REG - Royal Bk Scot.Grp. - Interim Management Statement <Origin Href="QuoteRef">RBS.L</Origin> - Part 4
30/10/2015 07:01
- Part 4: For the preceding part double click ID:nRSd9427Dc
At end of period 810 291 810 435 291
Foreign exchange reserve
At beginning of period 3,483 3,691 2,317 2,779 2,963
Retranslation of net assets (39) (96) 509 (1,042) 776
Foreign currency (losses)/gains on hedges of net assets (150) (6) (188) 604 (161)
Tax (11) (26) 3 - (15)
Reclassified to profit or loss on ceding control of Citizens (962) - (962) - -
Transfer to retained earnings (642) (390) - (24) (390)
At end of period 1,679 3,173 1,679 2,317 3,173
Capital redemption reserve
At beginning of period 9,131 9,131 9,131 9,131 9,131
Preference shares redeemed (1) 1 - 1 - -
At end of period 9,132 9,131 9,132 9,131 9,131
Notes:
(1) Non-cumulative dollar preference shares totalling $1.9 billion were redeemed in September 2015. Upon redemption, share premium previously attributable to preference shareholders was reclassified to ordinary shareholders.
(2) Paid-in equity reclassified to liabilities as a result of the call of RBS Capital Trust IV in January 2015.
(3) Net of tax - £11 million charge.
(4) Net of tax - £6 million charge.
(5) Net of tax - £16 million credit.
(6) Includes £2,491 million relating to the secondary offering of Citizens in March 2015.
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
Retained earnings
At beginning of period (2,518) 867 (2,098) (2,416) 2,258
(Loss)/profit attributable to ordinary and B shareholders
and other equity owners
- continuing operations (54) 2,497 (4) 111 887
- discontinued operations 1,117 408 1,053 275 106
Equity preference dividends paid (223) (231) (80) (73) (91)
Paid-in equity dividends paid, net of tax (41) (33) (17) (20) (6)
Dividend access share dividend - (320) - - -
Transfer from available-for-sale reserve 43 9 - (4) 9
Transfer from cash flow hedging reserve (9) (34) - - (34)
Transfer from foreign exchange reserve 642 390 - 24 390
Costs of placing Citizens equity (29) (45) - - (45)
Redemption of equity preference shares (1) (1,214) - (1,214) - -
Shares issued under employee share schemes (57) (41) - (1) -
Share-based payments
- gross 24 26 14 6 18
- tax - - - - 1
Reclassification of paid in equity (27) - - - -
At end of period (2,346) 3,493 (2,346) (2,098) 3,493
Own shares held
At beginning of period (113) (137) (108) (111) (136)
Disposal of own shares 5 1 - 3 -
At end of period (108) (136) (108) (108) (136)
Owners' equity at end of period 57,544 62,091 57,544 56,064 62,091
Non-controlling interests
At beginning of period 2,946 473 5,705 5,473 618
Currency translation adjustments and other movements 2 (15) 65 (146) 1
Profit/(loss) attributable to non-controlling interests
- continuing operations 55 (40) 5 29 (64)
- discontinued operations 334 29 40 399 11
Dividends paid (31) - - (20) -
Movements in available-for-sale securities
- unrealised gains/(losses) 24 (6) 12 (45) (4)
- realised (gains)/losses (6) 74 - (6) 68
- tax (5) - - 16 -
Movements in cash flow hedging reserve
- amount recognised in equity 32 - 11 9 -
- tax (4) - - (4) -
- amounts transferred from equity to earnings
Equity raised (6) 2,537 2,232 46 - 2,117
Equity withdrawn and disposals (24) - (24) - -
Loss of control of Citizens (5,157) - (5,157) - -
At end of period 703 2,747 703 5,705 2,747
Total equity at end of period 58,247 64,838 58,247 61,769 64,838
Total equity is attributable to:
Non-controlling interests 703 2,747 703 5,705 2,747
Preference shareholders 3,305 4,313 3,305 4,313 4,313
Paid-in equity holders 2,646 979 2,646 634 979
Ordinary and B shareholders 51,593 56,799 51,593 51,117 56,799
58,247 64,838 58,247 61,769 64,838
For the notes to this table refer to the previous page.
Notes
1. Basis of preparation
The condensed consolidated financial statements should be read in conjunction with RBS's 2014 Annual Report and Accounts
which were prepared in accordance with International Financial Reporting Standards 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
There have been no significant changes to RBS's principal accounting policies as set out on pages 349 to 357 of the 2014
Annual Report and Accounts. Amendments to IFRSs effective for 2015 have not had a material effect on RBS's 2015 results.
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 judgments are described on pages 357 to 359 of RBS's
2014 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 results for the period ended 30
September 2015 have been prepared on a going concern basis.
2. Citizens Financial Group
Citizens was classified as a disposal group on 31 December 2014 and its assets and liabilities from that date to 3 August
2015 have been aggregated and presented as separate lines in accordance with IFRS 5. Citizens was also reclassified as a
discontinued operation in 2014 and comparatives for all periods re-presented accordingly.
In March 2015, RBS sold 155.25 million shares in Citizens and in April 2015, Citizens purchased 10.5 million of its shares
from RBS.
In July 2015, RBS sold 86 million shares in Citizens to underwriters and sold an additional 12.9 million shares on 3 August
2015 through an over-allotment option in the underwriting agreement. Concurrently, Citizens repurchased 9.6 million shares
from RBS. RBS now owns 110.5 million shares - 20.9% of Citizens' common stock.
Following these share sales, RBS no longer controls Citizens and has ceased to consolidate it for accounting purposes. On
loss of control, RBS derecognised Citizens' net assets and recognised its retained interest in Citizens at fair value
recording a gain (in discontinued operations) of £1.1 billion. Included in the gain is the reclassification of £1.0 billion
previously recognised in other comprehensive income in relation to Citizens; principally foreign exchange translation
differences. RBS's retained interest in Citizens qualifies as an associate and is classified as held for sale. Its fair
value less costs to sell at 30 September 2015 was £1.6 billion.
Notes
3. 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 2015 799 424 580 320 183 1,805 663 4,774
Transfer - - - 50 (50) - - -
Currency translation and other movements - - - (12) 1 (34) 94 49
Charge to income statement (2) 100 81 279 334 27 517 390 1,728
Releases to income statement (2) - (12) (14) - - (6) (138) (170)
Provisions utilised (202) (210) (146) (178) (1) (41) (181) (959)
At 30 June 2015 697 283 699 514 160 2,241 828 5,422
Transfer - - - (65) - 65 - -
Currency translation and other movements - - - 20 1 91 46 158
Charge to income statement (2) - - 13 - - 125 511 649
Releases to income statement (2) - - (4) - - (5) (77) (86)
Provisions utilised (84) (86) (70) - - (111) (131) (482)
At 30 September 2015 613 197 638 469 161 2,406 1,177 5,661
Notes:
(1) Closing provision primarily 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 certain of 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. RBS will continue to monitor the position closely and refresh the underlying assumptions.
4. Litigation, investigations and reviews
RBS's 2015 interim results issued on 30 July 2015 included comprehensive disclosures about RBS's litigation, investigations
and reviews in Note 16. There have been no material developments in these matters since the 2015 interim results were
published other than those set out below.
Litigation
The charge in respect of mortgage-backed securities (MBS) related litigation was £0.1 billion (see Note 3) during Q3 2015,
bringing the total charge for MBS related litigation claims and investigations for the nine months ended 30 September 2015
to £0.6 billion. Although RBS has established provisions with respect to MBS litigation, the final outcomes of such
litigation and MBS related governmental investigations could result in the future outflow of resources in respect of such
matters ultimately proving to be substantially greater than the aggregate provisions RBS has recognised.
Other securitisation and securities related litigation in the United States
The National Credit Union Administration Board (NCUA) is litigating two MBS cases against RBS companies (on behalf of US
Central Federal Credit Union and Western Corporate Federal Credit Union). The original principal balance of the MBS at
issue in these two NCUA cases is US$3.25 billion. In September 2015, in a third case brought by NCUA (on behalf of
Southwest Corporate Federal Credit Union and Members United Corporate Federal Credit Union), the NCUA accepted RBS's offer
of judgment for US$129.6 million, plus attorney's fees, to resolve the matter, which concerned US$312 million in MBS. RBS
has paid to the plaintiff the agreed US$129.6 million.
Notes
4. Litigation, investigations and reviews (continued)
Credit default swap antitrust litigation
As previously disclosed, certain members of the Group, as well as a number of other financial institutions, are defendants
in a consolidated antitrust class action pending in the United States District Court for the Southern District of New York.
The plaintiffs allege that defendants violated the US antitrust laws by restraining competition in the market for credit
default swaps through various means and thereby causing inflated bid-ask spreads for credit default swaps. The RBS
defendants have reached an agreement to settle this matter for US$33 million, subject to approval of the court. The
settlement amount is covered by an existing provision.
FX antitrust litigation
As previously disclosed, RBS and RBS Securities Inc., as well as a number of other financial institutions, are defendants
in class actions on behalf of US based plaintiffs that are pending in the United States District Court for the Southern
District of New York. In August 2015, the original complaint asserting antitrust claims on behalf of plaintiffs who entered
into Foreign Exchange (FX) transactions with RBS or other defendant banks was consolidated with several additional class
action complaints filed on behalf of plaintiffs who transacted in exchange-traded foreign exchange futures contracts and/or
options on foreign exchange futures contracts, which asserted both antitrust and Commodities Exchange Act claims. RBS and
RBS Securities Inc. have settled all claims that are or could be asserted on behalf of the classes in the consolidated
action, subject to approval of the Court. The total settlement amount (US$255 million) is covered by an existing provision.
Other class action complaints purporting to be on behalf of US-based plaintiffs who engaged in FX transactions, including a
complaint asserting Employee Retirement Income Security Act claims on behalf of employee benefit plans that engaged in FX
transactions, name certain members of the Group as defendants.
In September 2015, certain members of the Group, as well as a number of other financial institutions, were named as
defendants in two purported class actions filed in Ontario and Quebec on behalf of persons in Canada who entered into
foreign exchange transactions or who invested in funds that entered into foreign exchange transactions. The plaintiffs
allege that the defendants violated the Canadian Competition Act by conspiring to manipulate the prices of currency
trades.
Investigations and reviews
Payment Protection Insurance
As previously disclosed, RBS is monitoring developments following the UK Supreme Court's decision in the case of Plevin v
Paragon in November 2014. That decision was that the sale of a single premium PPI policy could create an 'unfair
relationship' under s.140A of the Consumer Credit Act 1974 (the 'Consumer Credit Act') because the premium contained a
particularly high level of undisclosed commission. The Financial Ombudsman Service (FOS) has confirmed on its website that
unfair relationship provisions in the Consumer Credit Act and the Plevin judgment are 'potentially relevant considerations'
in some of the PPI complaints referred to FOS. On 27 May 2015, the FCA announced that it was considering whether additional
rules and/or guidance are required to deal with the impact of the Plevin decision on complaints about PPI generally. RBS is
in active dialogue with FOS and the FCA on this issue.
On 2 October 2015, the FCA announced that it would issue a consultation paper by the end of 2015 on proposed rules and
guidance about how firms should handle PPI complaints fairly in light of the Plevin decision and how the FOS should
consider relevant PPI complaints.The FCA also intends to consult on the introduction of a time bar for handling PPI
complaints.
Notes
4. Litigation, investigations and reviews (continued)
At this stage, as there remains considerable uncertainty regarding the application of the Plevin decision and the impact of
any time bar, it is not practicable reliably to estimate the potential impact on RBS, which may be material.
UK personal current accounts/retail banking
As previously disclosed, on 11 March 2014, the Competition & Markets Authority (CMA) announced that it would be undertaking
an update of the OFT's 2013 personal current account (PCA) review, in parallel with its market study into small and
medium-sized enterprise (SME) banking. In July 2014 the CMA published its preliminary findings in respect of both the PCA
and SME market studies. The CMA provisionally decided to make a market investigation reference (MIR) for both the PCA and
SME market studies. On 6 November 2014, the CMA made its final decision to proceed with a MIR. On 22 October 2015 the CMA
published a summary of its provisional findings and notice of possible remedies. The CMA has provisionally concluded there
are a number of competition concerns in the provision of PCAs, business current accounts and SME lending, particularly
around low levels of customer switching, resulting in banks not being put under enough competitive pressure, and new
products and new banks not attracting customers quickly enough. The notice of possible remedies sets out 15 potential
measures to address these concerns, including measures to make it easier for consumers and businesses to compare bank
products, and requiring banks to help raise public awareness of, and confidence in, switching bank accounts. The MIR is a
wide-ranging 18-24 month Phase 2 inquiry with the final report expected to be published in April 2016.
At this stage as there remains uncertainty around the outcome of this matter, it is not practicable reliably to estimate
the potential impact on RBS, which may be material.
Notes
5. Recent developments
Conversion of B shares
On 8 October 2015, the company received a valid notice from HM Treasury to convert 51 billion Series 1 B shares of 1p each
into 5.1 billion new RBSG plc ordinary shares of £1 each. The new ordinary shares were admitted to the Official List and to
trading on the London Stock Exchange on 14 October 2015. HM Treasury's holding in the company's ordinary shares is
currently 72.9%.
Finance Bill 2015 - 2016
The Finance Bill 2015 - 2016 was substantively enacted on 26 October 2015 and introduced a number of previously announced
changes to the UK corporate tax system. In accordance with IFRS these changes will be accounted for in Q4 2015.
The most relevant measures include:
● Cuts in the rate of corporation tax from 20% to 19% from 1 April 2017 and to 18% from 1 April 2020. Existing temporary differences on which deferred tax has been provided may reverse at these reduced rates;
● A corporation tax surcharge of 8% on UK banking entities from 1 January 2016. This is expected to increase RBS's corporation tax liabilities and vary the carrying value of its deferred tax balances;
● A reduction in the bank levy rate from 0.21% to 0.18% from 1 January 2016 and subsequent annual reductions to 0.1% from 1 January 2021; and
● Making compensation in relation to misconduct non-deductible for corporation tax.
As outlined in our 2015 Interim results, it is expected that these measures will increase the normalised tax rate to around
27% in the medium term and trending lower thereafter and the annual bank levy charge for 2015 is expected to be £280
million, projected to fall progressively to £150 million by 2019.
6. Exchange rates
The following table shows the principal exchange rates:
£1 = E Nine month average Quarter average Period end
30 September 2015 1.374 1.392 1.355
30 June 2015 1.385 1.411
31 December 2014 1.268 1.285
30 September 2014 1.232 1.260 1.285
£1 = US$ Nine month average Quarter average Period end
30 September 2015 1.532 1.549 1.514
30 June 2015 1.532 1.572
31 December 2014 1.582 1.562
30 September 2014 1.669 1.669 1.622
7. Post balance sheet events
There have been no significant events between 30 September 2015 and the date of approval of this announcement which would
require a change to or additional disclosure in the 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 plc's (RBS) transformation plan (which includes RBS's 2013/2014 strategic plan relating to the implementation of its
new divisional and functional structure and the continuation of its balance sheet reduction programme including its
proposed divestments of CFG and Williams & Glyn, RBS's information technology and operational investment plan, the proposed
restructuring of RBS's CIB business and the restructuring of RBS as a result of the implementation of the regulatory
ring-fencing regime, together the "Transformation Plan"), as well as restructuring, capital and strategic plans,
divestments, capitalisation, portfolios, net interest margin, capital and leverage ratios, liquidity, risk-weighted assets
(RWAs), RWA equivalents (RWAe), return on equity (ROE), profitability, cost:income ratios, loan:deposit ratios, AT1 and
other capital raising plans, funding and risk profile; litigation, government and regulatory investigations including
investigations relating to the setting of interest rates and foreign exchange trading and rate setting activities; costs or
exposures borne by RBS arising out of the origination or sale of mortgages or mortgage-backed securities in the US;
investigations relating to business conduct and the costs of resulting customers redress and legal proceedings; RBS's
future financial performance; the level and extent of future impairments and write-downs; and RBS's exposure to political
risks, 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 and other
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 2014 Annual Report and Accounts and this document. These
include the significant risks for RBS presented by the execution of the Transformation Plan; RBS's ability to successfully
implement the various initiatives that are comprised in the Transformation Plan, particularly the balance sheet reduction
programme including the divestment of Williams & Glyn and its remaining stake in CFG, the proposed restructuring of its CIB
business and the significant restructuring undertaken by RBS as a result of the implementation of the ring fence; whether
RBS will emerge from implementing the Transformation Plan as a viable, competitive, customer focused and profitable bank;
RBS's ability to achieve its capital targets which depend on RBS's success in reducing the size of its business; the cost
and complexity of the implementation of the ring-fence and the extent to which it will have a material adverse effect on
RBS; the risk of failure to realise the benefit of RBS's substantial investments in its information technology and
operational infrastructure and systems, the significant changes, complexity and costs relating to the implementation of the
Transformation Plan, the risks of lower revenues resulting from lower customer retention and revenue generation as RBS
refocuses on the UK as well as increasing competition. In addition, there are other risks and uncertainties. These include
RBS's ability to attract and retain qualified personnel; uncertainties regarding the outcomes of 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; heightened regulatory and governmental scrutiny and the
increasingly regulated environment in which RBS operates; uncertainty relating to the referendum on the UK's membership of
the EU and the consequences arising from it; operational risks that are inherent in RBS's business and that could increase
as RBS implements its Transformation Plan; the potential negative impact on RBS's business of actual or perceived global
economic and financial market conditions and other global risks; how RBS will be increasingly impacted by UK developments
as its operations become gradually more focused on the UK; uncertainties regarding RBS exposure to any weakening of
economies within the EU and renewed threat of default or exit by certain countries in the Eurozone; the risks resulting
from RBS implementing the State Aid restructuring plan including with respect to the disposal of certain assets and
businesses as announced or required as part of the State Aid restructuring plan; the achievement of capital and costs
reduction targets; ineffective management of capital or changes to regulatory requirements relating to capital adequacy and
liquidity; the ability to access sufficient sources of capital, liquidity and funding when required; deteriorations in
borrower and counterparty credit quality; the extent of future write-downs and impairment charges caused by depressed asset
valuations; the value and effectiveness of any credit protection purchased by RBS; 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; changes in the credit ratings of RBS; changes to the valuation of
financial instruments recorded at fair value; competition and consolidation in the banking sector; regulatory or legal
changes (including those requiring any restructuring of RBS's operations); changes to the monetary and interest rate
policies of central banks and other governmental and regulatory bodies and continued prolonged periods of low interest
rates; changes in UK and foreign laws, regulations, accounting standards and taxes; impairments of goodwill; the high
dependence of RBS's operations on its information technology systems and its increasing exposure to cyber security threats;
the reputational risks inherent in RBS's operations; the risk that RBS may suffer losses due to employee misconduct;
pension fund shortfalls; the recoverability of deferred tax assets; 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; and the success of RBS in managing the risks involved in the foregoing.
The forward-looking statements contained in this document speak only as of the date of this announcement, and RBS does not
undertake 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 solicitation 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
Nine months ended Quarter ended
30 September 30 September 30 September 30 June 30 September
2015 2014 2015 2015 2014
Income statement £m £m £m £m £m
Net interest income 3,460 3,474 1,170 1,147 1,198
Non-interest income 920 1,031 289 322 345
Total income 4,380 4,505 1,459 1,469 1,543
Operating expenses (2,733) (2,785) (810) (793) (965)
Profit before impairment losses 1,647 1,720 649 676 578
Impairment releases/(losses) 6 (227) (11) (9) (79)
Operating profit 1,653 1,493 638 667 499
Operating profit - adjusted (1) 2,092 1,845 663 697 682
Analysis of income by product
Personal advances 652 698 219 217 231
Personal deposits 601 496 201 210 194
Mortgages 1,871 1,944 637 617 657
Cards 504 561 167 162 187
Business banking 816 751 269 278 261
Other (64) 55 (34) (15) 13
Total income 4,380 4,505 1,459 1,469 1,543
Analysis of impairments by sector
Personal advances 67 125 14 18 46
Mortgages (12) (3) (10) - (8)
Business banking (74) 50 5 (13) 20
Cards 13 55 2 4 21
Total impairment (releases)/losses (6) 227 11 9 79
Williams & Glyn (3)
Total income 625 637 211 211 214
Operating expenses (261) (256) (93) (90) (87)
Impairment releases/(losses) 5 (46) (5) (11) (15)
Operating profit 369 335 113 110 112
30 September 30 June 31 December
2015 2015 2014
Capital and balance sheet £bn £bn £bn
Loans and advances to customers (gross)
- personal advances 6.9 7.2 7.4
- mortgages 109.2 105.4 103.2
- business banking 14.1 13.7 14.3
- cards 4.3 4.4 4.9
Total loans and advances to customers (gross) 134.5 130.7 129.8
Williams & Glyn (3)
Total assets 20.1 19.5 19.6
Net loans and advances to customers 20.0 19.5 19.5
Customer deposits 23.6 23.4 22.0
Risk-weighted assets (2) 10.1 10.3 10.1
Notes:
(1) Excluding restructuring costs and litigation and conduct costs.
(2) RWAs on an end-point CRR basis.
(3) Williams & Glyn has not operated as a separate legal entity therefore these figures are not necessarily indicative of results that would have occurred if Williams & Glyn had been standalone.
(4) International private banking business reclassified to disposal groups.
(5) Transfers to other areas comprises the UK Portfolio which was transferred to Commercial Banking on 1 May 2015, the Western European Portfolio which is expected to transfer to Commercial Banking during Q4 2015 and UK Transaction services which is expected to transfer to Commercial Banking in Q4 2015.
(6) The CIB segment is being restructured into CIB Go-forward and CIB Capital Resolution elements. The split is subject to further refinement.
Appendix 1 Ulster Bank
Nine months ended Quarter ended
30 September 30 September 30 September 30 June 30 September
2015 2014 2015 2015 2014
Income statement £m £m £m £m £m
Net interest income 392 486 127 132 163
Non-interest income 190 140 87 46 51
Total income 582 626 214 178 214
Operating expenses (447) (450) (158) (150) (150)
Profit before impairment releases 135 176 56 28 64
Impairment releases 110 261 58 52 318
Operating profit 245 437 114 80 382
Operating profit - adjusted (1) 263 463 122 91 394
Average exchange rate 1.374 1.232 1.392 1.385 1.260
Analysis of income by business
Corporate 147 199 52 45 65
Retail 346 301 125 112 111
Other 89 126 37 21 38
Total income 582 626 214 178 214
Analysis of impairments by sector
Mortgages (86) (133) (35) (38) (168)
Commercial real estate
- investment 9 (9) (3) 11 (18)
- development 13 (15) (5) 18 (9)
Other corporate (43) (122) (18) (37) (130)
Other lending (3) 18 3 (6) 7
Total impairment (releases)/losses (110) (261) (58) (52) (318)
30 September 30 June 31 December
2015 2015 2014
Balance sheet £bn £bn £bn
Loans and advances to customers (gross)
Mortgages 16.1 15.9 17.5
Commercial real estate
- investment 0.9 0.8 1.0
- development 0.3 0.3 0.3
Other corporate 4.7 4.7 4.9
Other lending 0.9 0.9 1.0
Total loans and advances to customers (gross) 22.9 22.6 24.7
Spot exchange rate 1.355 1.411 1.285
For the notes to this table refer to page 1.
Appendix 1 Commercial Banking
Nine months ended Quarter ended
30 September 30 September 30 September 30 June 30 September
2015 2014 2015 2015 2014
Income statement £m £m £m £m £m
Net interest income 1,673 1,520 565 562 521
Non-interest income 871 859 265 330 290
Total income 2,544 2,379 830 892 811
Operating expenses (1,278) (1,294) (403) (466) (392)
Of which: operating lease costs (105) (103) (34) (35) (35)
Profit before impairment losses 1,266 1,085 427 426 419
Impairment losses (42) (43) (15) (26) (12)
Operating profit 1,224 1,042 412 400 407
Operating profit - adjusted (1) 1,302 1,172 413 476 425
Analysis of income by business
Commercial lending 1,378 1,353 430 499 459
Deposits 367 248 127 124 95
Asset and invoice finance 542 554 184 180 188
Other 257 224 89 89 69
Total income 2,544 2,379 830 892 811
Analysis of impairments by sector
Commercial real estate 13 (7) 5 10 (1)
Asset and invoice finance 1 4 (2)
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