REG - Royal Bk Scot.Grp.Royal Bk.of Scot.Nat.Westminster Bk - Interim Management Statement <Origin Href="QuoteRef">NWB_pa.L</Origin> <Origin Href="QuoteRef">RBS.L</Origin> - Part 5
31/10/2014 08:11
- Part 5: For the preceding part double click ID:nRSe7759Vd
● Currency translation gains in the quarter are principally due to the weakening of Sterling against the US dollar. The losses in the nine months are driven by the strengthening of Sterling against the Euro, partly offset by the weakening against the US dollar.
Selected condensed statutory financial statements
Condensed consolidated balance sheet at 30 September 2014
30 September 30 June 31 December
2014 2014 2013
£m £m £m
Assets
Cash and balances at central banks 67,900 68,670 82,659
Net loans and advances to banks 29,090 28,904 27,555
Reverse repurchase agreements and stock borrowing 24,860 28,163 26,516
Loans and advances to banks 53,950 57,067 54,071
Net loans and advances to customers 392,969 385,554 390,825
Reverse repurchase agreements and stock borrowing 50,631 53,542 49,897
Loans and advances to customers 443,600 439,096 440,722
Debt securities 106,769 112,794 113,599
Equity shares 8,309 7,834 8,811
Settlement balances 20,941 19,682 5,591
Derivatives 314,021 274,906 288,039
Intangible assets 12,454 12,173 12,368
Property, plant and equipment 6,985 7,115 7,909
Deferred tax 2,843 3,107 3,478
Prepayments, accrued income and other assets 7,185 7,418 7,614
Assets of disposal groups 1,153 1,246 3,017
Total assets 1,046,110 1,011,108 1,027,878
Liabilities
Bank deposits 38,986 39,179 35,329
Repurchase agreements and stock lending 30,799 31,722 28,650
Deposits by banks 69,785 70,901 63,979
Customer deposits 405,367 401,226 414,396
Repurchase agreements and stock lending 44,302 51,540 56,484
Customer accounts 449,669 452,766 470,880
Debt securities in issue 53,487 59,087 67,819
Settlement balances 21,049 15,128 5,313
Short positions 34,499 39,019 28,022
Derivatives 310,361 270,087 285,526
Accruals, deferred income and other liabilities 14,618 14,876 16,017
Retirement benefit liabilities 2,629 2,742 3,210
Deferred tax 491 605 507
Subordinated liabilities 24,412 24,809 24,012
Liabilities of disposal groups 272 125 3,378
Total liabilities 981,272 950,145 968,663
Equity
Non-controlling interests 2,747 618 473
Owners' equity* - called up share capital 6,832 6,811 6,714
- reserves 55,259 53,534 52,028
Total equity 64,838 60,963 59,215
Total liabilities and equity 1,046,110 1,011,108 1,027,878
* Owners' equity attributable to:
Ordinary and B shareholders 56,799 55,053 53,450
Other equity owners 5,292 5,292 5,292
62,091 60,345 58,742
Contingent liabilities and commitments 238,248 239,121 242,009
Selected condensed statutory financial statements
Condensed consolidated statement of changes in equity
for the period ended 30 September 2014
Quarter ended Nine months ended
30 September 30 June 30 September 30 September 30 September
2014 2014 2013 2014 2013
£m £m £m £m £m
Called-up share capital
At beginning of period 6,811 6,752 6,632 6,714 6,582
Ordinary shares issued 21 59 65 118 115
At end of period 6,832 6,811 6,697 6,832 6,697
Paid-in equity
At beginning and end of period 979 979 979 979 979
Share premium account
At beginning of period 24,885 24,760 24,483 24,667 24,361
Ordinary shares issued 49 125 145 267 267
At end of period 24,934 24,885 24,628 24,934 24,628
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 138 (62) (714) (308) (346)
Unrealised (losses)/gains (37) 411 592 807 606
Realised losses/(gains) 52 (148) (164) (314) (769)
Tax 28 (63) 34 (40) 367
Transfer to retained earnings (9) - - (9) -
Recycled to profit or loss on disposal of businesses (1) - - - 36 (110)
At end of period 172 138 (252) 172 (252)
Cash flow hedging reserve
At beginning of period 94 141 491 (84) 1,666
Amount recognised in equity 575 315 163 1,543 (696)
Amount transferred from equity to earnings (368) (362) (251) (1,088) (928)
Tax (44) - 44 (114) 405
Transfer to retained earnings 34 - - 34 -
At end of period 291 94 447 291 447
Foreign exchange reserve
At beginning of period 2,963 3,551 5,201 3,691 3,908
Retranslation of net assets 776 (702) (1,338) (96) 92
Foreign currency gains on hedges of net assets (161) 123 148 (6) 17
Tax (15) (9) 7 (26) 4
Transfer to retained earnings (390) - - (390) -
Recycled to profit or loss on disposal of businesses - - - - (3)
At end of period 3,173 2,963 4,018 3,173 4,018
Capital redemption reserve
At beginning and end of period 9,131 9,131 9,131 9,131 9,131
Contingent capital reserve
At beginning and end of period - - (1,208) - (1,208)
For the notes to this table refer the following page.
Selected condensed statutory financial statements
Condensed consolidated statement of changes in equity
for the period ended 30 September 2014
Quarter ended Nine months ended
30 September 30 June 30 September 30 September 30 September
2014 2014 2013 2014 2013
£m £m £m £m £m
Retained earnings
At beginning of period 2,258 1,986 11,105 867 10,596
Profit/(loss) attributable to ordinary and B
shareholders and other equity owners
- continuing operations 999 627 (723) 2,894 (116)
- discontinued operations (6) 15 (3) 11 107
Equity preference dividends paid (91) (75) (98) (231) (250)
Dividend access share dividend - (320) - (320) -
Paid-in equity dividends paid, net of tax (6) (17) (4) (33) (34)
Transfer from available-for-sale reserve 9 - - 9 -
Transfer from cash flow hedging reserve (34) - - (34) -
Transfer from foreign exchange reserve 390 - - 390 -
Costs relating to CFG IPO (45) - - (45) -
Actuarial losses recognised in retirement
benefit schemes
- tax - - (163) - (163)
Loss on disposal of own shares held - - - - (18)
Shares released for employee benefits - (5) - (41) (1)
Share-based payments
- gross 18 47 26 26 22
- tax 1 - 4 - 1
At end of period 3,493 2,258 10,144 3,493 10,144
Own shares held
At beginning of period (136) (136) (139) (137) (213)
Disposal of own shares - - 1 1 74
Shares released for employee benefits - - - - 1
At end of period (136) (136) (138) (136) (138)
Owners' equity at end of period 62,091 60,345 67,668 62,091 67,668
Non-controlling interests
At beginning of period 618 612 475 473 1,770
Currency translation adjustments and other movements 1 (19) (21) (15) (7)
(Loss)/profit attributable to non-controlling interests
- continuing operations (62) 12 8 (38) 97
- discontinued operations 9 11 (2) 27 26
Movements in available-for-sale securities
- unrealised (losses)/gains (4) (1) 2 (6) 11
- realised losses 68 3 - 74 -
- tax - - - - (1)
- recycled to profit or loss on disposal of discontinued
operations (2) - - - - (5)
Equity raised (3) 2,117 - - 2,232 -
Equity withdrawn and disposals - - - - (1,429)
At end of period 2,747 618 462 2,747 462
Total equity at end of period 64,838 60,963 68,130 64,838 68,130
Notes:
(1) Net of tax - £11 million in the nine months ended 30 September 2014 (nine months ended 30 September 2013 - £35 million).
(2) Net of tax - £1 million in the nine months ended 30 September 2013.
(3) Includes £2,117 million relating to the initial public offering of Citizens Financial Group.
Notes
1. Basis of preparation
The condensed consolidated financial statements should be read in conjunction with RBS's 2013 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 377 to 386 of the 2013
Annual Report and Accounts. The adoption of a number of amendments to IFRSs effective for 2014 has not had a material
effect on RBS's 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 386 to 389 of RBS's
2013 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 Interim Management Statement for
the period ended 30 September 2014 has been prepared on a going concern basis.
Restatements
On 27 February 2014, RBS announced the reorganisation of the previously reported operating divisions into
three franchises. In addition, in order to present a more complete picture of funding, operational and business costs of
the franchises and operating segments, certain reporting changes were implemented.
For further information on these changes refer to the Q2 2014 Restatement Document dated 21 July 2014, available on
www.investors.rbs.com/restatement
Notes
2. Income
Quarter ended Nine months ended
30 September 30 June 30 September 30 September 30 September
2014 2014 2013 2014 2013
£m £m £m £m £m
Loans and advances to customers 3,571 3,543 3,829 10,632 11,469
Loans and advances to banks 94 89 106 272 328
Debt securities 174 189 272 556 970
Interest receivable 3,839 3,821 4,207 11,460 12,767
Customer accounts 467 471 692 1,454 2,269
Deposits by banks 24 41 95 119 318
Debt securities in issue 237 270 315 794 1,013
Subordinated liabilities 226 220 223 658 670
Internal funding of trading businesses 22 21 102 79 280
Interest payable 976 1,023 1,427 3,104 4,550
Net interest income 2,863 2,798 2,780 8,356 8,217
Fees and commissions receivable
- payment services 316 325 375 963 1,064
- credit and debit card fees 237 245 284 737 813
- lending (credit facilities) 345 371 335 1,048 1,033
- brokerage 97 102 117 304 369
- investment management 100 100 109 306 319
- trade finance 87 71 73 225 226
- other 114 100 89 318 266
Fees and commissions receivable 1,296 1,314 1,382 3,901 4,090
Fees and commissions payable (202) (251) (238) (689) (698)
Net fees and commissions 1,094 1,063 1,144 3,212 3,392
Foreign exchange 171 202 198 591 648
Interest rate 17 424 248 689 650
Credit 136 41 116 533 996
Own credit adjustments 33 (84) (155) 44 20
Other (89) (42) 37 (96) 194
Income from trading activities (1) 268 541 444 1,761 2,508
Gain on redemption of own debt - - 13 20 204
Operating lease and other rental income 98 87 125 276 381
Own credit adjustments 16 (106) (341) (46) (140)
Changes in the fair value of FVTPL financial assets
and liabilities and related derivatives 41 9 36 70 65
Changes in the fair value of investment properties 6 (31) (7) (37) (23)
(Loss)/profit on sale of:
- securities (114) 132 167 229 739
- property, plant and equipment 23 16 10 63 33
- subsidiaries, networks and associates 1 171 (21) 364 (3)
Dividend income 6 17 6 36 41
Share of results of associates 31 28 73 86 277
Other income 19 22 (13) 122 (3)
Other operating income 127 345 35 1,163 1,367
Total non-interest income 1,489 1,949 1,636 6,156 7,471
Total income 4,352 4,747 4,416 14,512 15,688
Note:
(1) The analysis of income from trading activities is based on how the business is organised and the underlying risks managed. Income from trading activities comprises gains and losses on financial instruments held for trading, both realised and unrealised, interest income, dividends and the related hedging and funding costs in the trading book.
Notes
3. Earnings per ordinary and equivalent B share
Following agreement between RBS and Her Majesty's Treasury for the retirement of the Dividend Access Share (DAS), earnings
per share for periods ended after 25 June 2014 only reflect DAS dividends recognised before the end of a reporting period:
£320 million was recognised in the quarter ended 30 June 2014. For periods ending on or before 31 March 2014 earnings are
allocated solely to the DAS and earnings per ordinary and equivalent B share for such periods are therefore nil. The DAS
does not share in losses. For periods prior to 25 June 2014, adjusted earnings per ordinary and equivalent B share
excludes the rights of the dividend access share.
4. Provisions for liabilities and charges
Other Other
customer regulatory
PPI IRHP redress LIBOR provisions Litigation Property Other Total
£m £m £m £m £m £m £m £m £m
At 1 January 2014 926 1,077 337 416 150 2,018 379 186 5,489
Currency translation and other
movements - - - (2) (2) (61) (2) - (67)
Charge to income statement
- continuing operations 150 100 51 - - 68 151 174 694
Releases to income statement
- continuing operations - - (8) - - (35) (15) - (58)
Provisions utilised (490) (417) (79) (414) (5) (80) (129) (71) (1,685)
At 30 June 2014 586 760 301 - 143 1,910 384 289 4,373
Currency translation and other
movements - - - - - 102 (1) - 101
Charge to income statement
- continuing operations 100 - 19 - 500 135 28 95 877
Releases to income statement
- continuing operations - - (4) - - (4) - - (8)
Provisions utilised (143) (207) (50) - (4) (335) (14) (31) (784)
At 30 September 2014 543 553 266 - 639 1,808 397 353 4,559
5. Litigation, investigations and reviews
Except for the developments noted below, there have been no material changes to litigation, investigations and reviews as
disclosed in the Interim Results for the six months ended 30 June 2014. Other regulatory provisions increased by £500
million (see Note 4) during the three month period ended 30 September 2014, £400 million of which was in connection with
the investigations and reviews around foreign exchange trading. Although RBS has established a provision with respect to
these investigations, the effect of the outcome of these investigations, any regulatory findings and any related
developments, including the timing and amount of fines or settlements, could result in the future outflow of resources in
respect of these investigations ultimately proving to be substantially greater than or less than the aggregate provision
RBS has recognised.
Litigation
ISDAFIX antitrust litigation
In September and October 2014, The Royal Bank of Scotland plc (RBS plc) and a number of other financial institutions were
named as defendants in three purported class action complaints alleging manipulation of USD ISDAFIX rates, to the detriment
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