Form 6-K ROYAL BANK OF SCOTLAND For: Feb 15
FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For
February 15, 2019
Commission
File Number: 001-10306
The
Royal Bank of Scotland Group plc
RBS,
Gogarburn, PO Box 1000
Edinburgh
EH12 1HQ
(Address
of principal executive offices)
Indicate
by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.
Form
20-F X Form 40-F
___
Indicate
by check mark if the registrant is submitting the Form 6-K in paper
as permitted by Regulation S-T Rule 101(b)(1):_________
Indicate
by check mark if the registrant is submitting the Form 6-K in paper
as permitted by Regulation S-T Rule 101(b)(7):_________
Indicate
by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information
to the Commission pursuant to Rule 12g3-2(b) under the Securities
Exchange Act of 1934.
Yes ___
No X
If
"Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82-
________
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The following information was issued as Company announcements
in London, England and is furnished pursuant to General Instruction
B to the General Instructions to Form
6-K:
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The Royal Bank of Scotland Group plc
2018 RBS performance summary
RBS reported an operating profit before tax of £3,359 million
and an attributable profit of £1,622 million for 2018 and
proposes a final ordinary dividend of 3.5 pence per share and a 7.5
pence special dividend.
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Q4 2018
operating profit before tax of £572 million and an
attributable profit of £286 million.
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Continued track record of delivery
Income resilient in a competitive market:
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Income
increased by £269 million, or 2.0%, compared with 2017.
Excluding notable items, NatWest Markets and Central items, income
was stable.
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2018
net interest margin of 1.98% decreased by 15 basis points compared
with 2017. Q4 2018 net interest margin of 1.95%, or 1.97% excluding
one-off items, was 2 basis points higher than Q3 2018.
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Lower costs through continued transformation and increased
digitisation:
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Compared
with 2017, other expenses decreased by £278 million, or 3.6%,
excluding one-off VAT releases in 2017, and FTEs reduced by
5.8%.
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We
continue to transition from physical to digital services. 6.4
million customers now regularly use our mobile app, 16% higher than
2017. In UK PBB, total digital sales increased by 19%, representing
45% of all sales. In Commercial Banking, we successfully launched
the Bankline mobile app in the Apple app store and our customers
can now apply digitally for loans of up to £750,000, the
largest value offered by a UK commercial bank, with approximately
50% of loans given a decision in principle in under 24
hours.
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Stronger capital position:
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CET1
ratio of 16.2% increased by 30 basis points in 2018 and included:
the impact of a £2 billion pre-tax pension contribution; the
settlement with the Department of Justice; and full year ordinary
and special dividends of £1.6 billion. Excluding these items,
the CET1 ratio increased by 240 basis points driven by the profit
and reduced RWAs.
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Active
capital management reduced RWAs by £12.2 billion in
2018.
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RBS
achieved a clear pass in the 2018 Bank of England stress
test.
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Outlook(1)
RBS,
like all companies, continues to deal with a range of significant
risks and uncertainties in the external economic, political and
regulatory environment. Our central economic forecast, which
supports our corporate plan, is in line with consensus as at the
end of December 2018 and shows average UK GDP growth of around
1.0-2.0% from 2019 to 2023 and continued low interest rates. Given
the current uncertainties we will continue to actively monitor and
react to market conditions.
2019 Outlook
As part
of our continued cost savings plans, we expect to incur aggregate
strategic costs of around £2.5 billion across 2018 and 2019,
with £1.0 billion of this having been incurred during 2018. We
plan to reduce operating expenses, excluding strategic costs and
conduct and litigation costs, by £300 million in 2019 compared
with 2018, excluding one-off items.
2018
saw a continuation of the period of benign economic conditions with
low defaults and strong cash recoveries. However, the potential
impact on the real economy of ongoing political uncertainties and
geopolitical tensions could affect our credit loss outcome. As a
result, impairments are expected to increase in 2019 but remain
below our through-the-cycle loss rate assumption of 30-40 basis
points. The threat from single name and sector driven events
remains.
We
expect to end 2019 with risk weighted assets (RWAs) of around
£185 – 190 billion as the RWAs associated with Alawwal
Bank are expected to reduce by around £5 billion, subject to
regulatory approvals relating to the merger and our
shareholding.
RBS
Group (RBSG) capital and funding plans focus on issuing £3-5
billion of MREL-compliant instruments and around £1 billion of
Tier 2 instruments. We do not plan to issue AT1 in 2019. As in
prior years, we will continue to target other funding sources to
diversify our funding structure, including senior secured issuance
of £2-3 billion from NatWest Bank. NatWest Markets Plc, as a
standalone bank, plans to issue £3-5 billion of term senior
unsecured instruments.
Medium term outlook
While
we remain comfortable with our 2020 target of a return on tangible
equity of more than 12%, we recognise our 2020 target of a
cost:income ratio of less than 50% is increasingly challenging for
the business to achieve with the risk being to the downside. This
reflects the ongoing economic and political uncertainty and the
additional ongoing costs associated with ring-fencing and
Brexit.
Our
previous guidance on RWAs beyond 2020 was an estimated 10% increase
in 2021 relating to Basel 3 amendments, in addition to RWA
inflation as a result of IFRS 16, which requires lease obligations
to be brought on balance sheet, of £1.3 billion in 2019 and
Bank of England mortgage floors of £10.5 billion in 2020. We
now expect the overall impact of Basel 3 amendments to be in the
range of 5-10% and phased across 2021 to 2023, with the details
still subject to significant regulatory uncertainty.
RBS Group capital distributions
We
propose a 3.5 pence final ordinary dividend and a 7.5 pence special
dividend for the 2018 financial year, while maintaining a CET1
ratio of 16.2% as at 31 December 2018.
Pro-forma
for the introduction of IFRS16 - Leases, the CET1 ratio was 16.0%,
with the c.20 basis points reduction reflecting a £1.3 billion
increase in RWAs and £0.3 billion charge against
reserves.
We
expect to maintain ordinary dividends of around 40% of attributable
profit. We have updated our medium term guidance of CET1 to be
approximately 14% at the end of 2021. We have shareholder and
regulatory approval to carry out directed buybacks of the UK
government stake in RBS, but recognise that any exercise of this
authority would be dependant upon HMT’s intentions and is
limited to 4.99% of issued share capital in any 12 month period. As
a reminder, we have also committed to make further pre tax
contributions to the pension scheme of up to £1.5 billion in
aggregate from 1 January 2020 linked to future distributions to RBS
shareholders.
NatWest Markets (NWM)
The NWM
franchise includes NWM Plc and NWM N.V., both of which are
currently direct subsidiaries of RBSG. RBS has previously announced
its intention for NWM N.V. to become a subsidiary of NWM Plc
following the completion of the sale of the consortium holding in
Alawwal. As such, NWM Plc’s financial reporting does not
currently include NWM N.V.
NWM Plc
is regulated and discloses capital ratios and RWAs on a standalone
bank basis and is targeting by 2020 a CET1 ratio of circa 15%, MREL
ratio of at least 30% and a leverage ratio of at least
4%.
We plan
to transfer our Western Europe corporate business into NWM N.V.
from the ring-fenced bank, in addition to the NWM business that is
expected to be part of a FSMA Part VII Transfer Scheme from NWM Plc
to NWM N.V., subject to court approval and as announced on 6
December 2018. NWM Plc legal entity RWAs are expected to be around
£35 billion, NWM N.V. RWAs are expected to be around
£8billion with the consolidated NWM franchise position,
excluding RWAs related to intercompany positions, expected to be
around £39 billion by 2020.
Note:
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(1)
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The targets, expectations and trends discussed in this section
represent RBSG and NWM’s management’s current
expectations and are subject to change, including as a result of
the factors described in the “Risk Factors” section on
pages 253 to 263 of the RBSG 2018 Annual Report and Accounts and
pages 124 to 133 of the NWM 2018 Annual Report and Accounts. These
statements constitute forward-looking statements; refer to
Forward-looking statements in this document.
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Business performance summary
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Year ended
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Quarter ended
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31 December
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31 December
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31 December
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30 September
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31 December
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Performance key metrics and ratios
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2018
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2017
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2018
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2018
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2017
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Operating profit/(loss) before tax
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£3,359m
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£2,239m
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£572m
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£961m
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(£583m)
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Profit/(loss) attributable to ordinary shareholders
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£1,622m
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£752m
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£286m
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£448m
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(£579m)
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Net interest margin
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1.98%
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2.13%
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1.95%
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1.93%
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2.04%
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Average interest earning assets
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£437bn
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£422bn
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£442bn
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£443bn
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£431bn
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Cost:income ratio (1)
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71.7%
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79.0%
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80.5%
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66.7%
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111.5%
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Earnings per share
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- basic
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13.5p
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6.3p
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2.4p
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3.7p
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(4.9p)
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- basic fully diluted
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13.4p
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6.3p
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2.3p
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3.7p
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(4.9p)
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Return on tangible equity
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4.8%
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2.2%
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3.5%
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5.4%
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(6.7%)
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Average tangible equity
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£33bn
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£34bn
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£33bn
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£33bn
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£34bn
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Average number of ordinary shares
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outstanding during the period (millions)
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- basic
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12,009
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11,867
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12,040
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12,034
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11,944
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- fully diluted (2)
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12,061
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11,936
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12,081
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12,083
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12,003
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31 December
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30 September
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31 December
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Balance sheet related key metrics and ratios
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2018
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2018
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2017
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Total assets
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£694.2bn
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£719.9bn
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£738.1bn
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Funded assets
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£560.9bn
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£587.3bn
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£577.2bn
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Loans to customers - amortised cost
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£305.1bn
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£305.8bn
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£310.1bn
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Impairment provisions (3)
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£3.3bn
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£3.9bn
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£3.8bn
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Customer deposits
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£360.9bn
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£360.6bn
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£361.3bn
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Liquidity coverage ratio (LCR)
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158%
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158%
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152%
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Liquidity portfolio
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£198bn
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£195bn
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£186bn
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Net stable funding ratio (NSFR) (4)
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141%
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139%
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132%
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Loan:deposit ratio (5)
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85%
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85%
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86%
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Total wholesale funding
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£74bn
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£78bn
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£70bn
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Short-term wholesale funding
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£15bn
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£14bn
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£18bn
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Common Equity Tier (CET1) ratio
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16.2%
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16.7%
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15.9%
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Total capital ratio
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21.8%
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22.1%
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21.3%
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Pro forma CET 1 ratio, pre 2018 dividend accrual
(6)
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16.9%
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16.8%
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15.9%
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Risk-weighted assets (RWAs)
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£188.7bn
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£194.5bn
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£200.9bn
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CRR leverage ratio
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5.4%
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5.4%
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5.3%
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UK leverage ratio
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6.2%
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6.3%
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6.1%
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Tangible net asset value (TNAV) per ordinary share
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287p
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288p
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294p
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Tangible net asset value (TNAV) per ordinary share - fully
diluted
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286p
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287p
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292p
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Tangible equity
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£34,566m
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£34,672m
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£35,164m
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Number of ordinary shares in issue (millions)
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12,049
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12,048
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11,965
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Number of ordinary shares in issue (millions) - fully
diluted (2,7)
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12,088
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12,091
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12,031
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Notes:
(1)
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Operating
lease depreciation included in income for the year ended 31
December 2018 - £121 million; Q4 2018 - £32 million (year
ended 31 December 2017 - £142 million; Q3 2018 - £32
million; Q4 2017 - £35 million).
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(2)
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Includes
the effect of dilutive share options and convertible securities.
Dilutive shares on an average basis for Q4 2018 were 41 million
shares and for the year ended 31 December 2018 were 52 million
shares; (year ended 31 December 2017 - 69 million shares, Q3 2018
– 49 million shares, Q4 2017 – 59 million shares), and
as at 31 December 2018 were 39 million shares (30 September 2018 -
43 million shares; 31 December 2017 - 66 million
shares).
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(3)
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31
December and 30 September 2018 prepared under IFRS 9, 31 December
2017 prepared under IAS 39.
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(4)
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In
November 2016, the European Commission published its proposal for
NSFR rules within the EU as part of its CRR2 package of regulatory
reforms. CRR2 NSFR is expected to become the regulatory requirement
in future within the EU and the UK. RBS has changed its policy on
the NSFR to align with its interpretation of the CRR2 proposals
with effect from 1 January 2018. The pro forma CRR2 NSFR at 31
December 2017 under CRR2 proposals is estimated to be
139%.
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(5)
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The
loan:deposit ratio has been updated following the adoption of IFRS
9 to be based on customer loans and deposits held at amortised
cost. Comparatives have been re-presented.
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(6)
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The pro
forma CET 1 ratio at 31 December 2018 excludes a charge of
£422 million (3.5p per share) for the final dividend and
£904 million (7.5p per share) for the special dividend (30
September 2018 - £120 million (1p per share)) that are
reasonably foreseeable dividends.
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(7)
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Includes
8 million treasury shares (30 September 2018 - 9 million shares; 31
December 2017 - 16 million shares).
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Chief Executive’s message
2018 was a year of strong progress on our strategy - we settled our
remaining major legacy issues, paid our first dividend in ten years
and delivered another full year bottom line profit. However, while
our financial performance is more assured, we know that a
significant gap remains to achieving our ambition to be the best
bank for customers. We are fully focused on closing this
gap.
Today
we are reporting a pre-tax operating profit of £3.4 billion
and a bottom line attributable profit of £1.6 billion for
2018. In addition, we are pleased to propose a full year ordinary
dividend of 3.5 pence per share, and a special dividend of 7.5
pence per share. These are in addition to the ordinary dividend we
paid at our interim results. Together, we will have returned
£1.6 billion to shareholders, and around £1 billion to
the UK taxpayer in dividends. We also have shareholder approval to
participate in a directed buyback should the government seek to
dispose of a portion of its shares.
The UK
economy faces a heightened level of uncertainty related to the
ongoing Brexit negotiations. We have continued to support our
customers, providing £30.4 billion in gross new UK mortgage
lending in 2018, and Commercial Banking made or renewed commitments
of around £30 billion of term lending facilities to mainly UK
businesses. Our Commercial and Business Banking businesses
supported total lending of more than £100 billion in
2018.
We have
also committed an additional £2 billion to our Growth Fund to
support British business, taking the total fund to £3 billion.
This fund is helping businesses manage their supply chains in what
is a very uncertain time. These actions help maintain our position
as the largest supporter of UK business.
A good financial performance in uncertain economic
conditions
Our
financial performance is good, given the uncertain economic
outlook. In 2018, we continued to take costs out of the business
and reduced operating expenses by £278 million. This means
that we have now reduced operating costs by more than £4
billion in five years.
Our
long-term target remains to reach a cost to income ratio of below
50%, however we note that as an industry we are required to carry
additional costs to deal with Brexit and the ongoing operational
obligations of ring-fencing. Given the continued low rate
environment and highly competitive mortgage market, coupled with
the uncertainty in the economy, income remains under pressure. We
continue to focus on cost reduction to ensure we are preparing our
business for the future and to meet our customers and shareholders
needs.
In
2019, we are committing to reducing our operating costs by
c.£300 million. Our consistent delivery on cost targets in
recent years gives me the confidence we will achieve
this.
Our
strategic plan has served us well and we will continue to focus on
our five key priorities, as set out below, as we strive to become
the UK and Republic of Ireland’s best bank for
customers.
Strength and Sustainability
The
bank’s financial strength is much improved. Our Common Equity
Tier 1 ratio has increased from 8.6% at the end of 2013 to 16.2% at
the end of 2018. This progress helped us to obtain a clear pass in
the 2018 Bank of England stress test - a very important milestone.
Alongside our financial strength we have continued to build greater
resilience into our systems, helping to protect our customers who
are at greater risk of fraud and scams more than ever before. We
are the first and only UK bank to partner with National Trading
Standards on their Friends Against Scams initiative. More than
31,000 colleagues completed the training in 2018 and we have
committed to training a million customers by 2020.
Customer Experience
While
our financial performance is more assured, we know that a
significant gap remains to achieving our ambition to be the best
bank for customers. We are very aware that we need to deliver
better service, more consistently. The Competition and Markets
Authority (CMA) results, which now provide the public with a
ranking of banks’ performance for customers, bring this into
sharp focus. With the large major legacy issues behind us, we are
putting all of our focus into improving our customer
experience.
We are
investing in innovation, with £1 billion committed to invest
in 2019 aimed at improving legacy systems and delivering better
solutions for customers. We continue to develop our mobile
app which for NatWest now scores +41 for customer advocacy. Our
Commercial Bank, the UK’s largest supporter of business,
remains ahead of the rest of the market for customer advocacy and
in Coutts we have a market leading private banking
brand.
Customers
want and need to do their banking quickly and safely. When we help
them to do this, and combine it with expert advice, we see advocacy
scores increase. That is how we are focusing the business, and we
are confident the changes we are making will deliver a consistently
higher quality of service.
Simplifying the Bank
We are
a simpler bank, but we can’t yet call ourselves simple to
deal with. While we are now more efficient with a lower cost base,
as we have shrunk in size, many of our processes are still too
difficult for our customers to deal with, and are frustrating for
our colleagues as they try to serve our customers. Whether it is
booking travel, watching a film or shopping online, customers now
expect a fast and reliable service. Banking is no different from
any other customer focused industry, and we are responding to those
changes in customer behaviour.
Our
first digital lending journey for Commercial Banking customers is
now live. The new platform allows existing customers to apply
digitally for secured and unsecured loans up to £750,000,
subject to eligibility criteria. Customers are able to complete
their loan application in a matter of minutes, and usually get a
decision in principle within 24 hours. We have simplified and
streamlined the customer experience, giving our customers a rapid
response, all the while supported by the vast industry knowledge
and insight of our Relationship Managers.
We are
also embracing artificial intelligence (AI), which is helping us
lower our cost base and deliver a 24/7 customer experience . Take
Cora for instance –our AI Chat Bot which we launched in
partnership with IBM Watson - she now handles an average of 83,000
queries a week. Given the success in the personal business, we have
recently rolled out Cora to Commercial Banking.
Supporting sustainable growth
Supporting
our customers’ ambitions is a key part of our role in
society. We have focused on growing lending in our target markets.
Gross mortgage lending in UK Personal and Business Banking
increased £1.5 billion in 2018, and we helped around 45,000
customers buy their first home. Our support doesn’t only
extend to lending, we now have 12 NatWest accelerators. These hubs
make up the UK’s largest fully-funded business accelerator
network, capable of supporting up to 1,000
entrepreneurs.
NatWest
Markets continued to support large corporate customers with a range
of financing needs in 2018. Our FX team was voted number one for
customer satisfaction in the 2017 Greenwich Associates FX Survey
and we helped clients raise £312 billion on the debt capital
markets.
Employee engagement
The
turnaround of the bank would not have been possible without the
hard work and determination of our colleagues. Over the last four
years we have seen a significant reduction in the number of roles
across the bank, as a result of divestment and restructuring
aligned to our strategy. Despite this activity, colleague
engagement is at its highest level since we started measuring in
2002. The independent Banking Standards Board report on culture
also showed improvements in every category. Of course, there is
always more we can do, and we have set stretching targets as we
strive to become a more diverse and inclusive
organisation.
Innovating and investing to improve customer service
We have
taken a dual approach to innovation by transforming our core
banking services and delivering new products and services outside
of traditional banking. In 2018, we continued to invest in our
existing infrastructure, improving system resilience and migrating
to latest in cloud technologies. Last year we experienced 19
Criticality 1 Incidents, compared to 318 four years
ago.
Our
customers continued to migrate to our mobile app during 2018. In UK
PBB we now have 6.4 million regular mobile customers, 16% higher
than 2017. Today close to three quarters of active current account
customers in UK PBB are regular digital users. Sales through our
digital channels in UK PBB are up 19% on last year and now
represent almost half of all product sales. Four years ago this
figure would have been 26%.
At the
same time we are trying new things outside our core banking
services. We are piloting Bó and Mettle as two standalone
digital banks. Bó is our digital personal bank targeted at
helping people to manage their money better. Mettle is our digital
bank for business customers.
We are
learning a lot from these innovations and applying our findings
back into the core bank.
These
innovations complement the wider eco-systems that we want to build
around key customer experiences – be it buying a home, or
running a business. Building or acquiring complementary services to
the core banking services we already offer in these areas will
allow us to deepen our relationships with customers, and ultimately
grow revenue.
2019, a year of focusing forward
In
2019, we will focus forward, into a rapidly changing market. We
have set annual goals for 2019 based around our five priorities in
order to keep up momentum on the delivery of our strategic plan.
There are two areas in particular that we need to focus on –
customer experience and simplifying the bank. This year we aim to
spend £1 billion on upgrading legacy infrastructure, improving
systems, processes and delivering new innovations which will
improve our customers’ experience. We will simplify the bank
further in 2019, given this we have set a operating cost reduction
target of c.£300 million for 2019, and continue to strive for
a sub 50% cost to income ratio.
We have
made good progress on making RBS a much simpler, safer and more
customer focused bank. From a position of capital strength, we will
aim to improve returns for you, our shareholders.
Building the best bank for customers in the UK and Republic of
Ireland
Customer Advocacy and Trust Scores
Our
brands are our main connection with customers. Each takes a clear
and differentiated position with the aim of helping us strengthen
our relationship with them. For this reason we track customer
advocacy for our key brands using the net-promoter score (NPS)
– a commonly-used metric in banking and other industries
across the world.
We know
that we still have much to do. Our recent programme of branch
closures has had a detrimental impact on NPS. But we are determined
to make a difference with the things that matter most to our
customers. We are listening hard. In 2018, we called a total of
over 113,000 customers; either to learn more about feedback that
they had already given us, or to respond to issues that they
identified. Through fixing our core processes we will get our core
service right first time more consistently while at the same time
innovating to deliver better solutions.
The
tables below show NPS and Trust scores for our key
brands.
Personal Banking
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Q4 2017
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Q1 2018
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Q2 2018
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Q3 2018
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Q4 2018
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NatWest
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12
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12
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13
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12
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11
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Royal
Bank of Scotland
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-6
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-14
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-21
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-22
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-17
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Ulster
Bank Northern Ireland
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-5
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-6
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-11
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-9
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-10
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Ulster
Bank Republic of Ireland
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-7
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-5
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-7
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-6
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-6
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Source:
Ipsos MORI FRS 6 month rolling data. Latest base sizes: 3,111 for
NatWest (England & Wales); 421 for Royal Bank of Scotland
(Scotland). Based on the question: “How likely is it that you
would recommend (brand) to a relative, friend or colleague in the
next 12 months for current account banking?” Base: Claimed
main banked current account customers.
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Source:
Coyne Research 12 month rolling data. Question: “Please
indicate to what extent you would be likely to recommend (brand) to
your friends or family using a scale of 0 to 10 where 0 is not at
all likely and 10 is extremely likely”. Latest base sizes:
274 Northern Ireland; 297 Republic of Ireland.
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Business Banking
|
Q4 2017
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Q1 2018
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Q2 2018
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Q3 2018
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Q4 2018
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NatWest
|
-7
|
-10
|
-6
|
-5
|
-9
|
Royal
Bank of Scotland
|
-15
|
-22
|
-23
|
-29
|
-36
|
Source:
Charterhouse Research Business Banking Survey, YE Q4 2018. Based on
interviews with businesses with an annual turnover up to £2
million. Latest base sizes: 1134 for NatWest (England & Wales),
455 for Royal Bank of Scotland (Scotland). Question: “How
likely would you be to recommend (bank)”. Base: Claimed main
bank. Data weighted by region and turnover to be representative of
businesses in Great Britain.
|
Commercial Banking
|
Q4 2017
|
Q1 2018
|
Q2 2018
|
Q3 2018
|
Q4 2018
|
NatWest
|
25
|
23
|
22
|
21
|
21
|
Royal
Bank of Scotland
|
21
|
10
|
17
|
21
|
20
|
Source:
Charterhouse Research Business Banking Survey, YE Q4 2018. Based on
interviews with businesses with an annual turnover over £2
million. Latest base sizes: 558 for NatWest (England & Wales),
103 for Royal Bank of Scotland (Scotland). Question: “How
likely would you be to recommend (bank)”. Base: Claimed main
bank. Data weighted by region and turnover to be representative of
businesses in Great Britain.
|
Trust
We also
use independent experts to measure our customers’ trust in
the bank. Each quarter we ask customers to what extent they trust
or distrust their bank to do the right thing. The score is a net
measure of those customers that trust their bank (a lot or
somewhat) minus those that distrust their bank (a lot or
somewhat).
|
|||||
|
Q4 2017
|
Q1 2018
|
Q2 1208
|
Q3 2018
|
Q4 2018
|
NatWest
|
57
|
59
|
58
|
64
|
56
|
Royal
Bank of Scotland
|
27
|
15
|
27
|
25
|
27
|
Source:
Populus. Latest quarter’s data. Measured as a net % of those
that trust RBS/NatWest to do the right thing, less those that do
not. Latest base sizes: 891 for NatWest (England & Wales), 215
for Royal Bank of Scotland (Scotland).
|
Summary consolidated income statement for the period ended 31
December 2018
|
||||||
|
|
|
|
|
|
|
|
Year ended
|
|
Quarter ended
|
|||
|
31 December
|
31 December
|
|
31 December
|
30 September
|
31 December
|
|
2018
|
2017
|
|
2018
|
2018
|
2017
|
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Net interest income
|
8,656
|
8,987
|
|
2,176
|
2,154
|
2,211
|
|
|
|
|
|
|
|
Own credit adjustments
|
92
|
(69)
|
|
33
|
20
|
9
|
Loss on redemption of own debt
|
-
|
(7)
|
|
-
|
-
|
-
|
Strategic disposals
|
-
|
347
|
|
-
|
-
|
191
|
Other non-interest income
|
4,654
|
3,875
|
|
849
|
1,468
|
646
|
|
|
|
|
|
|
|
Non-interest income
|
4,746
|
4,146
|
|
882
|
1,488
|
846
|
|
|
|
|
|
|
|
Total income
|
13,402
|
13,133
|
|
3,058
|
3,642
|
3,057
|
|
|
|
|
|
|
|
Litigation and conduct costs
|
(1,282)
|
(1,285)
|
|
(92)
|
(389)
|
(764)
|
Strategic costs
|
(1,004)
|
(1,565)
|
|
(355)
|
(299)
|
(531)
|
Other expenses
|
(7,359)
|
(7,551)
|
|
(2,022)
|
(1,753)
|
(2,111)
|
|
|
|
|
|
|
|
Operating expenses
|
(9,645)
|
(10,401)
|
|
(2,469)
|
(2,441)
|
(3,406)
|
|
|
|
|
|
|
|
Profit/(loss) before impairment losses
|
3,757
|
2,732
|
|
589
|
1,201
|
(349)
|
Impairment losses(1)
|
(398)
|
(493)
|
|
(17)
|
(240)
|
(234)
|
|
|
|
|
|
|
|
Operating profit/(loss) before tax
|
3,359
|
2,239
|
|
572
|
961
|
(583)
|
Tax (charge)/credit
|
(1,275)
|
(824)
|
|
(136)
|
(398)
|
168
|
|
|
|
|
|
|
|
Profit/(loss) for the period
|
2,084
|
1,415
|
|
436
|
563
|
(415)
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
|
Ordinary shareholders
|
1,622
|
752
|
|
286
|
448
|
(579)
|
Other owners
|
470
|
628
|
|
164
|
93
|
150
|
Non-controlling interests
|
(8)
|
35
|
|
(14)
|
22
|
14
|
|
|
|
|
|
|
|
Notable items within total income
|
|
|
|
|
|
|
IFRS volatility in Central items & other (2)
|
(59)
|
2
|
|
(25)
|
77
|
(173)
|
Insurance indemnity
|
357
|
-
|
|
85
|
272
|
-
|
of which:
|
|
|
|
|
|
|
NatWest Markets
|
165
|
-
|
|
-
|
165
|
-
|
Central items & other
|
192
|
-
|
|
85
|
107
|
-
|
UK PBB debt sale gain
|
61
|
185
|
|
35
|
-
|
9
|
FX losses in Central items & other
|
(46)
|
(183)
|
|
(39)
|
(11)
|
(8)
|
Commercial Banking fair value and disposal gain/(loss)
|
169
|
6
|
|
(10)
|
(13)
|
(46)
|
NatWest Markets legacy business disposal
(losses)/gains
|
(86)
|
(712)
|
|
(43)
|
14
|
(163)
|
|
|
|
|
|
|
|
Notable items within expenses
|
|
|
|
|
|
|
Litigation and conduct costs
|
(1,282)
|
(1,285)
|
|
(92)
|
(389)
|
(764)
|
of which: US RMBS
|
(823)
|
(664)
|
|
-
|
(21)
|
(442)
|
of which: DoJ
|
(1,040)
|
-
|
|
-
|
-
|
-
|
Nomura
|
241
|
-
|
|
-
|
-
|
-
|
of which: PPI
|
(200)
|
(175)
|
|
-
|
(200)
|
(175)
|
of which: Ulster Bank RoI
|
(71)
|
(169)
|
|
(17)
|
(37)
|
(135)
|
VAT recovery in Central items & other
|
-
|
86
|
|
-
|
-
|
6
|
Notes:
(1)
|
31
December 2018 and 30 September 2018 prepared under IFRS 9, 31
December 2017 prepared under IAS 39. Refer to Note 2 in this
document and Note 34 in the 2018 Annual Report and Accounts for
further information on the impact of IFRS 9 on basis of
preparation.
|
(2)
|
IFRS
volatility relates to loans which are economically hedged but for
which hedge accounting is not permitted under IFRS.
|
Business performance summary
Income statement overview
2018 compared with 2017
Income
●
|
Total
income increased by £269 million, or 2.0%. Excluding notable
items, income decreased by £650 million, or 4.8%, primarily
reflecting lower NatWest Markets income and reduced net interest
income. Excluding notable items, NatWest Markets and Central items,
income was stable.
|
●
|
Net
interest income decreased by £331 million, or 3.7%, driven by
margin pressure, active capital management in Commercial Banking, a
reduction in the NatWest Markets legacy business and one-off
Central items in 2017. Net interest margin was 15 basis points
lower than 2017, or 13 basis points lower excluding one-off items
reflecting an 8 basis points reduction relating to increased
liquidity, 3 basis points from competitive pressures and 2 basis
points from mix impacts. Structural hedges of £159 billion
generated £0.9 billion of incremental net interest income for
the year, compared with £1.5 billion of incremental net
interest income on a balance of £149 billion in
2017.
|
●
|
Non-interest
income increased by £600 million, or 14.5%. Excluding notable
items, non-interest income decreased by £381 million
principally due to lower core NatWest Markets income driven by
challenging fixed income, currencies and commodities (FICC) market
conditions in Q4 2018, together with turbulence in European bond
markets earlier in the year.
|
Operating expenses
●
|
Operating
expenses decreased by £756 million, or 7.3%, primarily
reflecting £561 million lower strategic costs and a £192
million reduction in other expenses, with litigation and conduct
costs remaining broadly stable despite the US Department of Justice
charge in the year. Excluding £86 million of one-off VAT
releases in 2017, other expenses decreased by £278 million, or
3.6%, and FTEs reduced by 5.8%.
|
●
|
Strategic
costs of £1,004 million included: a £195 million direct
charge in NatWest Markets relating to both the wind-down of the
legacy business and ongoing development of the core business
infrastructure; £177 million in respect of implementing
ring-fencing requirements; £171 million of technology costs; a
£133 million charge relating to the reduction in our property
portfolio; a £76 million net settlement relating to the
International Private Bank pension scheme; with the remaining
charge largely relating to restructuring costs to achieve cost
efficiencies across front and back office operations.
|
●
|
Litigation
and conduct costs of £1,282 million largely comprises the
£1,040 million charge relating to the settlement with the
Department of Justice and a £200 million charge relating to
Payment Protection Insurance, partially offset by a £241
million provision release relating to a RMBS litigation
indemnity.
|
●
|
The
cost:income ratio of 71.7% is elevated due to the inclusion of the
net RMBS related conduct charge. Excluding this item the
cost:income ratio, including strategic costs, would be
65.7%.
|
Impairments
●
|
A net
impairment loss of £398 million, 13 basis points of gross
customer loans, decreased by £95 million, or 19.3%, compared
with 2017 primarily reflecting lower single name charges in
Commercial Banking, partially offset by fewer provision releases in
UK PBB and NatWest Markets. In addition, we took an additional
£101 million charge in Q3 2018 reflecting the more uncertain
economic outlook and a net £60 million impairment charge in
Ulster Bank RoI principally in relation to ongoing sales from our
loan book to further reduce the level of non performing loans.
Underlying credit conditions remained benign during
2018.
|
Business performance summary
Personal & Business Banking – UK Personal & Business
Banking
|
|
||||||
|
|
Year ended
|
|
Quarter ended and as at
|
|||
|
|
31 December
|
31 December
|
|
31 December
|
30 September
|
31 December
|
|
|
2018
|
2017
|
|
2018
|
2018
|
2017
|
|
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Total income
|
|
6,282
|
6,477
|
|
1,557
|
1,564
|
1,548
|
Operating expenses
|
|
(3,482)
|
(3,829)
|
|
(941)
|
(959)
|
(1,266)
|
Impairment losses
|
|
(342)
|
(235)
|
|
(125)
|
(70)
|
(60)
|
Operating profit
|
|
2,458
|
2,413
|
|
491
|
535
|
222
|
Return on equity
|
|
24.3%
|
23.7%
|
|
18.6%
|
20.9%
|
7.8%
|
Net interest margin
|
|
2.78%
|
2.86%
|
|
2.73%
|
2.76%
|
2.76%
|
|
|
|
|
|
£bn
|
£bn
|
£bn
|
Net loans to customers (amortised cost)
|
|
|
|
|
162.3
|
163.2
|
161.7
|
Customer deposits
|
|
|
|
|
184.1
|
183.4
|
180.4
|
RWAs
|
|
|
|
|
45.1
|
45.4
|
43.0
|
2018 compared with 2017
|
|
●
|
UK PBB
now has 6.4 million regular mobile app users, 16% higher than 2017,
with 72% of our active current account customers being regular
digital users. Total digital sales increased by 19% representing
45% of all sales. 61% of mortgage switching is now done digitally,
compared with 51% in 2017. 57% of personal unsecured loans sales
are via the digital channel, with digital volumes 31% higher. In
business banking, 91% of current accounts and 68% of loans under
£50,000 were originated digitally.
|
●
|
Total
income was £195 million, or 3.0%, lower reflecting £124
million lower debt sale gains and a £33 million transfer of
the Collective Investment Funds business to Private Banking in Q4
2017. Excluding these items, income was £38 million, or 0.6%,
lower, including a £28 million reduction in overdraft fees
following changes implemented in H2 2017, which included increasing
the number of customer alerts. Net interest income of £5,098
million decreased by 0.6% as balance growth and deposit margin
benefits were offset by lower mortgage new business margins, with
net interest margin down by 8 basis points to 2.78%.
|
●
|
Operating
expenses decreased by £347 million, or 9.1%. Excluding
strategic, litigation and conduct costs, operating expenses were
£167 million, or 5.3%, lower driven by reduced back-office
operations costs and lower headcount reflecting continued operating
efficiencies, partially offset by increased technology investment
spend as we continue to build our digital capability.
|
●
|
Impairments
were £107 million higher driven by fewer provision releases
and lower recoveries following debt sales in prior years, as well
as increased provision requirements under IFRS 9. The underlying
default rate remained broadly stable with asset growth also
accounting for an element of the uplift.
|
●
|
Net
loans to customers increased by 0.4% to £162.3 billion. The
business has maintained a prudent approach to risk and pricing in a
very competitive market, with gross new mortgage lending in 2018 at
£30.4 billion, 1.9% lower than 2017. Mortgage market share was
maintained at 11.3% supporting a stock share of around 10%.
Momentum continued in personal advances and business banking,
increasing by 7.0% and 0.4% respectively.
|
●
|
Customer
deposits increased by £3.7 billion, or 2.1%, as growth
continued across current accounts and savings.
|
●
|
RWAs
increased by £2.1 billion, or 4.9%, principally due to
modelling changes on mortgages and unsecured loans.
|
Q4 2018 compared with Q3 2018
|
|
●
|
Total
income decreased by £7 million primarily due to a charge of
£18 million following an annual review of mortgage customer
repayment behaviour and lower seasonal debit and credit card fee
income, partially offset by a debt sale gain of £35 million.
Net interest margin was 3 basis points lower principally due to the
mortgage customer repayment behaviour charge. Excluding this
charge, net interest margin increased as the benefit of the August
base rate rise on deposit margins flowed through.
|
●
|
Operating
expenses decreased by £18 million. Excluding strategic,
litigation and conduct costs, operating expenses increased by
£111 million, including the annual UK bank levy charge of
£54 million.
|
●
|
Impairments
were £55 million higher primarily driven by a debt sale
benefit in Q3 2018 and updates in IFRS 9 predictive loss models in
Q4 2018.
|
●
|
Gross
new mortgage lending was £8.6 billion with market share of new
mortgages at approximately 12% and mortgage approval share at
14%.
|
Q4 2018 compared with Q4 2017
|
|
●
|
Total
income was £9 million higher driven by increased debt sale
gains of £26 million, partially offset by lower overdraft fees
and mortgage margin pressure.
|
●
|
Operating
expenses decreased by £325 million, or 25.7%. Excluding
strategic, litigation and conduct costs, operating expenses were
£7 million, or 0.9%, higher due to a £21 million increase
in the annual bank levy charge, partially offset by reduced
headcount reflecting continued operating efficiencies.
|
Business performance summary
Personal & Business Banking – Ulster Bank RoI
|
|
|
|
|
|
|
|
Year ended
|
|
Quarter ended and as at
|
|||
|
31 December
|
31 December
|
|
31 December
|
30 September
|
31 December
|
|
2018
|
2017
|
|
2018
|
2018
|
2017
|
|
€m
|
€m
|
|
€m
|
€m
|
€m
|
Total income
|
689
|
689
|
|
165
|
169
|
182
|
Operating expenses
|
(657)
|
(772)
|
|
(184)
|
(188)
|
(289)
|
Impairment (losses)/releases
|
(17)
|
(68)
|
|
21
|
(68)
|
(92)
|
Operating profit/(loss)
|
15
|
(151)
|
|
2
|
(87)
|
(199)
|
Return on equity
|
0.5%
|
(5.0%)
|
|
0.4%
|
(12.7%)
|
(26.5%)
|
Net interest margin
|
1.79%
|
1.67%
|
|
1.73%
|
1.72%
|
1.76%
|
|
|
|
|
€bn
|
€bn
|
€bn
|
Net loans to customers (amortised cost)
|
|
|
|
21.0
|
21.6
|
22.0
|
Customer deposits
|
|
|
|
20.1
|
20.1
|
19.1
|
RWAs
|
|
|
|
16.4
|
18.6
|
20.2
|
2018 compared with 2017
|
|
●
|
Ulster
Bank RoI continued to strengthen its digital proposition in 2018
through enhancements to digital and mobile customer
offerings. 69% of our active personal current account
customers are choosing to bank with us through digital channels. A
faster, more convenient and secure digital application experience
was introduced for customers who are applying for current accounts
and personal loans and further enhancements were made to the mobile
app during the year. Mobile payments and transfers increased 36%
compared with 2017, reflecting the continued customer migration
from physical to digital channels.
|
●
|
Total
income was in line with 2017. Net interest income increased by
€22 million, or 4.6%, supporting a 12 basis point increase in
net interest margin, primarily driven by an improving asset mix,
lower cost of deposits and a one-off funding benefit in 2018,
partially offset by a reduction in income on free funds.
Non-interest income decreased by €22 million, or 10.5%,
principally due to a lower number of non-recurring benefits and a
reduction in fee income.
|
●
|
Operating
expenses decreased by €115 million, or 14.9%, principally due
to a €113 million reduction in litigation and conduct costs
and €39 million lower strategic costs. 2018 included a
€79 million conduct and litigation provision for customer
remediation and project costs associated with legacy business
issues. Other expenses increased by €37 million primarily
reflecting: the investment made into strengthening the risk,
compliance and control environment; increased bank levies and
regulatory fees; and higher spend on technology and
innovation.
|
●
|
A net
impairment charge of €17 million reflects a charge associated
with a non-performing loan sale partially offset by observable
improvements in the performance of the loan portfolio.
|
●
|
Net
loans to customers reduced by €1.0 billion, or 4.5%,
principally reflecting the sale of a portfolio of non-performing
loans of €0.6 billion in 2018 and a continued reduction in
the tracker mortgage book.
|
●
|
Customer
deposits increased by €1.0 billion, or 5.2%, supporting a
reduction in the loan:deposit ratio to 105% from 115%.
|
●
|
RWAs
reduced by €3.8 billion, or 18.8%, principally reflecting the
impact of the non-performing loan sale and an improvement in credit
metrics.
|
Q4 2018 compared with Q3 2018
|
|
●
|
Total
income decreased by €4 million primarily due to a reduction
in income associated with the non-performing loan portfolio and
reduced fee income.
|
●
|
A net
impairment release of €21 million in Q4 2018 compared to a
€68 million impairment charge in Q3 2018, principally due to
a provision made in Q3 2018 for a further non-performing loan
sale.
|
●
|
RWAs
reduced by €2.2 billion primarily driven by the sale of a
portfolio of non-performing loans.
|
Q4 2018 compared with Q4 2017
|
|
●
|
Total
income decreased by €17 million, or 9.3%, reflecting a one
off income benefit in Q4 2017 and a reduction in income from free
funds in Q4 2018. Net interest margin decreased by 3 basis points,
primarily driven by a decrease in income associated with
non-performing loans.
|
●
|
Total
operating expenses decreased by €105 million, or 36.3%,
principally due to a €134 million reduction in litigation and
conduct costs, partially offset by a €14 million increase in
strategic costs primarily associated with our property strategy. Q4
2018 included a €19 million conduct and litigation provision
for customer remediation and project costs associated with legacy
business issues.
|
Business performance summary
Commercial & Private Banking – Commercial Banking
|
|
|
|
|
|
|
|
|
|
Year ended
|
|
Quarter ended
|
|||
|
|
31 December
|
31 December
|
|
31 December
|
30 September
|
31 December
|
|
|
2018
|
2017
|
|
2018
|
2018
|
2017
|
|
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Total income
|
|
3,374
|
3,484
|
|
805
|
789
|
806
|
Operating expenses
|
|
(1,872)
|
(2,014)
|
|
(580)
|
(443)
|
(575)
|
Impairment losses
|
(144)
|
(362)
|
|
(22)
|
(103)
|
(117)
|
|
Operating profit
|
|
1,358
|
1,108
|
|
203
|
243
|
114
|
Return on equity
|
|
10.2%
|
6.6%
|
|
5.5%
|
6.6%
|
1.3%
|
Net interest margin
|
|
1.67%
|
1.74%
|
|
1.66%
|
1.71%
|
1.75%
|
|
|
|
|
|
£bn
|
£bn
|
£bn
|
Net loans to customer (amortised cost)
|
|
|
88.0
|
88.3
|
96.9
|
||
Customer deposits
|
|
|
|
|
95.6
|
96.4
|
98.0
|
RWAs
|
|
|
|
|
67.6
|
69.0
|
71.8
|
Comparisons
with prior periods are impacted by preparations for ring-fencing,
including the transfer of shipping and other activities from
NatWest Markets, the transfer of whole business securitisations and
Relevant Financial Institutions and other activities to NatWest
Markets and the transfer of the funds and trustee depositary
business to RBS International. The net impact of transfers on 2017
would have been to reduce income by £246 million, operating
expenses by £10 million, impairments by £72 million, net
loans to customers by £5.3 billion, customer deposits by
£1.2 billion and RWAs by £2.2 billion. There is an
additional £1.4 billion reduction in 2017 net loans to
customers as a result of 2018 asset reclassifications under IFRS9.
The net impact of transfers on Q4 2017 would have been to reduce
income by £39 million and operating expenses by £4
million. The net impact of transfers on Q3 2018 would have been to
reduce income by £2 million, operating expenses by £1
million, net loans to customers by £0.6 billion, customer
deposits by £0.7 billion and RWAs by £0.1 billion. The
variances in the commentary below have been adjusted for the impact
of these items excluding net interest margin.
|
|
2018 compared with 2017 (comparisons adjusted for
transfers)
|
|
●
|
Approximately
85% of customers now interact with Commercial Banking digitally and
we have developed solutions they value. We successfully launched
the Bankline mobile app in the Apple app store, whilst our lending
journey now enables customers to apply digitally for loans of up to
£750,000 through a self-service application process. This is
the largest value offered by a UK commercial bank, giving customers
rapid, digital access to funding decisions, with approximately 50%
of loan applications given a decision in principle in under 24
hours.
|
●
|
Total
income increased by £136 million, or 4.2%, reflecting asset
disposal and fair value gains of £169 million, compared with a
£64 million loss in 2017, partially offset by lower lending.
Net interest margin decreased by 7 basis points to 1.67% primarily
reflecting reclassification of net interest income to non-interest
income under IFRS 9, the impact of transfers and asset margin
compression, partially offset by higher funding benefits from
deposit balances.
|
●
|
Operating
expenses decreased by £132 million, or 6.6%. Excluding
strategic, litigation and conduct costs, operating expenses were
£79 million, or 4.4%, lower reflecting continued operating
model simplification.
|
●
|
Impairments
decreased by £146 million, or 50.3%, mainly reflecting lower
single name charges.
|
●
|
Net
loans to customers decreased by £2.2 billion, or 2.4%,
principally driven by significant active capital management
reductions, with underlying lending growth of £3.5 billion, or
3.8%. At Q3 2018, we announced an additional £2 billion of
growth funding to help British businesses prepare for the Brexit
transition, bringing the total commitment to £3
billion.
|
●
|
Customer
deposits decreased by £1.2 billion, or 1.2%, supporting a
broadly stable loan:deposit ratio of 92%.
|
●
|
RWAs
decreased by £2.0 billion, or 2.9%, driven by £10.5
billion gross RWA reductions associated with active capital
management, partially offset by model updates of £2.9 billion,
underlying business growth and partial reinvestment of gross RWA
reductions through refinancing to existing clients under our
revised pricing framework.
|
Q4 2018 compared with Q3 2018 (comparisons adjusted for
transfers)
|
|
●
|
Total
income increased by £18 million primarily reflecting higher
fee income and lower fair value and disposal losses in the quarter.
Net interest margin decreased by 5 basis points to 1.66%
principally due to a higher liquidity buffer costs and coupon
payments associated with active capital management.
|
●
|
Operating
expenses increased by £138 million. Excluding strategic,
litigation and conduct costs, operating expenses were £94
million higher, including the annual UK bank levy charge of
£59 million.
|
●
|
Net
loans to customers increased by £0.3 billion principally due
to underlying lending growth, partially offset by reductions
associated with the net impact of capital management.
|
Q4 2018 compared with Q4 2017 (comparisons adjusted for
transfers)
|
|
●
|
Total
income increased by £38 million, or 4.9%, reflecting lower
asset disposal and fair value losses.
|
●
|
Operating
expenses increased by £9 million, or 1.6%. Excluding
strategic, litigation and conduct costs, operating expenses were
£13 million, or 2.6%, lower driven by lower staff
costs.
|
Business performance summary
Commercial & Private Banking – Private Banking
|
|
|
|
|
|
|
|
|
|
Year ended
|
|
Quarter ended
|
|||
|
|
31 December
|
31 December
|
|
31 December
|
30 September
|
31 December
|
|
|
2018
|
2017
|
|
2018
|
2018
|
2017
|
|
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Total income
|
|
775
|
678
|
|
198
|
195
|
191
|
Operating expenses
|
|
(478)
|
(529)
|
|
(143)
|
(110)
|
(194)
|
Impairment releases/(losses)
|
|
6
|
(6)
|
|
8
|
(1)
|
(2)
|
Operating profit/(loss)
|
|
303
|
143
|
|
63
|
84
|
(5)
|
Return on equity
|
|
15.4%
|
6.4%
|
|
12.3%
|
17.3%
|
(2.9%)
|
Net interest margin
|
|
2.52%
|
2.47%
|
|
2.49%
|
2.54%
|
2.44%
|
|
|
|
|
|
£bn
|
£bn
|
£bn
|
Net loans to customers (amortised cost)
|
|
|
|
|
14.3
|
14.2
|
13.5
|
Customer deposits
|
|
|
|
|
28.4
|
27.2
|
26.9
|
RWAs
|
|
|
|
|
9.4
|
9.5
|
9.1
|
AUM
|
|
|
|
|
19.8
|
21.8
|
21.5
|
Comparisons with
prior periods are impacted by the transfer of the Collective
Investment Fund business from UK PBB and by the transfers of Coutts
Crown Dependency and the International Client Group Jersey to RBS
International. The net impact of the transfers on 2017 would have
been to increase income by £24 million and operating expenses
by £15 million and reduce net loans to customers by £0.1
billion, customer deposits by £0.5 billion and assets under
management by £0.7 billion. The variances in the commentary
below have been adjusted for the impact of these transfers
excluding net interest margin.
|
|
2018
compared with 2017 (comparisons adjusted for
transfers)
|
|
●
|
Approximately 60%
of clients bank with us digitally and 94% of clients positively
rate our Coutts24 telephony service. Private Banking also recently
launched Coutts Connect, a social platform which allows clients to
network and build working relationships with one
another.
|
●
|
Total
income increased by £73 million, or 10.4%, largely due to
increased lending, higher funding benefits from deposit balances
and higher investment income. Net interest margin increased by 5
basis points as higher deposit income was partially offset by asset
margin pressure.
|
●
|
Operating
expenses decreased by £66 million, or 12.1%. Excluding
strategic, litigation and conduct costs, operating expenses
decreased by £4 million, or 0.8% driven by operating model
efficiencies.
|
●
|
A net
impairment release of £6 million largely reflects a £9m
release in Q4 2018 due to data quality improvements.
|
●
|
Net
loans to customers increased by £0.9 billion, or 6.7%,
primarily in mortgages.
|
●
|
Customer deposits
increased by £2.0 billion, or 7.6%, mainly due to higher
personal client account balances.
|
●
|
Assets
under management decreased by £1.0 billion, or 4.8%,
reflecting market movements partially offset by new business
inflows of £0.6 billion.
|
●
|
Private
Banking manages a further £6.7 billion of assets under
management on behalf of RBS Group which sit outside of Private
Banking. Total assets under management overseen by Private Banking
have decreased by 5.7% to £26.5 billion as a result of market
movements partially offset by net new business.
|
●
|
RWAs
increased by £0.3 billion, or 3.3%, relative to 6.7% growth in
net loans to customers.
|
Q4
2018 compared with Q3 2018
|
|
●
|
Total
income was broadly stable at £198 million, reflecting higher
deposit income offset by asset margin pressure and lower assets
under management. Net interest margin decreased by 5 basis points
to 2.49% reflecting higher funding costs.
|
●
|
Operating
expenses increased by £33 million. Excluding strategic,
litigation and conduct costs, operating expenses increased by
£26 million, including the annual UK bank levy charge of
£18 million.
|
Q4
2018 compared with Q4 2017
|
|
●
|
Total
income was £7 million higher reflecting lending growth and
higher funding benefits from deposit balances, partially offset by
asset margin pressure.
|
●
|
Operating
expenses decreased by £51 million, or 26.3%. Excluding
strategic, litigation and conduct costs, operating expenses
increased by £6 million, or 4.7%.
|
Business performance summary
RBS International
|
|
|
|
|
|
|
|
|
|
Year ended
|
|
Quarter ended
|
|||
|
|
31 December
|
31 December
|
|
31 December
|
30 September
|
31 December
|
|
|
2018
|
2017
|
|
2018
|
2018
|
2017
|
|
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Total income
|
|
594
|
389
|
|
155
|
155
|
97
|
Operating expenses
|
|
(260)
|
(219)
|
|
(86)
|
(60)
|
(66)
|
Impairment releases/(losses)
|
|
2
|
(3)
|
|
2
|
(3)
|
--
|
Operating profit
|
|
336
|
167
|
|
71
|
92
|
31
|
Return on equity
|
|
24.4%
|
11.2%
|
|
20.0%
|
26.9%
|
9.2%
|
Net interest margin
|
|
1.71%
|
1.36%
|
|
1.81%
|
1.73%
|
1.34%
|
|
|
|
|
|
£bn
|
£bn
|
£bn
|
Net loans to customers (amortised costs)
|
|
|
|
|
13.3
|
13.0
|
8.7
|
Customer deposits
|
|
|
|
|
27.5
|
26.9
|
28.9
|
RWAs
|
|
|
|
|
6.9
|
6.9
|
5.1
|
Comparisons with
prior periods are impacted by the transfer of the funds and trustee
depositary business from Commercial Banking and by the transfers of
Coutts Crown Dependency and the International Client Group from
Private Banking. The net impact of the transfers on 2017 would have
been to increase income by £151 million, operating expenses by
£14 million, net loans to customers by £4.5 billion,
customer deposits by £1.7 billion and RWAs by £1.9
billion. The net impact of transfers on Q3 2018 would have been to
increase deposits by £0.7 billion. The net impact of the
transfers on Q4 2017 would have been to increase income by £37
million and operating expenses by £4 million. The variances in
the commentary below have been adjusted for the impact of these
transfers excluding net interest margin.
|
|
2018
compared with 2017 (comparisons adjusted for
transfers)
|
|
●
|
The RBS
International mobile app has been further developed to include new
functionality, allowing customers to manage their finances more
effectively and has 67 thousand users, an increase of 23% from
2017. 71% of wholesale customer payments are now processed using
our newly introduced international banking platform, making the
payments process simpler for customers.
|
●
|
Total
income increased by £54 million, or 10.0%, largely driven by
deposit margin benefits. Institutional Banking contributed 62% to
income in 2018, with Local Banking contributing 32% and Depositary
Services 6%. Net interest margin increased by 35 basis points
primarily driven by the impact of transfers and a change in product
mix.
|
●
|
Operating expenses
increased by £27 million, or 11.6%, due to £39 million
higher back-office costs associated with becoming a non ring-fenced
bank and £5 million of remediation costs, partially offset by
lower conduct and litigation costs.
|
●
|
Impairments
decreased by £5 million reflecting a number of small releases
and improvements in underlying lending quality.
|
●
|
Net
loans to customers remained broadly stable at £13.3 billion
and are split: £9.2 billion within Institutional Banking, of
which £2.2 billion relates to real estate exposures; and
£4.1 billion in Local Banking, of which £2.7 billion
relates to mortgages.
|
●
|
Customer deposits
decreased by £3.1 billion reflecting a large inflow of short
term placements in Institutional Banking in 2017. Customer deposits
represent RBS International’s primary funding source and are
split: £18.1 billion Institutional Banking and £9.4
billion Local Banking.
|
●
|
RWAs
decreased by £0.1 billion, or 1.4%, with model updates offset
by business movements.
|
●
|
During
2018, we repositioned our balance sheet so that excess funds
previously placed with RBS Group are now deployed into funding
customer assets in our new London branch. We have also established
a liquidity portfolio across central and correspondent banks and
sovereign bond holdings. These changes provide continuity for our
customers and support compliance with incoming Basel III Liquidity
Coverage Ratio rules.
|
Q4
2018 compared with Q3 2018 (comparisons adjusted for
transfers)
|
|
●
|
Total
income was broadly stable as an increase in deposit income of
£3 million was offset by a reduction in income resulting from
placing excess funding with central banks. Net interest margin of 1.81% includes
a one-off benefit, and in addition we would expect higher funding
costs in 2019 as we reposition our balance sheet as outlined
above.
|
●
|
Operating expenses
were £26 million higher principally due to the annual UK bank
levy charge of £18 million and increased remediation
spend.
|
●
|
Net
loans to customers increased by £0.2 billion and customer
deposits decreased by £0.1 billion reflecting reductions in
Institutional Banking.
|
Q4
2018 compared with Q4 2017 (comparisons adjusted for
transfers)
|
|
●
|
Total
income increased by £21 million, or 15.6%, driven by deposit
margin benefits.
|
●
|
Operating expenses
increased by £16 million, or 22.9%, due to higher back-office
costs associated with becoming a non ring-fenced bank and increased
remediation costs.
|
Business performance summary
NatWest Markets(1)
|
|
Year ended
|
|
Quarter ended and as at
|
|||
|
|
31 December
|
31 December
|
|
31 December
|
30 September
|
31 December
|
|
|
2018
|
2017
|
|
2018
|
2018
|
2017
|
|
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Total income
|
|
1,442
|
1,050
|
|
152
|
569
|
200
|
Operating expenses
|
|
(1,604)
|
(2,201)
|
|
(455)
|
(478)
|
(583)
|
Impairment releases/(losses)
|
|
92
|
174
|
|
100
|
(4)
|
26
|
Operating (loss)/profit
|
|
(70)
|
(977)
|
|
(203)
|
87
|
(357)
|
Return on equity
|
|
(2.0%)
|
(9.0%)
|
|
(9.2%)
|
1.8%
|
(14.0%)
|
|
|
|
|
|
£bn
|
£bn
|
£bn
|
Funded assets
|
|
|
|
|
111.4
|
120.9
|
118.7
|
RWAs
|
|
|
|
|
44.9
|
46.5
|
52.9
|
Note:
(1)
|
The
NatWest Markets operating segment should not be assumed to be the
same as the NatWest Markets Plc legal entity or group. Refer to
page 2 for further details on the outlook for NatWest Markets
Plc.
|
Comparisons
with prior periods are impacted by the transfer of shipping and
other activities to Commercial Banking and the transfer of whole
business securitisations and Relevant Financial Institutions from
Commercial Banking in preparation for ring-fencing. The net impact
of the transfers on 2017 would have been to increase income by
£104 million, reduce operating expenses by £2 million,
reduce the net release of impairments by £72 million and
increase funded assets by £1.3 billion and RWAs by £0.4
billion. The variances in the full year commentary below have been
adjusted for the impact of these transfers.
|
|
2018
compared with 2017 (comparisons adjusted for
transfers)
|
|
●
|
NatWest
Markets continues to focus on customer service and is increasingly
using technology to enhance the way it provides innovative
financial solutions to its customers and partners. For example,
FXmicropay makes it simpler for businesses operating globally to
accept payments in multiple currencies, reducing costs and
increasing revenues for our customers. Our success in harnessing
technology has been recognised with two awards: Best in Service
Globally among Corporates for Algorithmic trading in the 2018
Euromoney FX Survey and Best Order Management award in the Profit
& Loss 2018 Digital FX Awards.
|
●
|
Total
income increased by £288 million, or 25.0%, primarily
reflecting lower disposal losses in the legacy business and a
£165 million indemnity insurance recovery, partially offset by
lower income in the core business. The reduction in the core
business was driven by challenging fixed income, currencies and
commodities (FICC) market conditions in Q4 2018, together with
turbulence in European bond markets earlier in the
year.
|
●
|
Operating expenses
decreased by £595 million, or 27.1%. This reflects reductions
in other expenses across both the core and legacy businesses, down
£313 million to £1,213 million, lower strategic costs,
down £198 million to £238 million, and reduced litigation
and conduct costs, down £84 million to £153
million.
|
●
|
The net
impairment release decreased by £10 million to £92
million reflecting a lower level of legacy releases.
|
●
|
Funded
assets decreased by £8.6 billion, or 7.2%, reflecting the wind
down of the legacy business.
|
●
|
RWAs
decreased by £8.4 billion to £44.9 billion, including
RWAs for Alawwal bank of £5.9 billion. The decrease was driven
by the legacy business, down £7.1 billion, in addition to
reductions in the core business.
|
Q4
2018 compared with Q3 2018
|
|
●
|
Total
income decreased by £417 million, primarily reflecting legacy
disposal losses of £43 million in the quarter compared to the
prior quarter that included a £165 million indemnity insurance
recovery, and the impact of challenging FICC market conditions in
the core business.
|
●
|
Operating expenses
decreased by £23 million principally due to lower litigation
and conduct costs, partially offset by the annual UK bank levy
charge of £27 million.
|
●
|
The net
impairment release of £100 million was driven by a small
number of one-off releases.
|
●
|
RWAs
decreased by £1.6 billion driven by reductions in the core
business.
|
Q4
2018 compared with Q4 2017
|
|
●
|
Total
income decreased by £48 million, or 24.0%, primarily
reflecting lower income in the core business driven by the
challenging FICC market conditions in Q4 2018.
|
●
|
Operating expenses
decreased by £128 million principally reflecting reductions in
both the core and legacy businesses and lower strategic and
litigation and conduct costs.
|
Central items & other
●
|
Central
items not allocated represented a charge of £1,038 million in
2018, largely comprises the £1,040 million charge relating to
the civil settlement with the US Department of Justice and
£333m of strategic costs, partially offset by a £241
million provision release relating to an RMBS litigation indemnity
and indemnity insurance recoveries of £192
million.
|
Business performance summary
|
|
|
|
|
End-point CRR basis
|
||
|
31 December
|
30 September
|
31 December
|
|
2018
|
2018
|
2017
|
Risk asset ratios
|
%
|
%
|
%
|
|
|
|
|
CET1
|
16.2
|
16.7
|
15.9
|
Tier 1
|
18.4
|
18.8
|
17.9
|
Total
|
21.8
|
22.1
|
21.3
|
|
|
|
|
Capital
|
£m
|
£m
|
£m
|
Tangible equity
|
34,566
|
34,672
|
35,164
|
|
|
|
|
Expected loss less impairment provisions
|
(654)
|
(606)
|
(1,286)
|
Prudential valuation adjustment
|
(494)
|
(574)
|
(496)
|
Deferred tax assets
|
(740)
|
(731)
|
(849)
|
Own credit adjustments
|
(405)
|
(264)
|
(90)
|
Pension fund assets
|
(394)
|
(283)
|
(287)
|
Cash flow hedging reserve
|
191
|
370
|
(227)
|
Foreseeable ordinary and special dividends
|
(1,326)
|
(120)
|
-
|
Other adjustments for regulatory purposes
|
(105)
|
(9)
|
28
|
|
|
|
|
Total deductions
|
(3,927)
|
(2,217)
|
(3,207)
|
CET1 capital
|
30,639
|
32,455
|
31,957
|
AT1 capital
|
4,051
|
4,051
|
4,041
|
Tier 1 capital
|
34,690
|
36,506
|
35,998
|
Tier 2 capital
|
6,483
|
6,455
|
6,765
|
|
|
|
|
Total regulatory capital
|
41,173
|
42,961
|
42,763
|
|
|
|
|
Risk-weighted assets
|
|
|
|
|
|
|
|
Credit risk
|
137,900
|
142,500
|
144,700
|
Counterparty credit risk
|
13,600
|
14,100
|
15,400
|
Market risk
|
14,800
|
15,500
|
17,000
|
Operational risk
|
22,400
|
22,400
|
23,800
|
|
|
|
|
Total RWAs
|
188,700
|
194,500
|
200,900
|
|
|
|
|
Leverage (1)
|
|
|
|
Cash and balances at central banks
|
88,900
|
106,500
|
98,300
|
Trading assets
|
75,100
|
82,500
|
86,000
|
Derivatives
|
133,300
|
132,600
|
160,800
|
Net loans to customers
|
318,000
|
317,700
|
321,600
|
Other assets
|
78,900
|
80,600
|
71,400
|
|
|
|
|
Total assets
|
694,200
|
719,900
|
738,100
|
Derivatives
|
|
|
|
- netting and variation margin
|
(141,300)
|
(136,900)
|
(161,700)
|
- potential future exposures
|
42,100
|
42,700
|
49,400
|
Securities financing transactions gross up
|
2,100
|
1,700
|
2,300
|
Undrawn commitments
|
50,300
|
49,500
|
53,100
|
Regulatory deductions and other adjustments
|
(2,900)
|
(700)
|
(2,100)
|
|
|
|
|
CRR Leverage exposure
|
644,500
|
676,200
|
679,100
|
|
|
|
|
CRR leverage ratio%
|
5.4
|
5.4
|
5.3
|
|
|
|
|
UK leverage exposure (2)
|
559,500
|
580,300
|
587,100
|
|
|
|
|
UK leverage ratio% (2)
|
6.2
|
6.3
|
6.1
|
Notes:
(1)
|
Based
on end-point CRR Tier 1 capital and leverage exposure under the CRR
Delegated Act.
|
(2)
|
Based
on end-point CRR Tier 1 capital and UK leverage exposures
reflecting the post EU referendum measures announced by the Bank of
England in the third quarter of 2016.
|
Segment performance
|
Year ended 31 December 2018
|
|||||||||
PBB
|
|
CPB
|
|
|
|
Central
|
|
|||
|
|
Ulster
|
|
Commercial
|
Private
|
RBS
|
|
NatWest
|
items &
|
Total
|
|
UK PBB
|
Bank RoI
|
|
Banking
|
Banking
|
International
|
|
Markets
|
other (1)
|
RBS
|
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Income statement
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
5,098
|
444
|
|
2,040
|
518
|
466
|
|
112
|
(22)
|
8,656
|
Other non-interest income
|
1,184
|
166
|
|
1,334
|
257
|
128
|
|
1,238
|
347
|
4,654
|
Own credit adjustments
|
-
|
-
|
|
-
|
-
|
-
|
|
92
|
-
|
92
|
Total income
|
6,282
|
610
|
|
3,374
|
775
|
594
|
|
1,442
|
325
|
13,402
|
Direct expenses - staff costs
|
(890)
|
(202)
|
|
(547)
|
(161)
|
(102)
|
|
(557)
|
(1,190)
|
(3,649)
|
- other
costs
|
(300)
|
(103)
|
|
(221)
|
(66)
|
(67)
|
|
(241)
|
(2,712)
|
(3,710)
|
Indirect expenses
|
(1,801)
|
(185)
|
|
(957)
|
(229)
|
(91)
|
|
(415)
|
3,678
|
-
|
Strategic costs - direct
|
(54)
|
(2)
|
|
(20)
|
-
|
(3)
|
|
(195)
|
(730)
|
(1,004)
|
-
indirect
|
(221)
|
(20)
|
|
(86)
|
(21)
|
(6)
|
|
(43)
|
397
|
-
|
Litigation and conduct costs
|
(216)
|
(71)
|
|
(41)
|
(1)
|
9
|
|
(153)
|
(809)
|
(1,282)
|
Operating expenses
|
(3,482)
|
(583)
|
|
(1,872)
|
(478)
|
(260)
|
|
(1,604)
|
(1,366)
|
(9,645)
|
Operating profit/(loss) before impairment
(losses)/releases
|
2,800
|
27
|
|
1,502
|
297
|
334
|
|
(162)
|
(1,041)
|
3,757
|
Impairment (losses)/releases
|
(342)
|
(15)
|
|
(144)
|
6
|
2
|
|
92
|
3
|
(398)
|
Operating profit/(loss)
|
2,458
|
12
|
|
1,358
|
303
|
336
|
|
(70)
|
(1,038)
|
3,359
|
Additional information
|
|
|
|
|
|
|
|
|
|
|
Return on equity (2)
|
24.3%
|
0.5%
|
|
10.2%
|
15.4%
|
24.4%
|
|
(2.0%)
|
nm
|
4.8%
|
Cost:income ratio (3)
|
55.4%
|
95.6%
|
|
53.8%
|
61.7%
|
43.8%
|
|
111.2%
|
nm
|
71.7%
|
Loan impairment rate
|
0.21%
|
0.08%
|
|
0.16%
|
nm
|
nm
|
|
nm
|
nm
|
0.13%
|
Net interest margin
|
2.78%
|
1.79%
|
|
1.67%
|
2.52%
|
1.71%
|
|
0.40%
|
nm
|
1.98%
|
Third party customer asset rate (4)
|
3.40%
|
2.41%
|
|
2.87%
|
2.89%
|
2.15%
|
|
nm
|
nm
|
nm
|
Third party customer funding rate
|
(0.30%)
|
(0.20%)
|
|
(0.36%)
|
(0.25%)
|
(0.09%)
|
|
nm
|
nm
|
nm
|
Average interest earning assets (£bn)
|
183.6
|
24.8
|
|
122.4
|
20.5
|
27.3
|
|
27.9
|
30.4
|
436.9
|
Total assets (£bn)
|
194.2
|
25.2
|
|
143.2
|
22.0
|
28.4
|
|
244.5
|
36.7
|
694.2
|
Funded assets (£bn)
|
194.2
|
25.2
|
|
143.2
|
22.0
|
28.4
|
|
111.4
|
36.5
|
560.9
|
Net loans to customers - amortised cost (£bn)
|
162.3
|
18.8
|
|
88.0
|
14.3
|
13.3
|
|
8.4
|
-
|
305.1
|
Impairment provisions (£bn)(5)
|
(1.4)
|
(0.8)
|
|
(1.0)
|
nm
|
nm
|
|
(0.1)
|
-
|
(3.3)
|
Customer deposits (£bn)
|
184.1
|
18.0
|
|
95.6
|
28.4
|
27.5
|
|
2.6
|
4.7
|
360.9
|
Risk-weighted assets (RWAs) (£bn)
|
45.1
|
14.7
|
|
67.6
|
9.4
|
6.9
|
|
44.9
|
0.1
|
188.7
|
RWA equivalent (RWAes) (£bn)
|
46.6
|
14.7
|
|
68.6
|
9.5
|
6.9
|
|
50.0
|
0.2
|
196.5
|
Employee numbers (FTEs - thousands) (6)
|
24.1
|
3.1
|
|
7.9
|
1.9
|
1.7
|
|
4.8
|
23.6
|
67.1
|
|
|
|
|
|
|
|
|
|
|
|
For the notes to this table, refer to page 21. nm = not
meaningful
|
|
|
|
|
|
|
|
|
|
Segment performance
|
Year ended 31 December 2017
|
|||||||||
PBB
|
|
CPB
|
|
|
|
Central
|
|
|||
|
|
Ulster
|
|
Commercial
|
Private
|
RBS
|
|
NatWest
|
items &
|
Total
|
|
UK PBB
|
Bank RoI
|
|
Banking
|
Banking
|
International
|
|
Markets
|
other (1)
|
RBS
|
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Income statement
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
5,130
|
421
|
|
2,286
|
464
|
325
|
|
203
|
158
|
8,987
|
Other non-interest income
|
1,347
|
186
|
|
1,198
|
214
|
64
|
|
887
|
(21)
|
3,875
|
Own credit adjustments
|
-
|
(3)
|
|
-
|
-
|
-
|
|
(66)
|
-
|
(69)
|
Loss on redemption of own debt
|
-
|
-
|
|
-
|
-
|
-
|
|
-
|
(7)
|
(7)
|
Strategic disposals
|
-
|
-
|
|
-
|
-
|
-
|
|
26
|
321
|
347
|
Total income
|
6,477
|
604
|
|
3,484
|
678
|
389
|
|
1,050
|
451
|
13,133
|
Direct expenses - staff costs
|
(773)
|
(191)
|
|
(467)
|
(145)
|
(61)
|
|
(677)
|
(1,609)
|
(3,923)
|
- other
costs
|
(259)
|
(66)
|
|
(232)
|
(32)
|
(25)
|
|
(287)
|
(2,727)
|
(3,628)
|
Indirect expenses
|
(2,126)
|
(194)
|
|
(1,115)
|
(268)
|
(116)
|
|
(564)
|
4,383
|
-
|
Strategic costs - direct
|
(79)
|
(27)
|
|
(48)
|
(20)
|
(5)
|
|
(319)
|
(1,067)
|
(1,565)
|
-
indirect
|
(382)
|
(29)
|
|
(119)
|
(25)
|
(4)
|
|
(117)
|
676
|
-
|
Litigation and conduct costs
|
(210)
|
(169)
|
|
(33)
|
(39)
|
(8)
|
|
(237)
|
(589)
|
(1,285)
|
Operating expenses
|
(3,829)
|
(676)
|
|
(2,014)
|
(529)
|
(219)
|
|
(2,201)
|
(933)
|
(10,401)
|
Operating profit/(loss) before impairment
(losses)/releases
|
2,648
|
(72)
|
|
1,470
|
149
|
170
|
|
(1,151)
|
(482)
|
2,732
|
Impairment (losses)/releases
|
(235)
|
(60)
|
|
(362)
|
(6)
|
(3)
|
|
174
|
(1)
|
(493)
|
Operating profit/(loss)
|
2,413
|
(132)
|
|
1,108
|
143
|
167
|
|
(977)
|
(483)
|
2,239
|
Additional information
|
|
|
|
|
|
|
|
|
|
|
Return on equity (2)
|
23.7%
|
(5.0%)
|
|
6.6%
|
6.4%
|
11.2%
|
|
(9.0%)
|
nm
|
2.2%
|
Cost:income ratio (3)
|
59.1%
|
111.9%
|
|
56.0%
|
78.0%
|
56.3%
|
|
nm
|
nm
|
79.0%
|
Loan impairment rate
|
0.14%
|
0.29%
|
|
0.37%
|
nm
|
nm
|
|
nm
|
nm
|
0.16%
|
Net interest margin
|
2.86%
|
1.67%
|
|
1.74%
|
2.47%
|
1.36%
|
|
0.65%
|
nm
|
2.13%
|
Third party customer asset rate (4)
|
3.47%
|
2.38%
|
|
2.73%
|
2.71%
|
2.71%
|
|
nm
|
nm
|
nm
|
Third party customer funding rate
|
(0.16%)
|
(0.31%)
|
|
(0.15%)
|
(0.09%)
|
(0.02%)
|
|
nm
|
nm
|
nm
|
Average interest earning assets (£bn)
|
179.5
|
25.2
|
|
131.2
|
18.8
|
23.9
|
|
31.2
|
12.5
|
422.3
|
Total assets (£bn)
|
190.6
|
24.6
|
|
149.5
|
20.3
|
25.9
|
|
277.9
|
49.3
|
738.1
|
Funded assets (£bn)
|
190.6
|
24.5
|
|
149.5
|
20.3
|
25.9
|
|
118.7
|
47.7
|
577.2
|
Net loans to customers - amortised cost (£bn)
|
161.7
|
19.5
|
|
96.9
|
13.5
|
8.7
|
|
9.7
|
0.1
|
310.1
|
Impairment provisions (£bn) (5)
|
(1.3)
|
(1.1)
|
|
(1.2)
|
-
|
-
|
|
(0.2)
|
-
|
(3.8)
|
Customer deposits (£bn)
|
180.4
|
16.9
|
|
98.0
|
26.9
|
28.9
|
|
3.3
|
6.9
|
361.3
|
Risk-weighted assets (RWAs) (£bn)
|
43.0
|
18.0
|
|
71.8
|
9.1
|
5.1
|
|
52.9
|
1.0
|
200.9
|
RWA equivalent (RWAes) (£bn)
|
46.7
|
18.9
|
|
76.8
|
9.1
|
5.2
|
|
56.4
|
1.1
|
214.2
|
Employee numbers (FTEs - thousands) (6)
|
19.8
|
2.7
|
|
4.6
|
1.5
|
1.6
|
|
5.7
|
35.3
|
71.2
|
|
|
|
|
|
|
|
|
|
|
|
For the notes to this table, refer to page 21. nm = not
meaningful
|
|
|
|
|
|
|
|
|
|
Segment performance
|
Quarter ended 31 December 2018
|
|||||||||
|
PBB
|
|
CPB
|
|
|
|
Central
|
|
||
|
|
Ulster
|
|
Commercial
|
Private
|
RBS
|
|
NatWest
|
items &
|
Total
|
|
UK PBB
|
Bank RoI
|
|
Banking
|
Banking
|
International
|
|
Markets
|
other (1)
|
RBS
|
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Income statement
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
1,267
|
110
|
|
518
|
133
|
123
|
|
30
|
(5)
|
2,176
|
Other non-interest income
|
290
|
37
|
|
287
|
65
|
32
|
|
89
|
49
|
849
|
Own credit adjustments
|
-
|
-
|
|
-
|
-
|
-
|
|
33
|
-
|
33
|
Total income
|
1,557
|
147
|
|
805
|
198
|
155
|
|
152
|
44
|
3,058
|
Direct expenses - staff costs
|
(208)
|
(53)
|
|
(143)
|
(39)
|
(25)
|
|
(128)
|
(263)
|
(859)
|
-
other costs
|
(93)
|
(27)
|
|
(64)
|
(22)
|
(22)
|
|
(65)
|
(870)
|
(1,163)
|
Indirect expenses
|
(522)
|
(52)
|
|
(295)
|
(72)
|
(35)
|
|
(123)
|
1,099
|
-
|
Strategic costs - direct
|
(28)
|
(3)
|
|
(4)
|
-
|
(1)
|
|
(89)
|
(230)
|
(355)
|
-
indirect
|
(84)
|
(12)
|
|
(36)
|
(10)
|
(2)
|
|
(22)
|
166
|
-
|
Litigation and conduct costs
|
(6)
|
(17)
|
|
(38)
|
-
|
(1)
|
|
(28)
|
(2)
|
(92)
|
Operating expenses
|
(941)
|
(164)
|
|
(580)
|
(143)
|
(86)
|
|
(455)
|
(100)
|
(2,469)
|
Operating profit/(loss) before impairment
(losses)/releases
|
616
|
(17)
|
|
225
|
55
|
69
|
|
(303)
|
(56)
|
589
|
Impairment (losses)/releases
|
(125)
|
19
|
|
(22)
|
8
|
2
|
|
100
|
1
|
(17)
|
Operating profit/(loss)
|
491
|
2
|
|
203
|
63
|
71
|
|
(203)
|
(55)
|
572
|
Additional information
|
|
|
|
|
|
|
|
|
|
|
Return on equity (2)
|
18.6%
|
0.4%
|
|
5.5%
|
12.3%
|
20.0%
|
|
(9.2%)
|
nm
|
3.5%
|
Cost:income ratio (3)
|
60.4%
|
111.6%
|
|
70.9%
|
72.2%
|
55.5%
|
|
nm
|
nm
|
80.5%
|
Loan impairment rate
|
0.31%
|
(0.39%)
|
|
0.10%
|
nm
|
nm
|
|
nm
|
nm
|
0.02%
|
Net interest margin
|
2.73%
|
1.73%
|
|
1.66%
|
2.49%
|
1.81%
|
|
0.39%
|
nm
|
1.95%
|
Third party customer asset rate (4)
|
3.39%
|
2.43%
|
|
3.06%
|
2.94%
|
1.73%
|
|
nm
|
nm
|
nm
|
Third party customer funding rate
|
(0.35%)
|
(0.18%)
|
|
(0.50%)
|
(0.38%)
|
(0.08%)
|
|
nm
|
nm
|
nm
|
Average interest earning assets (£bn)
|
184.2
|
25.2
|
|
124.2
|
21.2
|
26.9
|
|
30.4
|
30.0
|
442.1
|
Total assets (£bn)
|
194.2
|
25.2
|
|
143.2
|
22.0
|
28.4
|
|
244.5
|
36.7
|
694.2
|
Funded assets (£bn)
|
194.2
|
25.2
|
|
143.2
|
22.0
|
28.4
|
|
111.4
|
36.5
|
560.9
|
Net loans to customers - amortised cost (£bn)
|
162.3
|
18.8
|
|
88.0
|
14.3
|
13.3
|
|
8.4
|
-
|
305.1
|
Impairment provisions (£bn) (5)
|
(1.4)
|
(0.8)
|
|
(1.0)
|
-
|
nm
|
|
(0.1)
|
-
|
(3.3)
|
Customer deposits (£bn)
|
184.1
|
18.0
|
|
95.6
|
28.4
|
27.5
|
|
2.6
|
4.7
|
360.9
|
Risk-weighted assets (RWAs) (£bn)
|
45.1
|
14.7
|
|
67.6
|
9.4
|
6.9
|
|
44.9
|
0.1
|
188.7
|
RWA equivalent (RWAes) (£bn)
|
46.6
|
14.7
|
|
68.6
|
9.5
|
6.9
|
|
50.0
|
0.2
|
196.5
|
Employee numbers (FTEs - thousands) (6)
|
24.1
|
3.1
|
|
7.9
|
1.9
|
1.7
|
|
4.8
|
23.6
|
67.1
|
For the notes to this table refer to page 21. nm = not
meaningful.
|
|
|
|
|
|
Segment performance
|
Quarter ended 30 September 2018
|
|||||||||
PBB
|
|
CPB
|
|
|
|
Central
|
|
|||
|
|
Ulster
|
|
Commercial
|
Private
|
RBS
|
|
NatWest
|
items &
|
Total
|
|
UK PBB
|
Bank RoI
|
|
Banking
|
Banking
|
International
|
|
Markets
|
other (1)
|
RBS
|
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Income statement
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
1,289
|
110
|
|
525
|
133
|
124
|
|
15
|
(42)
|
2,154
|
Other non-interest income
|
275
|
41
|
|
264
|
62
|
31
|
|
534
|
261
|
1,468
|
Own credit adjustments
|
-
|
-
|
|
-
|
-
|
-
|
|
20
|
-
|
20
|
Total income
|
1,564
|
151
|
|
789
|
195
|
155
|
|
569
|
219
|
3,642
|
Direct expenses - staff costs
|
(221)
|
(51)
|
|
(131)
|
(39)
|
(26)
|
|
(120)
|
(299)
|
(887)
|
- other
costs
|
(76)
|
(31)
|
|
(57)
|
(16)
|
(12)
|
|
(61)
|
(613)
|
(866)
|
Indirect expenses
|
(415)
|
(45)
|
|
(221)
|
(52)
|
(19)
|
|
(91)
|
843
|
-
|
Strategic costs - direct
|
-
|
(1)
|
|
(8)
|
1
|
(2)
|
|
(78)
|
(211)
|
(299)
|
-
indirect
|
(41)
|
(2)
|
|
(17)
|
(4)
|
(1)
|
|
(15)
|
80
|
-
|
Litigation and conduct costs
|
(206)
|
(37)
|
|
(9)
|
-
|
-
|
|
(113)
|
(24)
|
(389)
|
Operating expenses
|
(959)
|
(167)
|
|
(443)
|
(110)
|
(60)
|
|
(478)
|
(224)
|
(2,441)
|
Operating profit/(loss) before impairment
(losses)/releases
|
605
|
(16)
|
|
346
|
85
|
95
|
|
91
|
(5)
|
1,201
|
Impairment (losses)/releases
|
(70)
|
(60)
|
|
(103)
|
(1)
|
(3)
|
|
(4)
|
1
|
(240)
|
Operating profit/(loss)
|
535
|
(76)
|
|
243
|
84
|
92
|
|
87
|
(4)
|
961
|
Additional information
|
|
|
|
|
|
|
|
|
|
|
Return on equity (2)
|
20.9%
|
(12.7%)
|
|
6.6%
|
17.3%
|
26.9%
|
|
1.8%
|
nm
|
5.4%
|
Cost:income ratio (3)
|
61.3%
|
110.6%
|
|
54.3%
|
56.4%
|
38.7%
|
|
84.0%
|
nm
|
66.7%
|
Loan impairment rate
|
0.17%
|
1.18%
|
|
0.46%
|
nm
|
nm
|
|
nm
|
nm
|
0.31%
|
Net interest margin
|
2.76%
|
1.72%
|
|
1.71%
|
2.54%
|
1.73%
|
|
0.22%
|
nm
|
1.93%
|
Third party customer asset rate (4)
|
3.39%
|
2.42%
|
|
2.89%
|
2.91%
|
2.29%
|
|
nm
|
nm
|
nm
|
Third party customer funding rate
|
(0.29%)
|
(0.20%)
|
|
(0.33%)
|
(0.26%)
|
(0.11%)
|
|
nm
|
nm
|
nm
|
Average interest earning assets (£bn)
|
185.2
|
25.4
|
|
122.0
|
20.8
|
28.4
|
|
26.7
|
34.6
|
443.1
|
Total assets (£bn)
|
195.6
|
25.3
|
|
144.0
|
21.4
|
29.0
|
|
253.3
|
51.3
|
719.9
|
Funded assets (£bn)
|
195.6
|
25.3
|
|
144.0
|
21.4
|
29.0
|
|
120.9
|
51.1
|
587.3
|
Net loans to customers - amortised cost (£bn)
|
163.2
|
19.2
|
|
88.3
|
14.2
|
13.0
|
|
8.0
|
(0.1)
|
305.8
|
Impairment provisions (£bn) (5)
|
(1.4)
|
(1.2)
|
|
(1.0)
|
(0.1)
|
-
|
|
(0.2)
|
-
|
(3.9)
|
Customer deposits (£bn)
|
183.4
|
17.9
|
|
96.4
|
27.2
|
26.9
|
|
2.6
|
6.2
|
360.6
|
Risk-weighted assets (RWAs) (£bn)
|
45.4
|
16.5
|
|
69.0
|
9.5
|
6.9
|
|
46.5
|
0.7
|
194.5
|
RWA equivalent (RWAes) (£bn)
|
47.1
|
16.6
|
|
72.5
|
9.5
|
6.9
|
|
49.9
|
0.7
|
203.2
|
Employee numbers (FTEs - thousands) (6)
|
24.8
|
3.1
|
|
8.1
|
1.9
|
1.7
|
|
4.9
|
24.1
|
68.6
|
|
|
|
|
|
|
|
|
|
|
|
For the notes to this table, refer to page 21. nm = not
meaningful
|
|
|
|
|
|
|
|
|
|
Segment performance
|
Quarter ended 31 December 2017
|
|||||||||
|
PBB
|
|
CPB
|
|
|
|
Central
|
|
||
|
|
Ulster
|
|
Commercial
|
Private
|
RBS
|
|
NatWest
|
items &
|
Total
|
|
UK PBB
|
Bank RoI
|
|
Banking
|
Banking
|
International
|
|
Markets
|
other (1)
|
RBS
|
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
Income statement
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
1,272
|
111
|
|
575
|
122
|
81
|
|
38
|
12
|
2,211
|
Other non-interest income
|
276
|
50
|
|
231
|
69
|
16
|
|
127
|
(123)
|
646
|
Own credit adjustments
|
-
|
-
|
|
-
|
-
|
-
|
|
9
|
-
|
9
|
Strategic disposals
|
-
|
-
|
|
-
|
-
|
-
|
|
26
|
165
|
191
|
Total income
|
1,548
|
161
|
|
806
|
191
|
97
|
|
200
|
54
|
3,057
|
Direct expenses - staff costs
|
(189)
|
(45)
|
|
(109)
|
(35)
|
(25)
|
|
(153)
|
(372)
|
(928)
|
-
other costs
|
(73)
|
(25)
|
|
(66)
|
(14)
|
(15)
|
|
(83)
|
(907)
|
(1,183)
|
Indirect expenses
|
(554)
|
(45)
|
|
(344)
|
(78)
|
(23)
|
|
(154)
|
1,198
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Strategic costs - direct
|
(55)
|
(2)
|
|
(6)
|
(19)
|
(3)
|
|
(129)
|
(317)
|
(531)
|
-
indirect
|
(198)
|
(2)
|
|
(23)
|
(9)
|
-
|
|
(13)
|
245
|
-
|
Litigation and conduct costs
|
(197)
|
(135)
|
|
(27)
|
(39)
|
-
|
|
(51)
|
(315)
|
(764)
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
(1,266)
|
(254)
|
|
(575)
|
(194)
|
(66)
|
|
(583)
|
(468)
|
(3,406)
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit/(loss) before impairment
(losses)/releases
|
282
|
(93)
|
|
231
|
(3)
|
31
|
|
(383)
|
(414)
|
(349)
|
Impairment (losses)/releases
|
(60)
|
(81)
|
|
(117)
|
(2)
|
-
|
|
26
|
-
|
(234)
|
Operating profit/(loss)
|
222
|
(174)
|
|
114
|
(5)
|
31
|
|
(357)
|
(414)
|
(583)
|
|
|
|
|
|
|
|
|
|
|
|
Additional information
|
|
|
|
|
|
|
|
|
|
|
Return on equity (2)
|
7.8%
|
(26.5%)
|
|
1.3%
|
(2.9%)
|
9.2%
|
|
(14.0%)
|
nm
|
(6.7%)
|
Cost:income ratio (3)
|
81.8%
|
157.8%
|
|
70.0%
|
101.6%
|
68.0%
|
|
nm
|
nm
|
111.5%
|
Loan impairment rate
|
0.15%
|
1.57%
|
|
0.48%
|
nm
|
nm
|
|
nm
|
nm
|
0.30%
|
Net interest margin
|
2.76%
|
1.76%
|
|
1.75%
|
2.44%
|
1.34%
|
|
0.55%
|
nm
|
2.04%
|
Third party customer asset rate (4)
|
3.38%
|
2.47%
|
|
2.77%
|
2.76%
|
2.59%
|
|
nm
|
nm
|
nm
|
Third party customer funding rate
|
(0.21%)
|
(0.24%)
|
|
(0.20%)
|
(0.11%)
|
(0.03%)
|
|
nm
|
nm
|
nm
|
Average interest earning assets (£bn)
|
182.6
|
25.1
|
|
130.1
|
19.8
|
24.1
|
|
27.4
|
21.8
|
430.9
|
Total assets (£bn)
|
190.6
|
24.6
|
|
149.5
|
20.3
|
25.9
|
|
277.9
|
49.3
|
738.1
|
Funded assets (£bn)
|
190.6
|
24.5
|
|
149.5
|
20.3
|
25.9
|
|
118.7
|
47.7
|
577.2
|
Net loans to customers - amortised cost (£bn)
|
161.7
|
19.5
|
|
96.9
|
13.5
|
8.7
|
|
9.7
|
0.1
|
310.1
|
Impairment provisions (£bn) (5)
|
(1.3)
|
(1.1)
|
|
(1.2)
|
-
|
-
|
|
(0.2)
|
-
|
(3.8)
|
Customer deposits (£bn)
|
180.4
|
16.9
|
|
98.0
|
26.9
|
28.9
|
|
3.3
|
6.9
|
361.3
|
Risk-weighted assets (RWAs) (£bn)
|
43.0
|
18.0
|
|
71.8
|
9.1
|
5.1
|
|
52.9
|
1.0
|
200.9
|
RWA equivalent (RWAes) (£bn)
|
46.7
|
18.9
|
|
76.8
|
9.1
|
5.2
|
|
56.4
|
1.1
|
214.2
|
Employee numbers (FTEs - thousands) (6)
|
19.8
|
2.7
|
|
4.6
|
1.5
|
1.6
|
|
5.7
|
35.3
|
71.2
|
For the notes to this table refer to the following page. nm = not
meaningful.
|
|
|
|
|
|
Condensed consolidated income statement for the period ended 31
December 2018
|
Year ended
|
|
Quarter ended
|
|||
|
31 December
|
31 December
|
|
31 December
|
30 September
|
31 December
|
2018
|
2017
|
|
2018
|
2018
|
2017
|
|
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
|
|
|
|
|
|
|
Interest receivable
|
11,049
|
11,034
|
|
2,825
|
2,780
|
2,754
|
Interest payable
|
(2,393)
|
(2,047)
|
|
(649)
|
(626)
|
(543)
|
|
|
|
|
|
|
|
Net interest income (1)
|
8,656
|
8,987
|
|
2,176
|
2,154
|
2,211
|
|
|
|
|
|
|
|
Fees and commissions receivable
|
3,218
|
3,338
|
|
785
|
787
|
846
|
Fees and commissions payable
|
(861)
|
(883)
|
|
(190)
|
(220)
|
(231)
|
Income from trading activities
|
1,507
|
634
|
|
161
|
499
|
(198)
|
Loss on redemption of own debt
|
-
|
(7)
|
|
-
|
-
|
-
|
Other operating income
|
882
|
1,064
|
|
126
|
422
|
429
|
|
|
|
|
|
|
|
Non-interest income
|
4,746
|
4,146
|
|
882
|
1,488
|
846
|
|
|
|
|
|
|
|
Total income
|
13,402
|
13,133
|
|
3,058
|
3,642
|
3,057
|
|
|
|
|
|
|
|
Staff costs
|
(4,122)
|
(4,676)
|
|
(1,014)
|
(1,022)
|
(1,100)
|
Premises and equipment
|
(1,383)
|
(1,565)
|
|
(411)
|
(328)
|
(524)
|
Other administrative expenses
|
(3,372)
|
(3,323)
|
|
(851)
|
(885)
|
(1,587)
|
Depreciation and amortisation
|
(731)
|
(808)
|
|
(187)
|
(206)
|
(178)
|
Write down of other intangible assets
|
(37)
|
(29)
|
|
(6)
|
-
|
(17)
|
|
|
|
|
|
|
|
Operating expenses
|
(9,645)
|
(10,401)
|
|
(2,469)
|
(2,441)
|
(3,406)
|
|
|
|
|
|
|
|
Profit/(loss) before impairment losses
|
3,757
|
2,732
|
|
589
|
1,201
|
(349)
|
Impairment losses
|
(398)
|
(493)
|
|
(17)
|
(240)
|
(234)
|
|
|
|
|
|
|
|
Operating profit/(loss) before tax
|
3,359
|
2,239
|
|
572
|
961
|
(583)
|
Tax charge/(credit)
|
(1,275)
|
(824)
|
|
(136)
|
(398)
|
168
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) for the period
|
2,084
|
1,415
|
|
436
|
563
|
(415)
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
|
Ordinary shareholders
|
1,622
|
752
|
|
286
|
448
|
(579)
|
Other owners
|
470
|
628
|
|
164
|
93
|
150
|
Non-controlling interests
|
(8)
|
35
|
|
(14)
|
22
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings/(loss) per ordinary share
|
13.5p
|
6.3p
|
|
2.4p
|
3.7p
|
(4.9p)
|
Earnings/(loss) per ordinary share - fully diluted
|
13.4p
|
6.3p
|
|
2.3p
|
3.7p
|
(4.9p)
|
Notes:
(1)
|
Negative
interest on loans is reported as interest payable. Negative
interest on customer deposits is reported as interest
receivable.
|
Notes to segment performance on pages 16 to 20.
Notes:
(1)
|
Central
items & other include unallocated transactions which
principally comprise RMBS related charges.
|
(2)
|
RBS’s
CET 1 target is approximately 14% 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 share dividends is divided by
average notional equity allocated at different rates of 14% (Ulster
Bank RoI), 11% (Commercial Banking), 13.5% (Private Banking –
14% from Q1 2017 to Q4 2017), 16% (RBS International – 12%
prior to November 2017) and 15% for all other segments, of the
monthly average of segmental risk-weighted assets equivalents
(RWAes) incorporating the effect of capital deductions. RBS Return
on equity is calculated using profit for the period attributable to
ordinary shareholders.
|
(3)
|
Operating
lease depreciation included in income for the year ended 31
December 2018 - £121 million; Q4 2018 - £32 million; Q3
2018 - £32 million; 31 December 2017 - £142 million; Q4
2017 - £35 million.
|
(4)
|
Ulster
Bank Ireland DAC manages its funding and liquidity requirements
locally. Its liquid asset portfolios and non-customer related
funding sources are included within its net interest margin, but
excluded from its third party asset and liability
rates.
|
(5)
|
Prepared
under IFRS 9. Refer to Note 2 of this document and Note 34 of the
Annual Report and Accounts for further details.
|
(6)
|
On 1
January 2017, 4,500 employees on a FTE basis were transferred from
Central items & other to NatWest Markets in preparation for
ring-fencing. On 1 October 2017, 800 employees on a FTE basis were
transferred from Central items & other to RBS International,
also in preparation for ring-fencing. On 1 January 2018, 7,600
employees on a FTE basis were transferred from Central items to UK
PBB, 200 to Ulster Bank RoI, 3,700 to Commercial Banking and 400 to
Private Banking.
|
Condensed consolidated statement of comprehensive income for the
period ended 31 December 2018
|
Year ended
|
|
Quarter ended
|
|||
|
31 December
|
31 December
|
|
31 December
|
30 September
|
31 December
|
|
2018
|
2017
|
|
2018
|
2018
|
2017
|
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Profit/(loss) for the period
|
2,084
|
1,415
|
|
436
|
563
|
(415)
|
Items that do not qualify for reclassification
|
|
|
|
|
|
|
Remeasurement of retirement benefit schemes
|
|
|
|
|
|
|
- contributions in preparation for
ring-fencing (1)
|
(2,053)
|
-
|
|
(53)
|
-
|
-
|
- other movements
|
86
|
90
|
|
14
|
72
|
116
|
Profit/(loss) on fair value of credit in financial
liabilities
|
|
|
|
|
|
|
designated at FVTPL due to own credit risk
|
200
|
(126)
|
|
91
|
14
|
(19)
|
Fair value through other comprehensive income (FVOCI)
|
|
|
|
|
|
|
financial assets (2)
|
48
|
-
|
|
(13)
|
58
|
-
|
Tax
|
502
|
(10)
|
|
15
|
(13)
|
(5)
|
|
(1,217)
|
(46)
|
|
54
|
131
|
92
|
Items that do qualify for reclassification
|
|
|
|
|
|
|
Fair value through other comprehensive income (FVOCI)
|
|
|
|
|
|
|
financial assets (2)
|
7
|
26
|
|
(24)
|
(168)
|
(11)
|
Cash flow hedges
|
(581)
|
(1,069)
|
|
241
|
(301)
|
(86)
|
Currency translation
|
310
|
100
|
|
190
|
102
|
18
|
Tax
|
189
|
256
|
|
(35)
|
127
|
19
|
|
(75)
|
(687)
|
|
372
|
(240)
|
(60)
|
Other comprehensive (loss)/income after tax
|
(1,292)
|
(733)
|
|
426
|
(109)
|
32
|
|
|
|
|
|
|
|
Total comprehensive income/(loss) for the period
|
792
|
682
|
|
862
|
454
|
(383)
|
|
|
|
|
|
|
|
Total comprehensive income/(loss) is attributable to:
|
|
|
|
|
|
|
Ordinary shareholders
|
305
|
2
|
|
709
|
304
|
(555)
|
Preference shareholders
|
182
|
234
|
|
88
|
20
|
79
|
Dividend access share
|
-
|
-
|
|
-
|
-
|
-
|
Paid-in equity holders
|
288
|
394
|
|
76
|
73
|
71
|
Non-controlling interests
|
17
|
52
|
|
(11)
|
57
|
22
|
|
792
|
682
|
|
862
|
454
|
(383)
|
Notes:
(1)
|
On 17 April 2018 RBS agreed a Memorandum of Understanding (MoU)
with the Trustees of the RBS Group Pension Fund in connection with
the requirements of ring-fencing. NatWest Markets Plc cannot
continue to be a participant in the Main section and separate
arrangements are required for its employees. Under the MoU,
NatWest Plc made a contribution of £2 billion to strengthen
funding of the Main section in recognition of the changes in
covenant. The contribution was paid on 9 October
2018. Also under the MoU, NatWest Markets Plc is
required to make a £53 million contribution to the NWM section
in Q1 2019.
|
(2)
|
Refer to Note 2 in this document and Note 34 in the 2018 Annual
Report and Accounts for further information on the impact of IFRS 9
on classification and basis of preparation. Periods ended 31
December 2018 and 30 September 2018 prepared under IFRS 9 and 31
December 2017 under IAS 39.
|
Condensed consolidated balance sheet as at 31 December
2018
|
31 December
|
30 September
|
31 December
|
2018
|
2018
|
2017
|
|
|
£m
|
£m
|
£m
|
Assets
|
|
|
|
Cash and balances at central banks
|
88,897
|
106,503
|
98,337
|
Trading assets
|
75,119
|
82,492
|
85,991
|
Derivatives
|
133,349
|
132,574
|
160,843
|
Settlement balances
|
2,928
|
11,213
|
2,517
|
Loans to banks - amortised costs
|
12,947
|
11,852
|
11,517
|
Loans to customers - amortised cost
|
305,089
|
305,823
|
310,116
|
Other financial assets
|
59,485
|
53,108
|
51,929
|
Intangible assets
|
6,616
|
6,581
|
6,543
|
Other assets
|
9,805
|
9,742
|
10,263
|
|
|
|
|
Total assets
|
694,235
|
719,888
|
738,056
|
|
|
|
|
Liabilities
|
|
|
|
Bank deposits
|
23,297
|
29,604
|
30,396
|
Customer deposits
|
360,914
|
360,617
|
361,316
|
Settlement balances
|
3,066
|
10,625
|
2,844
|
Trading liabilities
|
72,350
|
84,883
|
81,982
|
Derivatives
|
128,897
|
125,333
|
154,506
|
Other financial liabilities
|
39,732
|
38,364
|
30,326
|
Subordinated liabilities
|
10,535
|
10,341
|
12,722
|
Other liabilities
|
8,954
|
11,454
|
14,871
|
Total liabilities
|
647,745
|
671,221
|
688,963
|
|
|
|
|
Equity
|
|
|
|
Ordinary shareholders' interests
|
41,182
|
41,253
|
41,707
|
Other owners' interests
|
4,554
|
6,623
|
6,623
|
Owners’ equity
|
45,736
|
47,876
|
48,330
|
Non-controlling interests
|
754
|
791
|
763
|
|
|
|
|
Total equity
|
46,490
|
48,667
|
49,093
|
Total liabilities and equity
|
694,235
|
719,888
|
738,056
|
|
|
|
|
Condensed consolidated statement of changes in equity for the
period ended 31 December 2018
|
Year ended
|
|
Quarter ended
|
|||
|
31 December
|
31 December
|
|
31 December
|
30 September
|
31 December
|
|
2018
|
2017
|
|
2018
|
2018
|
2017
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
|
Called-up share capital - at 1 January
|
11,965
|
11,823
|
|
12,048
|
12,028
|
11,906
|
Ordinary shares issued
|
84
|
142
|
|
1
|
20
|
59
|
At 31 December
|
12,049
|
11,965
|
|
12,049
|
12,048
|
11,965
|
|
|
|
|
|
|
|
Paid-in equity - at 1 January
|
4,058
|
4,582
|
|
4,058
|
4,058
|
4,058
|
Redeemed/reclassified (1)
|
-
|
(524)
|
|
-
|
-
|
-
|
At 31 December
|
4,058
|
4,058
|
|
4,058
|
4,058
|
4,058
|
|
|
|
|
|
|
|
Share premium account - at 1 January
|
887
|
25,693
|
|
1,026
|
995
|
739
|
Ordinary shares issued
|
140
|
235
|
|
1
|
31
|
92
|
Redemption of debt preference shares (2)
|
-
|
748
|
|
-
|
-
|
56
|
Capital reduction (3)
|
-
|
(25,789)
|
|
-
|
-
|
-
|
At 31 December
|
1,027
|
887
|
|
1,027
|
1,026
|
887
|
|
|
|
|
|
|
|
Merger reserve - at 1 January and 31 December
|
10,881
|
10,881
|
|
10,881
|
10,881
|
10,881
|
|
|
|
|
|
|
|
FVOCI reserve - at 1 January (4)
|
255
|
238
|
|
361
|
442
|
260
|
Implementation of IFRS 9 on 1 January 2018
|
34
|
-
|
|
-
|
-
|
-
|
Unrealised gains
|
97
|
202
|
|
(11)
|
(95)
|
53
|
Realised gains
|
(42)
|
(176)
|
|
(20)
|
(19)
|
(64)
|
Tax
|
(1)
|
(9)
|
|
13
|
33
|
6
|
At 31 December
|
343
|
255
|
|
343
|
361
|
255
|
|
|
|
|
|
|
|
Cash flow hedging reserve - at 1 January
|
227
|
1,030
|
|
(370)
|
(151)
|
298
|
Amount recognised in equity
|
(63)
|
(277)
|
|
231
|
(138)
|
141
|
Amount transferred from equity to earnings
|
(518)
|
(792)
|
|
10
|
(163)
|
(227)
|
Tax
|
163
|
266
|
|
(62)
|
82
|
15
|
At 31 December
|
(191)
|
227
|
|
(191)
|
(370)
|
227
|
|
|
|
|
|
|
|
Foreign exchange reserve - at 1 January
|
2,970
|
2,888
|
|
3,073
|
3,001
|
2,962
|
Retranslation of net assets
|
195
|
111
|
|
196
|
57
|
13
|
Foreign currency losses on hedges of net assets
|
(33)
|
(6)
|
|
(43)
|
(4)
|
(2)
|
Tax
|
23
|
(1)
|
|
19
|
3
|
(2)
|
Recycled to profit or loss on disposal of businesses
(5)
|
123
|
(22)
|
|
33
|
16
|
(1)
|
At 31 December
|
3,278
|
2,970
|
|
3,278
|
3,073
|
2,970
|
|
|
|
|
|
|
|
Capital redemption reserve - at 1 January
|
-
|
4,542
|
|
-
|
-
|
-
|
Capital reduction (3)
|
-
|
(4,542)
|
|
-
|
-
|
-
|
At 31 December
|
-
|
-
|
|
-
|
-
|
-
|
Retained earnings - at 1 January
|
17,130
|
(12,936)
|
|
16,823
|
16,527
|
17,669
|
Implementation of IFRS 9 on 1 January 2018 (4)
|
(105)
|
-
|
|
-
|
-
|
-
|
Profit/(loss) attributable to ordinary shareholders
and
|
|
|
|
|
|
|
other equity owners
|
2,092
|
1,380
|
|
450
|
541
|
(429)
|
Equity preference dividends paid
|
(182)
|
(234)
|
|
(88)
|
(20)
|
(79)
|
Paid-in equity dividends paid, net of tax
|
(288)
|
(394)
|
|
(76)
|
(73)
|
(71)
|
Ordinary dividend paid
|
(241)
|
-
|
|
-
|
(241)
|
-
|
Capital reduction (3)
|
-
|
30,331
|
|
-
|
-
|
-
|
Redemption of debt preference shares (2)
|
-
|
(748)
|
|
-
|
-
|
(56)
|
Redemption of equity preference shares (6)
|
(2,805)
|
-
|
|
(2,805)
|
-
|
-
|
Redemption/reclassification of paid-in equity
|
-
|
(196)
|
|
-
|
-
|
-
|
Realised gains in period on FVOCI equity shares, net of
tax
|
6
|
-
|
|
1
|
2
|
-
|
Remeasurement of the retirement benefit schemes
|
|
|
|
|
|
|
- contributions in preparation for ring-fencing
(7)
|
(2,053)
|
-
|
|
(53)
|
-
|
-
|
- other movements
|
86
|
90
|
|
14
|
72
|
116
|
- tax
|
539
|
(28)
|
|
23
|
-
|
(8)
|
Changes in fair value of credit in financial liabilities designated
at
|
|
|
|
|
|
|
fair value through profit or loss
|
|
|
|
|
|
|
- gross
|
200
|
(126)
|
|
91
|
14
|
(19)
|
- tax
|
(33)
|
18
|
|
(13)
|
(4)
|
3
|
Shares issued under employee share schemes
|
(2)
|
(5)
|
|
-
|
-
|
-
|
Share-based payments
|
(32)
|
(22)
|
|
(55)
|
5
|
4
|
At 31 December
|
14,312
|
17,130
|
|
14,312
|
16,823
|
17,130
|
Condensed consolidated statement of changes in equity for the
period ended 31 December 2018
|
Year ended
|
|
Quarter ended
|
|||
|
31 December
|
31 December
|
|
31 December
|
30 September
|
31 December
|
|
2018
|
2017
|
|
2018
|
2018
|
2017
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
|
Own shares held - at 1 January
|
(43)
|
(132)
|
|
(24)
|
(24)
|
(45)
|
Shares issued under employee share schemes
|
87
|
161
|
|
5
|
—
|
5
|
Own shares acquired
|
(65)
|
(72)
|
|
(2)
|
—
|
(3)
|
At 31 December
|
(21)
|
(43)
|
|
(21)
|
(24)
|
(43)
|
Owners' equity at 31 December
|
45,736
|
48,330
|
|
45,736
|
47,876
|
48,330
|
|
|
|
|
|
|
|
Non-controlling interests - at 1 January
|
763
|
795
|
|
791
|
734
|
746
|
Currency translation adjustments and other movements
|
25
|
17
|
|
3
|
35
|
8
|
(Loss)/profit attributable to non-controlling
interests
|
(8)
|
35
|
|
(14)
|
22
|
14
|
Dividends paid
|
(5)
|
(25)
|
|
(5)
|
—
|
(5)
|
Equity withdrawn and disposals
|
(21)
|
(59)
|
|
(21)
|
—
|
—
|
At 31 December
|
754
|
763
|
|
754
|
791
|
763
|
|
|
|
|
|
|
|
Total equity at 31 December
|
46,490
|
49,093
|
|
46,490
|
48,667
|
49,093
|
|
|
|
|
|
|
|
Total equity is attributable to:
|
|
|
|
|
|
|
Ordinary shareholders
|
41,182
|
41,707
|
|
41,182
|
41,253
|
41,707
|
Preference shareholders
|
496
|
2,565
|
|
496
|
2,565
|
2,565
|
Paid-in equity holders
|
4,058
|
4,058
|
|
4,058
|
4,058
|
4,058
|
Non-controlling interests
|
754
|
763
|
|
754
|
791
|
763
|
|
46,490
|
49,093
|
|
46,490
|
48,667
|
49,093
|
Notes:
(1)
|
Paid-in
equity reclassified to liabilities as a result of the call of
US$564 million and CAD321 million EMTN notes in August 2017
(redeemed in October 2017), the call of RBS Capital Trust D in
March 2017 (redeemed in June 2017), the call of RBS Capital Trust C
in May 2016 (redeemed in July 2016).
|
(2)
|
During
2017, non-cumulative US dollar preference shares were redeemed at
their original issue price of US$1.1 billion. The nominal value of
£0.3 million was credited to the capital redemption reserve;
share premium increased by £0.7 billion in respect of the
premium received on issue, with a corresponding decrease in
retained earnings. During 2016, non-cumulative US dollar preference
shares were redeemed at their original issue price of US$1.5
billion. The nominal value of £0.3 million was transferred
from share capital to capital redemption reserve and ordinary
owners equity was reduced by £0.4 billion in respect of the
movement in exchange rates since issue.
|
(3)
|
On 15
June 2017, the Court of Session approved a reduction of RBSG plc
capital so that the amounts which stood to the credit of share
premium, account and capital redemption reserve were transferred to
retained earnings.
|
(4)
|
Refer
to Note 2 of this document and Note 34 in the 2018 Annual Report
and Accounts for further information.
|
(5)
|
No tax
impact.
|
(6)
|
During
2018, non-cumulative US dollar, Euro and Sterling preference shares
were redeemed.
|
(7)
|
On 17
April 2018 RBS agreed a Memorandum of Understanding (MoU) with the
Trustees of the RBS Group Pension Fund in connection with the
requirements of ring-fencing. NatWest Markets Plc cannot
continue to be a participant in the Main section and separate
arrangements are required for its employees. Under the MoU,
NatWest Bank Plc made a contribution of £2 billion to
strengthen funding of the Main section in recognition of the
changes in covenant. The contribution was paid on 9 October
2018. Also
under the MoU, NatWest Markets Plc is required to make a £53
million contribution to the NWM section in Q1 2019.
|
Condensed consolidated cash flow statement for the period ended 31
December 2018
|
Year ended
|
|
|
31 December
|
31 December
|
|
2018
|
2017
|
|
£m
|
£m
|
|
|
|
Operating activities
|
|
|
Operating profit before tax
|
3,359
|
2,239
|
Adjustments for non-cash items
|
(6,516)
|
(5,125)
|
|
|
|
Net cash outflow from trading activities
|
(3,157)
|
(2,886)
|
Changes in operating assets and liabilities
|
3,395
|
42,147
|
|
|
|
Net cash flows from operating activities before tax
|
238
|
39,261
|
Income taxes paid
|
(466)
|
(520)
|
|
|
|
Net cash flows from operating activities
|
(228)
|
38,741
|
|
|
|
Net cash flows from investing activities
|
(7,955)
|
(6,482)
|
|
|
|
Net cash flows from financing activities
|
(6,287)
|
(8,208)
|
|
|
|
Effects of exchange rate changes on cash and cash
equivalents
|
676
|
(16)
|
|
|
|
Net (decrease)/increase in cash and cash equivalents
|
(13,794)
|
24,035
|
Cash and cash equivalents at beginning of year
|
122,605
|
98,570
|
|
|
|
Cash and cash equivalents at end of year
|
108,811
|
122,605
|
|
|
|
Notes
1. Basis of preparation
The
condensed consolidated financial statements should be read in
conjunction with RBS’s 2018 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).
2. Accounting policies
The
Group’s principal accounting policies are as set out on pages
182 to 186 of the Group’s 2018 Annual Report and Accounts.
From 1 January 2018 the accounting policies have been updated to
reflect the adoption of IFRS 9. For further details see Note 34 of
the Group’s 2018 Annual Report and Accounts. There has been
no restatement of accounts prior to 2018. Other than in relation to
IFRS 9 other amendments to IFRS effective for 2018, including IFRS
15 ‘Revenue from contracts with customers’, IFRS 2
‘Share-based payments’ and IAS 40 ‘Investment
Property’ have not had a material effect on the Group’s
2018 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 the Group’s financial condition
are those relating to goodwill, provisions for liabilities,
deferred tax, loan impairment provisions and fair value of
financial instruments. These critical accounting policies and
judgements are described in the relevant note on the accounts in
the Group’s 2018 Annual Report and Accounts. From 1 January
2018, the previous critical accounting policy relating to loan
impairment provisions has been superseded on the adoption of IFRS
9. For further details refer to Note 34 in the Annual Report and
Accounts.
Balance sheet re-presentation
Due to
significant accounting policy changes on the adoption of IFRS 9,
the balance sheet has been re-presented. For further details refer
to Note 14 in the Annual Report and Accounts. There has been no
restatement of prior year data.
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 31 December
2018 have been prepared on a going concern basis.
3. Provisions for liabilities and charges
|
Payment
|
Other
|
|
Litigation and
|
|
|
|
protection
|
customer
|
|
other regulatory
|
|
|
|
insurance
|
redress
|
DoJ (1)
|
(incl. RMBS)
|
Other (2)
|
Total
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
At 1 January 2018
|
1,053
|
870
|
3,243
|
641
|
1,950
|
7,757
|
Implementation of IFRS 9 on 1 January 2018 (3)
|
-
|
-
|
-
|
-
|
85
|
85
|
Currency translation and other movements
|
-
|
(5)
|
(119)
|
(4)
|
(1)
|
(129)
|
Charge to income statement
|
-
|
19
|
-
|
3
|
111
|
133
|
Releases to income statement
|
-
|
(10)
|
(1)
|
(5)
|
(15)
|
(31)
|
Provisions utilised
|
(152)
|
(115)
|
(90)
|
(52)
|
(100)
|
(509)
|
At 31 March 2018
|
901
|
759
|
3,033
|
583
|
2,030
|
7,306
|
RMBS transfers (1)
|
-
|
-
|
(567)
|
567
|
-
|
-
|
Currency translation and other movements
|
-
|
-
|
209
|
32
|
(24)
|
217
|
Charge to income statement
|
-
|
46
|
1,040
|
23
|
93
|
1,202
|
Releases to income statement
|
-
|
(51)
|
-
|
(305)
|
(119)
|
(475)
|
Provisions utilised
|
(156)
|
(104)
|
-
|
(189)
|
(806)
|
(1,255)
|
At 30 June 2018
|
745
|
650
|
3,715
|
711
|
1,174
|
6,995
|
Transfer from accruals and other liabilities
|
-
|
3
|
-
|
-
|
-
|
3
|
Currency translation and other movements
|
-
|
1
|
46
|
12
|
11
|
70
|
Charge to income statement
|
200
|
55
|
-
|
133
|
33
|
421
|
Releases to income statement
|
-
|
(6)
|
-
|
(10)
|
(48)
|
(64)
|
Provisions utilised
|
(142)
|
(112)
|
(3,761)
|
(35)
|
(128)
|
(4,178)
|
At 30 September 2018
|
803
|
591
|
-
|
811
|
1,042
|
3,247
|
Transfer from accruals and other liabilities
|
-
|
(3)
|
-
|
(1)
|
14
|
10
|
Currency translation and other movements
|
-
|
8
|
-
|
3
|
(4)
|
7
|
Charge to income statement
|
-
|
125
|
-
|
22
|
192
|
339
|
Releases to income statement
|
-
|
(67)
|
-
|
(3)
|
(122)
|
(192)
|
Provisions utilised
|
(108)
|
(118)
|
-
|
(49)
|
(132)
|
(407)
|
At 31 December 2018
|
695
|
536
|
-
|
783
|
990
|
3,004
|
Notes:
(1)
|
RMBS
provision has been redesignated ‘DoJ’ and the remaining
RMBS litigation matters transferred to Litigation and other
regulatory as of 1 April 2018 to reflect progress on
resolution.
|
(2)
|
Refer
to Note 34 in the 2018 Annual Report and Accounts for further
details.
|
(3)
|
Materially
comprises provisions relating to property closures and
restructuring costs.
|
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.
Notes
4. Material developments in litigation, investigations and
reviews
RBS and certain members of the Group are party to legal proceedings
and the subject of investigation and other regulatory and
governmental action (“Matters”) in the United Kingdom
(UK), the United States (US), the European Union (EU) and other
jurisdictions. Note 27 in the 2018 Annual Report and Accounts,
issued on 15 February 2018 and available at RBS.com (“Note
27”), discusses the Matters in which RBS is currently
involved and developments to those matters. Other than the Matters
discussed in Note 27, no member of the Group is or has been
involved in governmental, legal, or regulatory proceedings
(including those which are pending or threatened) that are expected
to be material, individually or in aggregate. Recent developments
in the Matters identified in Note 27 that have occurred since the
Q3 2018 results were issued on 26 October 2018, include, but are
not limited to, those set out below.
Litigation
London Interbank Offered Rate (LIBOR) and other rates
litigation
RBS
companies are defendants in a number of class action complaints
filed in the United States District Court for the Southern District
of New York (SDNY), each relating to a different reference
rate. In the case relating to Pound Sterling LIBOR, the court
dismissed all claims against RBS companies, for various reasons, on
21 December 2018, and plaintiffs are seeking reconsideration of
that decision. In the case relating to the Australian Bank Bill
Swap Reference Rate, the court dismissed all claims against RBS
companies for lack of personal jurisdiction on 26 November 2018,
but plaintiffs have filed an amended complaint, which will be the
subject of a further motion to dismiss.
In
January 2019, a class action antitrust complaint was filed in the
SDNY alleging that the defendants (USD ICE LIBOR panel banks
including RBS companies) have conspired to suppress USD ICE LIBOR
from 2014 to the present by submitting incorrect information to ICE
about their borrowing costs.
FX antitrust litigation
On 7
November 2018, a number of claimants filed a complaint in the SDNY
against a number of financial institutions, including certain RBS
companies, alleging an antitrust conspiracy in the FX spot market.
The claimants are “opt-outs” from the FX-related class
action that RBS companies and others previously settled and which
received final court approval in August 2018. On 31 December 2018,
some of the same claimants, as well as others, filed proceedings in
the High Court in London, asserting competition claims against
NatWest Markets Plc and several other FX dealers.
Investigations and reviews
Systematic Anti-Money Laundering Programme assessment
In
December 2018, the FCA commenced a Systematic Anti-Money Laundering
Programme assessment of RBS. RBS is responding to requests for
information from the FCA.
5. Related party transactions
UK Government
The UK Government and bodies controlled or jointly controlled by
the UK Government and bodies over which it has significant
influence are related parties of the Group. The Group enters into
transactions with many of these bodies on an arm’s length
basis.
Bank of England facilities
In the
ordinary course of business, the Group may from time to time access
market-wide facilities provided by the Bank of England. The
Group’s other transactions with the UK Government include the
payment of taxes, principally UK corporation tax and value added
tax; national insurance contributions; local authority rates; and
regulatory fees and levies (including the bank levy and FSCS
levies).
Other related parties
(a) In
their roles as providers of finance, Group companies provide
development and other types of capital support to businesses. These
investments are made in the normal course of business and on
arm’s length terms. In some instances, the investment may
extend to ownership or control over 20% or more of the voting
rights of the investee company. However, these investments are not
considered to give rise to transactions of a materiality requiring
disclosure under IAS 24.
(b) The
Group recharges The Royal Bank of Scotland Group Pension Fund with
the cost of administration services incurred by it. The amounts
involved are not material to the Group.
Full
details of the Group’s related party transactions for the
year ended 31 December 2018 are included in the 2018 Annual Report
and Accounts.
6. Dividends
In 2018
RBS paid an interim dividend of £241 million, or 2.0p per
ordinary share. In addition, the company proposes a final dividend
of 3.5p per ordinary share and a further special dividend of 7.5p
per ordinary share.
The
final and special dividends recommended by directors are subject to
shareholders’ approval at the Annual General Meeting on 25
April 2019. If approved, payment will be made on 30 April 2019 to
shareholders on the register at the close of business on 22 March
2019. The ex-dividend date will be 21 March 2019. No dividend was
paid in 2017.
7. Post balance sheet events
On 6
February 2019, a General Meeting of shareholders authorised the
directors to agree buy-backs by the company of ordinary shares from
HM Treasury. The authority is subject to renewal at the company's
forthcoming Annual General Meeting.
Other
than this there have been no other significant events between 31
December 2018 and the date of approval of these accounts which
would require a change to or additional disclosure in the
accounts.
Statement of directors’ responsibilities
The
responsibility statement below has been prepared in connection with
the Group’s full Annual Report and Accounts for the year
ended 31 December 2018.
We, the
directors listed below, confirm that to the best of our
knowledge:
●
|
The
financial statements, prepared in accordance with International
Financial Reporting Standards, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the
company and the undertakings included in the consolidated taken as
a whole; and
|
●
|
The
Strategic Report and Directors’ report (incorporating the
Business review) include a fair review of the development and
performance of the business and the position of the company and the
undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and
uncertainties that they face.
|
By
order of the Board
Howard
Davies
|
Ross
McEwan
|
Katie
Murray
|
Chairman
|
Chief
executive
|
Chief
financial officer
|
14
February 2019
Board
of directors
Chairman
|
Executive directors
|
Non-executive directors
|
Howard
Davies
|
Ross
McEwan
Katie
Murray
|
Frank
Dangeard
Alison
Davis
Patrick
Flynn
Morten
Friis
Robert
Gillespie
Brendan
Nelson
Baroness
Noakes
Mike
Rogers
Mark
Seligman
Dr Lena
Wilson
|
Additional information
Presentation of information
In this
document, ‘RBSG plc’ or the ‘parent
company’ refers to The Royal Bank of Scotland Group plc, and
‘RBS’ or the ‘Group’ refers to RBSG plc and
its subsidiaries.
Financial information contained in this document does not
constitute statutory accounts within the meaning of section 434 of
the Companies Act 2006 (‘the Act’). The statutory
accounts for the year ended 31 December 2017 have been filed with
the Registrar of Companies and those for the year ended 31 December
2018 will be filed with the register of companies following the
Annual General Meeting. The report of the auditor on those
statutory accounts was unqualified, did not draw attention to any
matters by way of emphasis and did not contain a statement under
section 498(2) or (3) of the Act.
MAR Inside Information - this announcement Includes Inside
information which is a disclosure required by the European Union
Market Abuse Regulation EU 596/2014 of 16 April 2014. "Inside
Information" is used as defined in that Regulation.
Key operating indicators
As
described in Note 1 on page 26, RBS prepares its financial
statements in accordance with IFRS as issued by the IASB which
constitutes a body of generally accepted accounting principles
(GAAP). This document contains a number of adjusted or alternative
performance measures, also known as non-GAAP financial measures.
These measures exclude certain items which management believe are
not representative of the underlying performance of the business
and which distort period-on-period comparison. These measures
include:
●
|
Performance,
funding and credit metrics such as ‘return on tangible
equity’, and related RWA equivalents incorporating the effect
of capital deductions (RWAes), total assets excluding derivatives
(funded assets), net interest margin (NIM) adjusted for items
designated at fair value through profit or loss (non-statutory
NIM), cost:income ratio and loan:deposit ratio. These are internal
metrics used to measure business performance;
|
●
|
Personal
& Business Banking (PBB) franchise results, combining the
reportable segments of UK Personal & Business Banking (UK PBB)
and Ulster Bank RoI, Commercial & Private Banking (CPB)
franchise results, combining the reportable segments of Commercial
Banking and Private Banking.
|
●
|
The
Group also presents a pro forma CET1 ratio which is on an adjusted
basis, this has not been prepared in accordance with Regulation S-X
and should be read in conjunction with the notes provided as well
as the section “Forward-looking statements”
below.
|
Q1 2019 segmental re-organisation. In Q1 2019 RBS is
planning to transfer the Business Banking business from UK PBB to
Commercial Banking.
Contacts
Analyst enquiries:
|
Matt
Waymark
|
Investor
Relations
|
+44 (0)
207 672 1758
|
Media enquiries:
|
RBS
Press Office
|
|
+44 (0)
131 523 4205
|
|
Analyst and investor call
|
Fixed income call
|
Webcast and dial in details
|
Date:
|
Friday
15 February 2019
|
Friday
15 February 2019
|
www.rbs.com/results
|
Time:
|
9:30 am
UK time
|
1:30 pm
UK time
|
International:
+44 (0) 203 057 6566
|
Conference ID:
|
4088105
|
2228769
|
UK Free
Call: 0800 279 5995
US
Local Dial-In, New York: +1 646 741 2115
|
Available on www.rbs.com/results
●
|
Announcement
and slides.
|
●
|
2018
Annual Report and Accounts.
|
●
|
A
financial supplement containing income statement, balance sheet and
segment performance for the nine quarters ended 31 December
2018.
|
●
|
Pillar
3 Report.
|
Forward looking statements
Cautionary statement regarding 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’, ‘commit’,
‘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: future profitability and performance,
including financial performance targets such as return on tangible
equity; cost savings and targets, including cost:income ratios;
litigation and government and regulatory investigations, including
the timing and financial and other impacts thereof; the
implementation of the Alternative Remedies Package; the
continuation of the Group’s balance sheet reduction
programme, including the reduction of risk-weighted assets (RWAs)
and the timing thereof; capital and strategic plans and targets;
capital, liquidity and leverage ratios and requirements, including
CET1 Ratio, RWA equivalents (RWAe), Pillar 2 and other regulatory
buffer requirements, minimum requirement for own funds and eligible
liabilities, and other funding plans; funding and credit risk
profile; capitalisation; portfolios; net interest margin; customer
loan and income growth; the level and extent of future impairments
and write-downs, including with respect to goodwill; restructuring
and remediation costs and charges; the Group’s exposure to
political risk, economic risk, climate change risk, operational
risk, conduct risk, cyber and IT risk and credit rating risk and to
various types of market risks, including interest rate risk,
foreign exchange rate risk and commodity and equity price risk;
customer experience including our Net Promotor Score (NPS);
employee engagement and gender balance in leadership
positions.
Limitations inherent to forward-looking statements
These
statements are based on current plans, estimates, targets and
projections, and are subject to significant inherent risks,
uncertainties and other factors, both external and relating to the
Group’s strategy or operations, which may result in the Group
being unable to achieve the current targets, predictions,
expectations and other anticipated outcomes expressed or implied by
such forward-looking statements. In addition, certain of these
disclosures are dependent on choices relying on key model
characteristics and assumptions and are subject to various
limitations, including assumptions and estimates made by
management. By their nature, certain of these disclosures are only
estimates and, as a result, actual future gains and losses could
differ materially from those that have been estimated. Accordingly,
undue reliance should not be placed on these statements.
Forward-looking statements speak only as of the date we make them
and we expressly disclaim any obligation or undertaking to release
publicly any updates or revisions to any forward-looking statements
contained herein to reflect any change in the Group’s
expectations with regard thereto or any change in events,
conditions or circumstances on which any such statement is
based.
Important factors that could affect the actual outcome of the
forward-looking statements
We
caution you that a large number of important factors could
adversely affect our results or our ability to implement our
strategy, cause us to fail to meet our targets, predictions,
expectations and other anticipated outcomes or affect the accuracy
of forward-looking statements we describe in this document,
including in the risk factors and other uncertainties set out in
the Group’s 2018 Annual Report and Accounts and other risk
factors and uncertainties discussed in this document. These include
the significant risks for the Group presented by: operational and
IT resilience risk (including in respect of: the Group’s
susceptibility to increasing cyberattacks; operational risks
inherent in the Group’s business; the Group’s
operations being highly dependent on its IT systems; the Group
relying on attracting, retaining, developing and remunerating
senior management and skilled personnel and maintaining good
employee relations; the Group’s risk management framework;
and reputational risk), economic and political risk (including in
respect of: the UK’s withdrawal from the European Union;
increased political and economic risks and uncertainty in the UK
and key global markets; credit, market, operational and regulatory
risks in connection with climate change and the transition to a low
carbon economy; continued low interest rates; changes in foreign
currency exchange rates; and HM Treasury’s ownership of RBSG
and the possibility that it may exert a significant degree of
influence over the Group), financial resilience risk (including in
respect of: the Group’s ability to meet targets and generate
sustainable returns; the highly competitive markets in which the
Group operates; the ability of the Group to meet prudential
regulatory requirements for capital, manage its capital
effectively, or access sources of liquidity and funding; changes in
the credit ratings of RBSG, any of its subsidiaries or any of its
respective debt securities; the Group’s ability to meet
requirements of regulatory stress tests; deteriorations in borrower
and counterparty credit quality; possible losses or the requirement
to hold additional capital as a result of limitations or failure of
various models; sensitivity of the Group’s financial
statements to underlying accounting policies, assumptions and
estimates; changes in applicable accounting policies or rules; the
value or effectiveness of any credit protection purchased by the
Group; and the level and extent of future impairments and
write-downs, including with respect to goodwill) and legal,
regulatory and conduct risk (including in respect of: the
Group’s businesses being subject to substantial regulation
and oversight, which are constantly evolving; legal, regulatory and
governmental actions and investigations, the outcomes of which are
inherently difficult to predict; the replacement of LIBOR, EURIBOR
and other benchmark rates; heightened regulatory and governmental
scrutiny (including by competition authorities); implementation of
the Alternative Remedies Package and the costs related thereto; and
changes in tax legislation).
The
forward-looking statements contained in this document speak only as
at the date hereof, and the Group does not assume or undertake any
obligation or responsibility to update any forward-looking
statement to reflect events or circumstances after the date hereof
or to reflect the occurrence of unanticipated events.
The
information, statements and opinions contained in this document do
not constitute a public offer under any applicable legislation or
an offer to sell or solicit of any offer to buy any securities or
financial instruments or any advice or recommendation with respect
to such securities or other financial instruments.
Legal
Entity Identifier: 2138005O9XJIJN4JPN90
Date: 15
February 2019
|
THE
ROYAL BANK OF SCOTLAND GROUP plc (Registrant)
|
|
|
|
By: /s/
Jan Cargill
|
|
|
|
Name:
Jan Cargill
|
|
Title:
Deputy Secretary
|
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