 E17 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 E25.7
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 E0.2 billion compared with Q1 2015. Net loans and advances to customers(1) reduced by E0.6
billion from Q1 2015 and include a reduction of E0.9 billion in the low yielding tracker mortgage portfolio to E11.6 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 E1.0 billion (E0.2 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 the outstanding deficit reduction contributions of £4.2 billion, there was a surplus in RBS's main pension scheme which 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
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