Earnings Release • May 4, 2012
Earnings Release
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"We are happy with progress in the first quarter though the economic and regulatory backdrop remains tough. RBS continues, markedly, to regain strength and resilience. Our focus is on improving the future for customers and our business whilst ensuring that the bank's past issues are dealt with."
The Royal Bank of Scotland Group (RBS) continued on the recovery path, delivering stable returns from Core businesses while improving further its strong capital, liquidity and funding position.
During Q1 2012, RBS continued to prioritise the task of strengthening and de-risking its balance sheet. The Core Tier 1 capital ratio rose to 10.8%, while strong liquidity metrics improved even further. The Group reduced its short-term wholesale funding by £23 billion to £80 billion, which compares with a liquidity portfolio of £153 billion. The Group loan:deposit ratio improved to 106%. The run-off of Non-Core and the consistent elimination of legacy risks continued, with Non-Core funded assets down £11 billion to £83 billion.
The improving strength of the Group's balance sheet and funding has enabled RBS to take actions consistent with a return to standalone strength. RBS will have repaid £75 billion of Special Liquidity Scheme and Credit Guarantee Scheme (CGS) funding since 2009, including the last CGS repayment of £5.7 billion due to be repaid in May. RBS will resume discretionary coupons and dividend payments on hybrid capital instruments, which have been deferred for the last two years.
During the quarter, the Group delivered a solid operating performance from its Core businesses. Retail & Commercial has been challenged by a weak economy and persistently low interest rates, but delivered a return on equity (ROE) of 13%, excluding the still loss-making Ulster Bank. The Markets business rebounded to deliver a ROE of 21%, despite a reduced balance sheet and staff numbers, giving encouraging support for the restructuring announced in January. Non-Core operating losses were lower at £483 million, compared with £1,282 million in the prior quarter.
RBS remains committed to serving its customers and supporting economic recovery, with £14.3 billion of gross new loans and facilities to UK businesses during Q1 2012, including £7.9 billion to SMEs - up 18% from Q1 2011. The Group has supported a number of Government initiatives, including the NewBuy mortgage scheme and the National Loan Guarantee Scheme aimed at stimulating SME borrowing.
Excluding own credit adjustments, pre-tax profit totalled £1,052 million. Own credit adjustments represented a pre-tax charge of £2,456 million during Q1 2012 as RBS's credit strengthened, leaving a statutory pre-tax loss of £1,404 million and attributable loss of £1,524 million.
Note:
(1) Operating profit before tax, own credit adjustments, Asset Protection Scheme, Payment Protection Insurance costs, sovereign debt impairment and related interest rate hedge adjustments, amortisation of purchased intangible assets, integration and restructuring costs, gain on redemption of own debt, strategic disposals, write-down of goodwill and other intangible assets, bonus tax, bank levy and RFS Holdings minority interest ('operating profit'). Statutory operating loss before tax of £1,404 million for the quarter ended 31 March 2012.
| 31 March | Quarter ended 31 December |
31 March | |
|---|---|---|---|
| 2012 | 2011 | 2011 | |
| £m | £m | £m | |
| Core | |||
| Total income (1) | 6,862 | 5,999 | 7,678 |
| Operating expenses (2) | (3,721) | (3,330) | (3,798) |
| Insurance net claims | (649) | (590) | (784) |
| Operating profit before impairment losses (3) | 2,492 | 2,079 | 3,096 |
| Impairment losses (4) | (825) | (941) | (872) |
| Core operating profit (3) | 1,667 | 1,138 | 2,224 |
| Non-Core operating loss (3) | (483) | (1,282) | (1,091) |
| Group operating profit/(loss) (3) | 1,184 | (144) | 1,133 |
| Own credit adjustments | (2,456) | (472) | (560) |
| Asset Protection Scheme | (43) | (209) | (469) |
| Payment Protection Insurance costs | (125) | - | - |
| Sovereign debt impairment | - | (224) | - |
| Bank levy | - | (300) | - |
| Other items (5) | 36 | (627) | (220) |
| Loss before tax | (1,404) | (1,976) | (116) |
| Loss attributable to ordinary and B shareholders | (1,524) | (1,798) | (528) |
| Memo: APS after tax cost (6) | (32) | (154) | (345) |
| 31 March | 31 December | 31 March | |
|---|---|---|---|
| 2012 | 2011 | 2011 | |
| Capital and balance sheet | |||
| Funded balance sheet (7) | £950bn | £977bn | £1,052bn |
| Loan:deposit ratio (Group) (8) | 106% | 108% | 116% |
| Loan:deposit ratio (Core) (8) | 93% | 94% | 96% |
| Core Tier 1 ratio | 10.8% | 10.6% | 11.2% |
| Tangible equity per ordinary and B share (9) | 48.8p | 50.1p | 50.1p |
Notes:
The start of 2012 has shown pleasing progress at RBS within the context of a flat economic environment.
RBS has two jobs. Excellent progress continues in removing "mistakes" of the past. Non-Core assets have fallen, again. Liquidity is stronger, again. Next week the bank will repay the last of the UK Government-backed funding support we received during the crisis. We will also recommence paying dividends/coupons on hybrid capital. These are important recovery milestones.
Our second job is running the new RBS well and better. Here the bank also shows continued progress, though held back by economic conditions. In January we announced a restructuring in our wholesale banking activities and this is proceeding well. The Markets business rebounded to a 21% ROE in the seasonally strong Q1 whilst allocated resources were reduced. Retail and Commercial businesses remain solid - still impacted by subdued income trends and Irish losses, but cash-generative and competitively robust.
Extensive restructuring activity continues apace across the Group to achieve future improvement. Customer service and support remain at the forefront of our priorities for the tens of millions who rely on us.
RBS made further progress towards its strategic goals during Q1 2012. The Group has continued to deleverage and de-risk its balance sheet, with Non-Core funded assets falling by £11 billion to £83 billion and Markets funded assets falling by £13 billion.
With growth prospects muted in the major economies in which the Group operates, and with fragilities persisting in European financial markets, the focus has remained on improving balance sheet strength and a strong liquidity position. RBS has prioritised stable sources of deposit funding, with the Group loan:deposit ratio improving 200 basis points to 106% at the end of Q1 2012. Utilisation of short-term wholesale funding was cut by £23 billion during the quarter to £80 billion, which represents c.8% of funded assets and more than meets the Group's medium-term target. The Group will next week repay the final tranche of notes issued under the Government's CGS; over the last three years RBS will have repaid £75 billion of funding under the CGS and the Special Liquidity Scheme. The capital position remains robust, with a Core Tier 1 ratio of 10.8% and a Tier 1 leverage ratio of 16.3x.
As the Group works through its legacy issues it has continued to generate solid earnings from its Core operations, with Core pre-impairment operating profits totalling £2,492 million in Q1 2012, up 20% from Q4 2011. With impairments also continuing to fall, Retail & Commercial, excluding Ulster Bank, produced a ROE of 13%, while the Markets division generated a 21% ROE.
Group operating profit in Q1 2012 totalled £1,184 million, compared with a loss of £144 million in the previous quarter and a profit of £1,133 million in Q1 2011. Income was up 25% to £7,131 million, while expenses rose 9% to £3,984 million, and impairments fell by 22% to £1,314 million. Core operating profits were £1,667 million, up 46% from Q4 2011, while Non-Core operating losses fell to £483 million (Q4 2011 - £1,282 million).
The improvement in Core results was driven by Markets, where operating profits rose to £824 million from a loss of £109 million in Q4 2011. Retail & Commercial operating performance remained resilient in challenging economic conditions, with overall operating profit of £903 million (Q4 2011 - £1,033 million) which includes a £77 million sequential quarter decline in Ulster Bank due to higher impairments.
Non-Core achieved a significant reduction in operating losses, largely reflecting lower trading losses than those incurred in the restructure and divestment of a number of capital-intensive exposures during Q4 2011. Impairment losses were 35% lower, primarily reflecting lower commercial real estate provisioning.
Restructuring costs were £460 million during the quarter, slightly lower than in Q4. This includes c.£271 million relating to the Markets and International Banking restructuring. This cost was offset by a gain of £577 million from a liability management exercise whereby the Group exchanged £2.8 billion of new Lower Tier 2 (LT2) instruments for £3.4 billion of existing LT2 instruments during March. A charge of £43 million was booked in respect of the APS, which is accounted for as a credit derivative. A total of £2.5 billion has now been expensed for the APS, which equals the minimum fee payable. The Group took an additional reserve of £125 million for PPI claims during Q1 and has now accrued £1.2 billion for PPI claims, through new and pre-existing reserves, of which £501 million has been paid out as of 31 March 2012.
As RBS's credit spreads tightened during the quarter, a charge of £2,456 million was booked for own credit adjustments, compared with a charge of £472 million in Q4 2011.
After these non-operating items the Group's pre-tax loss totalled £1,404 million and loss attributable to shareholders was £1,524 million. Excluding own credit adjustments, pre-tax profit was £1,052 million.
Core expenses were up 12% from Q4 2011, but down 2% compared with Q1 2011. This largely reflects the variability of staff expense accruals, as accruals of deferred compensation are more heavily weighted to the first quarter. Markets' compensation to revenue ratio was 29%, compared with 33% in Q1 2011. Non-Core expenses, meanwhile, were down 16%, leaving Group expenses in Q1 2012 at £3,984 million, up 9% from Q4 2011 but down 3% from Q1 2011.
The Core Group's cost:income ratio in Q1 2012 was 60%, compared with 62% in Q4 2011 and 55% in Q1 2011. The improvement compared to Q4 2011 was driven by the improved income performance in Markets, while Retail & Commercial's cost:income ratio weakened to 60%, compared with 56% in Q4 2011.
Impairment losses totalled £1,314 million, down 22% from Q4 2011 and 33% from Q1 2011, with improvements across all divisions except Ulster Bank. UK Retail and US R&C showed continuing favourable credit quality trends. UK Corporate impairments were lower than in Q4 2011, with fewer individual impairment charges. Credit conditions in Ireland, however, remain challenging, and this was reflected both in Core Ulster Bank impairments and in Non-Core, which combined totalled £654 million in Q1 2012 compared with £570 million in Q4 2011 and £1,294 million in Q1 2011.
Overall, Core Q1 2012 annualised impairments represented 0.8% of loans and advances, compared with 0.9% in Q4 2011. For the Group as a whole, annualised impairments represented 1.1% of loans and advances, down from 1.3% in Q4 2011 and 1.5% in Q1 2011.
The Group's funded balance sheet decreased by a further £27 billion in Q1 to £950 billion at 31 March 2012. Non-Core continued to exceed its run-off targets, as funded assets decreased £11 billion to £83 billion and a further £5 billion of signed transactions are pending, principally the sale of the Group's aviation finance business which is expected to complete by the end of Q3 2012. Markets reduced funded assets by £13 billion, reflecting the Group's decision to exit certain businesses and reduce balance sheet consumption in a number of other capital-intensive areas.
Since the end of 2008 the Group has reduced its funded balance sheet by £276 billion.
Since embarking on its Strategic Plan in 2009 RBS has targeted a more stable deposit-led funding position with reduced dependence on wholesale funding sources. During Q1 2012, the Group has achieved significant progress towards this objective.
One key measure, the Group loan:deposit ratio, improved 200 basis points to 106% at the end of Q1 2012. This was driven by the continuing run-off of Non-Core and accelerated deleveraging in International Banking. The Core loan:deposit ratio improved further, by 1%, to 93%. UK Retail customer deposits grew strongly, up £2.3 billion in Q1 2012 and up 8% from Q1 2011, while Corporate deposits were stable year-on-year.
Another key focus has been to lower the amount of short-term wholesale funding while increasing the amount of liquidity coverage. During Q1 2012, short-term wholesale funding decreased by £23 billion to £80 billion. This represents c.8% of funded assets, and is already within the Group's medium-term target for short-term wholesale funding of less than 10%. Liquidity reserves were £153 billion, or 1.9 times the short-term wholesale funding, also above the Group's medium-term target of 150% coverage.
Funding sources have been diversified, with usage of Moody's rated US money market funds reduced from 15% of unsecured short-term funding to less than 3%. The liquidity portfolio was maintained above target levels at £153 billion, which covers outstanding commercial paper and certificates of deposit five times over.
Net term issuance during the quarter totalled £2.3 billion. In addition, the Group issued £2.8 billion of lower tier 2 securities as part of a liability management exercise. The Group plans no further unsecured term issuance over the balance of the year.
The final tranche of notes issued under the Government's Credit Guarantee Scheme will be repaid next week; as a result the Group will have repaid a total of £75 billion of funding under the CGS and the Special Liquidity Scheme.
The Group's capital position remains robust, with a Core Tier 1 ratio of 10.8% at 31 March 2012, compared with 10.6% at 31 December 2011. The increase reflects retained profits, net of changes in fair value of debt, as well as a reduction in RWAs of £12 billion in the quarter to £496 billion, excluding the effect of the APS. The Core Tier 1 benefit arising from the APS was 85bp. RBS's Tier 1 leverage ratio was 16.3x at 31 March 2012.
| Key Measures | Worst point |
2011 | Q1 2012 | Medium term target |
|---|---|---|---|---|
| Value drivers | Core | Core | Core | |
| • Return on equity (1) |
(31%)(2) | 10.5% | 11.0% | >12% |
| • Cost:income ratio (3) |
97%(4) | 60% | 60% | <55% |
| Risk measures | Group | Group | Group | |
| • Core Tier 1 ratio |
4%(5) | 10.6% | 10.8% | >10% |
| • Loan:deposit ratio |
154%(6) | 108% | 106% | c.100% |
| • Short-term wholesale funding (STWF) |
£297bn(7) | £102bn | £80bn | <10% TPAs |
| • Liquidity portfolio (8) |
£90bn(7) | £155bn | £153bn | >1.5x STWF |
| • Leverage ratio (9) |
28.7x(10) | 16.9x | 16.3x | <18x |
(1) Based on indicative Core attributable profit taxed at standard rates and Core average tangible equity per the average balance sheet (c.75% of Group tangible equity based on RWAs at 31 March 2012); (2) Group return on tangible equity for 2008; (3) Cost:income ratio net of insurance claims; (4) Year ended 31 December 2008; (5) As at 1 January 2008; (6) As at October 2008; (7) As at December 2008; (8) Eligible assets held for contingent liquidity purposes including cash, Government issued securities and other eligible securities with central banks; (9) Funded tangible assets divided by total Tier 1 capital; (10) As at June 2008.
On 26 November 2009, RBS entered into a State Aid Commitment Deed with HM Treasury containing commitments and undertakings that were designed to ensure that HM Treasury was able to comply with the commitments to be given by it to the European Commission for the purposes of obtaining approval for the State aid provided to RBS. As part of these commitments and undertakings, RBS agreed not to pay discretionary coupons and dividends on its existing hybrid capital instruments for a period of two years. This period commenced on 30 April 2010 for RBS Group instruments (the two year deferral period for RBS Holdings N.V. instruments commenced on 1 April 2011). On 30 April 2012 this period ended for RBS Group instruments. RBS has determined that it is now in a position to recommence payments on the RBS Group instruments.
The Core Tier 1 capital impact of discretionary amounts that will be payable over the remainder of 2012 on the RBS Group instruments on which payments have previously been stopped is c.£350 million. In the context of recent macro-prudential policy discussions, the Board of RBS has decided to neutralise any impact on Core Tier 1 capital through equity issuance. Approximately £250 million of this is ascribed to equity funding of employee incentive awards through the sale of surplus shares held by the Group's Employee Benefit Trust, which is now substantially complete. An additional c.£100 million will be raised through the issue of new ordinary shares, which is expected to take place over time during the second half of 2012.
The Directors have declared the discretionary dividends on Series M, N, P, Q, R, S, and T noncumulative dollar preference shares of US\$0.01 each for the three months to 30 June 2012, and the discretionary dividend on the Series 2 non-cumulative Euro preference shares of €0.01 for the 12 months to 30 June 2012. These discretionary dividends as well as the discretionary distributions on the RBSG/RBS innovative securities RBS Capital Trust A, RBS Capital Trust B, RBS Capital Trust D, RBS Capital Trust I, RBS Capital Trust II and RBS Capital Trust IV will be paid on their scheduled payment dates in June 2012. Future coupons and dividends on RBS Group hybrid capital instruments will only be paid subject to, and in accordance with, the terms of the relevant instruments.
The Group's Annual General Meeting on 30 May 2012 will consider resolutions which, if approved, will sub-divide and consolidate the Group's ordinary shares. As the Group currently has a very large number of ordinary shares in issue, a small movement in the share price can result in large percentage movements and considerable volatility in the Group's shares. The Board believes that the sub-division and consolidation will result in a share price and nominal value more appropriate for a company of the Group's size in the UK market and may assist in reducing volatility, thereby enabling a more consistent valuation.
The Group continues to target the second half of 2012 for the sale of the first tranche in Direct Line Group through a public flotation, subject to market conditions. Preparations for Direct Line Group's separation have continued, with good progress on the business's new name and identity and the appointment of Mike Biggs as chairman.
Planning and integration work for the carve out and sale to Santander of the RBS England and Wales and NatWest Scotland branch-based businesses, along with certain SME and corporate activities across the UK, continues to progress as expected.
These two disposals will substantially complete the series of divestments the Group agreed to make to comply with EC state aid requirements.
RBS's first priority is to serve its customers well. Full year 2011 results of both UK Retail and Ulster Bank's customer charters were published in Q1 2012, with UK Retail achieving 23 of the 25 goals and Ulster Bank achieving 28 of their 29 objectives. Further improvements are still needed in service and in resolving complaints fairly, consistently and promptly.
US Retail & Commercial completed the rollout of its core customer commitments during the quarter.
Following the success of mobile applications launched in a number of the Group's retail businesses during 2011, UK Corporate launched a new iPhone application for business banking customers during Q1 2012. The application allows customers to manage multiple accounts without the need to log in and out, view an extended transaction list and make intra-account transfers.
RBS continues to support economic recovery in the UK and remains committed to providing the credit UK businesses need in order to achieve this.
In Q1 2012, RBS provided £14.3 billion of gross new loans and facilities to UK businesses, of which £7.9 billion was to SME customers, and £6.4 billion of overdraft renewals, including £1.5 billion to SME customers. Gross new loans and facilities to SMEs were up 18% from Q1 2011 and broadly flat to Q4 2011.
SME customers remained cautious in their economic outlook at the start of 2012 but Q1 2012 did indicate a small improvement in sentiment with Core drawn balances, excluding real estate and construction, falling only 1% from Q4 2011. This compares with a 5% quarterly fall into Q4 2011. Overdraft utilisation also increased marginally in the quarter, although largely reflecting seasonal fluctuations. Overall, utilisation remained below 50% as it has for over two years. The Group has seen a steady increase in the demand for invoice and asset financing by SME customers, with Core net advances from these sources a significant component of gross lending and up 6% year-on-year.
Gross new loans and facilities provided to mid and large corporates fell quarter on quarter, and compared with Q1 2011, reflecting many businesses' decision to bring re-financing forward into 2011 and also the continuing low level of merger & acquisition activity in the market.
The UK Government's National Loan Guarantee Scheme (NLGS) was launched in March, with support from a number of the UK's leading banks, including RBS. RBS is the only bank to offer the 1% pricing discount to customers for loans from £1,000 in value, thus ensuring that we use NLGS to support as wide a range of customers as possible. Six weeks after launch, the Group has provided 1,600 loans and asset finance facilities under the scheme, with two thirds of these being for amounts under £25,000.
The Group also participates in the Regional Growth Fund, Business Growth Fund and the Enterprise Finance Guarantee for UK businesses. It also offers mortgages under the NewBuy scheme announced at the start of March 2012 which provide first time buyers, and other movers unable to raise a large deposit, with a more affordable way to move onto, or up, the property ladder.
Gross new mortgage lending in Q1 2012 was £4.0 billion, with the proportion of mortgages provided to first time buyers increasing to almost a quarter during March 2012, largely reflecting higher demand prior to the end of the stamp duty holiday.
Economic and regulatory challenges should continue throughout 2012.
Against this backdrop, we nonetheless expect Retail and Commercial performance to remain resilient.
Markets, while off to a good start, will remain market-dependent.
Group net interest margin outlook is stable with the first quarter of 2012.
We expect to achieve further progress in our balance sheet 'safety and soundness' agenda. Non-Core is on track to hit asset targets within our loss tolerance, and funding and liquidity momentum should continue.
| For analyst enquiries: | ||
|---|---|---|
| Richard O'Connor | Head of Investor Relations | +44 (0) 20 7672 1758 |
| For media enquiries: | ||
| Group Media Centre | +44 (0) 131 523 4205 | |
The Royal Bank of Scotland Group will be hosting a conference call following the release of the results for the quarter ended 31 March 2012. The details are as follows:
| Date: | Friday 4 May 2012 |
|---|---|
| Time: | 9.00 am UK time |
| Webcast: | www.rbs.com/ir |
| Dial in details: | International – +44 (0) 1452 568 172 UK Free Call – 0800 694 8082 US Toll Free – 1 866 966 8024 |
Slides accompanying this document, which will not be formally presented at the analysts' conference call, will be available on www.rbs.com/ir
A financial supplement will be available on www.rbs.com/ir This supplement shows published income and balance sheet financial information by quarter for the last nine quarters to assist analysts for modelling purposes.
RBS Group – Q1 2012 Results
| Page |
|---|
| ------ |
| Forward-looking statements | 3 |
|---|---|
| Presentation of information | 4 |
| Results summary | 6 |
| Results summary - statutory | 9 |
| Summary consolidated income statement | 10 |
| Summary consolidated balance sheet | 12 |
| Analysis of results | 13 |
| Net interest income | 13 |
| Non-interest income | 14 |
| Operating expenses | 15 |
| Impairment losses | 16 |
| One-off and other items | 17 |
| Capital resources and ratios | 18 |
| Balance sheet | 19 |
| Divisional performance | 20 |
| UK Retail | 23 |
| UK Corporate | 26 |
| Wealth | 30 |
| International Banking | 33 |
| Ulster Bank | 36 |
| US Retail & Commercial | 39 |
| Markets | 45 |
| Direct Line Group | 49 |
| Central items | 55 |
| Non-Core | 56 |
| Statutory results | 63 |
| Condensed consolidated income statement | 63 |
| Condensed consolidated statement of comprehensive income | 64 |
| Condensed consolidated balance sheet | 65 |
| Commentary on condensed consolidated balance sheet | 66 |
| Average balance sheet | 68 |
| Condensed consolidated statement of changes in equity | 70 |
| Page | |
|---|---|
| Notes | 73 |
| 1. Basis of preparation | 73 |
| 2. Accounting policies | 73 |
| 3. Analysis of income, expenses and impairment losses | 74 |
| Payment Protection Insurance (PPI) | 75 |
| 4. Loan impairment provisions | 76 |
| 5. Tax | 77 |
| 6. (Loss)/profit attributable to non-controlling interests | 78 |
| 7. Dividends | 78 |
| 8. Earnings per ordinary and B share | 79 |
| 9. Segmental analysis | 80 |
| 10. Discontinued operations and assets and liabilities of disposal groups | 83 |
| 11. Valuation reserves | 85 |
| 12. Available-for-sale financial assets | 87 |
| 13. Contingent liabilities and commitments | 87 |
| 14. Litigation, investigations, reviews and proceedings | 88 |
| 15. Other developments | 89 |
| 16. Date of approval | 90 |
| 17. Post balance sheet events | 90 |
| Risk and balance sheet management | 91 |
| Capital | 91 |
| Risk-weighted assets by division | 94 |
| Liquidity and funding risk | 95 |
| Funding sources | 95 |
| Liquidity portfolio | 98 |
| Loan:deposit ratio and customer funding gap | 99 |
| Net stable funding ratio | 100 |
| Credit risk | 101 |
| Loans and advances to customers by sector | 101 |
| Risk elements in lending | 102 |
| Loans, REIL and impairments by division | 104 |
| Impairment provisions | 105 |
| Loan impairment charge | 106 |
| Debt securities | 107 |
| Ulster Bank Group (Core and Non-Core) | 109 |
| Country risk | 114 |
| Summary | 116 |
| Eurozone | 121 |
| Eurozone periphery | 122 |
| Market risk | 128 |
| Additional information | 133 |
| Appendix 1 Income statement reconciliations |
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', 'believes', 'should', 'intend', 'plan', 'could', 'probability', 'risk', 'Value-at-Risk (VaR)', 'target', 'goal', 'objective', 'will', 'endeavour', 'outlook', 'optimistic', 'prospects' and similar expressions or variations on such expressions.
In particular, this document includes forward-looking statements relating, but not limited to: the Group's restructuring plans, divestments, capitalisation, portfolios, net interest margin, capital ratios, liquidity, risk weighted assets (RWAs), return on equity (ROE), profitability, cost:income ratios, leverage and loan:deposit ratios, funding and risk profile; discretionary coupon and dividend payments; certain ring-fencing proposals; sustainability targets; the Group's future financial performance; the level and extent of future impairments and write-downs, including sovereign debt impairments; the protection provided by the Asset Protection Scheme (APS); and the Group's potential exposures to various types of market risks, such as interest rate risk, foreign exchange rate risk and commodity and equity price risk. These statements are based on current plans, estimates and projections, and are subject to inherent risks, uncertainties and other factors which could cause actual results to differ materially from the future results expressed or implied by such forward-looking statements. For example, certain market risk disclosures are dependent on choices about key model characteristics and assumptions and are subject to various limitations. By their nature, certain of the market risk disclosures are only estimates and, as a result, actual future gains and losses could differ materially from those that have been estimated.
Other factors that could cause actual results to differ materially from those estimated by the forward-looking statements contained in this document include, but are not limited to: global economic and financial market conditions and other geopolitical risks, and their impact on the financial industry in general and on the Group in particular; the ability to implement strategic plans on a timely basis, or at all, including the disposal of certain Non-Core assets and of certain assets and businesses required as part of the State Aid restructuring plan; organisational restructuring, including any adverse consequences of a failure to transfer, or delay in transferring, certain business assets and liabilities from RBS N.V. to RBS; the ability to access sufficient sources of liquidity and funding; deteriorations in borrower and counterparty credit quality; litigation, government and regulatory investigations including investigations relating to the setting of LIBOR and other interest rates; costs or exposures borne by the Group arising out of the origination or sale of mortgages or mortgage-backed securities in the United States; the extent of future write-downs and impairment charges caused by depressed asset valuations; the value and effectiveness of any credit protection purchased by the Group; unanticipated turbulence in interest rates, yield curves, foreign currency exchange rates, credit spreads, bond prices, commodity prices, equity prices and basis, volatility and correlation risks; changes in the credit ratings of the Group; ineffective management of capital or changes to capital adequacy or liquidity requirements; changes to the valuation of financial instruments recorded at fair value; competition and consolidation in the banking sector; the ability of the Group to attract or retain senior management or other key employees; regulatory or legal changes (including those requiring any restructuring of the Group's operations) in the United Kingdom, the United States and other countries in which the Group operates or a change in United Kingdom Government policy; changes to regulatory requirements relating to capital and liquidity; changes to the monetary and interest rate policies of central banks and other governmental and regulatory bodies; changes in UK and foreign laws, regulations, accounting standards and taxes, including changes in regulatory capital regulations and liquidity requirements; the implementation of recommendations made by the Independent Commission on Banking (ICB) and their potential implications; impairments of goodwill; pension fund shortfalls; general operational risks; HM Treasury exercising influence over the operations of the Group; insurance claims; reputational risk; the ability to access the contingent capital arrangements with HM Treasury; the participation of the Group in the APS and the effect of the APS on the Group's financial and capital position; the conversion of the B Shares in accordance with their terms; limitations on, or additional requirements imposed on, the Group's activities as a result of HM Treasury's investment in the Group; and the success of the Group in managing the risks involved in the foregoing.
The forward-looking statements contained in this document speak only as of the date of this announcement, and the Group does not undertake to update any forward-looking statement to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
The information, statements and opinions contained in this document do not constitute a public offer under any applicable legislation or an offer to sell or solicitation of any offer to buy any securities or financial instruments or any advice or recommendation with respect to such securities or other financial instruments.
The financial information on pages 6 to 62, prepared using the Group's accounting policies, shows the underlying performance of the Group on a managed basis which excludes certain one-off and other items. This information is provided to give a better understanding of the results of the Group's operations. Group operating profit on this basis excludes:
The condensed consolidated income statement, condensed consolidated statement of comprehensive income, condensed consolidated balance sheet, condensed consolidated statement of changes in equity and related notes presented on pages 63 to 90 inclusive are on a statutory basis. Reconciliations between the managed basis and statutory basis are included in Appendix 1.
In accordance with IFRS 5 'Non-current Assets Held for Sale and Discontinued Operations', in Q4 2011 the Group transferred the assets and liabilities relating to the planned disposal of its RBS England and Wales, and NatWest Scotland branch-based businesses, along with certain SME and corporate activities across the UK ('UK branch-based businesses'), to assets and liabilities of disposal groups.
In January 2012, the Group announced changes to its wholesale banking operations in light of a changed market and regulatory environment. The changes have seen the reorganisation of the Group's wholesale businesses into 'Markets' and 'International Banking' and the proposed exit and/or downsizing of selected activities. The changes will ensure the wholesale businesses continue to deliver against the Group's strategy.
The changes will include an exit from cash equities, corporate broking, equity capital markets and mergers and acquisitions advisory businesses. Significant reductions in balance sheet, funding requirements and cost base in the remaining wholesale businesses will be implemented
In the first quarter of 2012, the Group revised its allocation of funding and liquidity costs and capital for the new divisional structure as well as for a new methodology. The new methodology is designed to ensure that the allocated funding and liquidity costs more fully reflect each division's funding requirement.
For the purposes of divisional return on equity ratios, notional equity has been calculated as a percentage of the monthly average of divisional risk-weighted assets (RWAs), adjusted for capital deductions. Historically, notional equity was allocated at 9% of RWAs for the Retail & Commercial divisions and 10% of RWAs for Global Banking & Markets. This has been revised and 10% of RWAs is now applied to both the Retail & Commercial and Markets divisions.
The Group had previously excluded changes in the fair value of own debt (FVOD) in presenting the underlying performance of the Group on a managed basis given it is a volatile non-cash item. To better align our managed view of performance, movements in the fair value of own derivative liabilities (FVDL), previously incorporated within Markets operating performance, are now combined with the movement in FVOD in a single measure, 'Own Credit Adjustments' (OCA). Group and Markets operating results have been adjusted to reflect this change which does not affect profit/(loss) before and after tax.
Comparatives have been restated accordingly. For further information on the restatements refer to the announcement dated 1 May 2012, available on www.rbs.com/ir.
| Quarter ended | |||
|---|---|---|---|
| 31 March | 31 December | 31 March | |
| 2012 | 2011 | 2011 | |
| £m | £m | £m | |
| Core | |||
| Total income (1) | 6,862 | 5,999 | 7,678 |
| Operating expenses (2) | (3,721) | (3,330) | (3,798) |
| Insurance net claims | (649) | (590) | (784) |
| Operating profit before impairment losses (3) | 2,492 | 2,079 | 3,096 |
| Impairment losses (4) | (825) | (941) | (872) |
| Operating profit (3) | 1,667 | 1,138 | 2,224 |
| Non-Core | |||
| Total income/(loss) (1) | 269 | (278) | 435 |
| Operating expenses (2) | (263) | (314) | (323) |
| Insurance net claims | - | 61 | (128) |
| Operating profit/(loss) before impairment losses (3) | 6 | (531) | (16) |
| Impairment losses (4) | (489) | (751) | (1,075) |
| Operating loss (3) | (483) | (1,282) | (1,091) |
| Total | |||
| Total income (1) | 7,131 | 5,721 | 8,113 |
| Operating expenses (2) | (3,984) | (3,644) | (4,121) |
| Insurance net claims | (649) | (529) | (912) |
| Operating profit before impairment losses (3) | 2,498 | 1,548 | 3,080 |
| Impairment losses (4) | (1,314) | (1,692) | (1,947) |
| Operating profit/(loss) (3) | 1,184 | (144) | 1,133 |
| Own credit adjustments | (2,456) | (472) | (560) |
| Asset Protection Scheme | (43) | (209) | (469) |
| Payment Protection Insurance costs | (125) | - | - |
| Sovereign debt impairment | - | (224) | - |
| Bank levy | - | (300) | - |
| Other items | 36 | (627) | (220) |
| Loss before tax | (1,404) | (1,976) | (116) |
For definitions of the notes refer to page 8.
| Quarter ended | ||||
|---|---|---|---|---|
| 31 March | 31 December | 31 March | ||
| Key metrics | 2012 | 2011 | 2011 | |
| Performance ratios | ||||
| Core | ||||
| - Net interest margin | 2.12% | 2.07% | 2.30% | |
| - Cost:income ratio (5) | 60% | 62% | 55% | |
| - Return on equity | 11.0% | 7.6% | 16.0% | |
| - Adjusted earnings/(loss) per ordinary and B share from continuing operations | 0.6p | (0.5p) | 0.7p | |
| - Adjusted earnings per ordinary and B share from continuing operations | ||||
| assuming a normalised tax rate of 24.5% (2011 - 26.5%) | 1.2p | 0.8p | 1.5p | |
| Non-Core | ||||
| - Net interest margin | 0.31% | 0.42% | 0.72% | |
| - Cost:income ratio (5) | 98% | nm | 105% | |
| Group | ||||
| - Net interest margin | 1.89% | 1.84% | 2.03% | |
| - Cost:income ratio (5) | 61% | 70% | 57% | |
| Continuing operations | ||||
| - Basic loss per ordinary and B share (6) | (1.4p) | (1.7p) | (0.5p) |
nm = not meaningful
For definitions of the notes refer to page 8.
| 31 March 2012 |
31 December 2011 |
Change | |
|---|---|---|---|
| Capital and balance sheet | |||
| Funded balance sheet (7) | £950bn | £977bn | (3%) |
| Total assets | £1,403bn | £1,507bn | (7%) |
| Loan:deposit ratio - Core (8) | 93% | 94% | (100bp) |
| Loan:deposit ratio - Group (8) | 106% | 108% | (200bp) |
| Risk-weighted assets - gross | £496bn | £508bn | (2%) |
| Benefit of Asset Protection Scheme (APS) | (£62bn) | (£69bn) | (10%) |
| Risk-weighted assets - net of APS | £434bn | £439bn | (1%) |
| Total equity | £75bn | £76bn | (1%) |
| Core Tier 1 ratio* | 10.8% | 10.6% | 20bp |
| Tier 1 ratio | 13.2% | 13.0% | 20bp |
| Risk elements in lending (REIL) | £40bn | £41bn | (2%) |
| REIL as a % of gross loans and advances (9) | 8.6% | 8.6% | - |
| Tier 1 leverage ratio (10) | 16.3x | 16.9x | (4%) |
| Tangible equity leverage ratio (11) | 5.8% | 5.7% | 10bp |
| Tangible equity per ordinary and B share (12) | 48.8p | 50.1p | (3%) |
* The benefit of APS in the Core Tier 1 ratio is 85bp at 31 March 2012 and 90bp at 31 December 2011.
Notes:
| Quarter ended | |||
|---|---|---|---|
| 31 March | 31 December | 31 March | |
| 2012 | 2011 | 2011 | |
| £m | £m | £m | |
| Continuing operations | |||
| Total income | 5,176 | 5,038 | 7,058 |
| Operating expenses | (4,617) | (4,567) | (4,315) |
| Operating (loss)/profit before impairment losses | (90) | (58) | 1,831 |
| Impairment losses | (1,314) | (1,918) | (1,947) |
| Operating loss before tax | (1,404) | (1,976) | (116) |
| Loss attributable to ordinary and B shareholders | (1,524) | (1,798) | (528) |
A reconciliation between statutory and managed view income statements is shown in Appendix 1 to this announcement.
In the income statement set out below, own credit adjustments, Asset Protection Scheme, Payment Protection Insurance costs, sovereign debt impairment, amortisation of purchased intangible assets, integration and restructuring costs, gain on redemption of own debt, strategic disposals, bonus tax, bank levy, interest rate hedge adjustments on impaired available-for-sale Greek government bonds, write-down of goodwill and other intangible assets and RFS Holdings minority interest are shown separately. In the statutory condensed consolidated income statement on page 63, these items are included in income and operating expenses as appropriate.
| Quarter ended | |||
|---|---|---|---|
| 31 March | 31 December | 31 March | |
| 2012 | 2011 | 2011 | |
| Core | £m | £m | £m |
| Net interest income | 2,943 | 2,977 | 3,103 |
| Non-interest income (excluding insurance net premium income) | 2,981 | 2,050 | 3,564 |
| Insurance net premium income | 938 | 972 | 1,011 |
| Non-interest income | 3,919 | 3,022 | 4,575 |
| Total income (1) | 6,862 | 5,999 | 7,678 |
| Operating expenses (2) | (3,721) | (3,330) | (3,798) |
| Profit before insurance net claims and impairment losses | 3,141 | 2,669 | 3,880 |
| Insurance net claims | (649) | (590) | (784) |
| Operating profit before impairment losses (3) | 2,492 | 2,079 | 3,096 |
| Impairment losses (4) | (825) | (941) | (872) |
| Operating profit (3) | 1,667 | 1,138 | 2,224 |
| Non-Core | |||
| Net interest income | 64 | 99 | 199 |
| Non-interest income (excluding insurance net premium income) | 205 | (386) | 98 |
| Insurance net premium income | - | 9 | 138 |
| Non-interest income | 205 | (377) | 236 |
| Total income/(loss) (1) | 269 | (278) | 435 |
| Operating expenses (2) | (263) | (314) | (323) |
| Profit/(loss) before insurance net claims and impairment losses | 6 | (592) | 112 |
| Insurance net claims | - | 61 | (128) |
| Operating profit/(loss) before impairment losses (3) | 6 | (531) | (16) |
| Impairment losses (4) | (489) | (751) | (1,075) |
| Operating loss (3) | (483) | (1,282) | (1,091) |
For definitions of the notes refer to page 8.
| Quarter ended | |||
|---|---|---|---|
| 31 March | 31 December | 31 March | |
| 2012 | 2011 | 2011 | |
| Total | £m | £m | £m |
| Net interest income | 3,007 | 3,076 | 3,302 |
| Non-interest income (excluding insurance net premium income) | 3,186 | 1,664 | 3,662 |
| Insurance net premium income | 938 | 981 | 1,149 |
| Non-interest income | 4,124 | 2,645 | 4,811 |
| Total income (1) | 7,131 | 5,721 | 8,113 |
| Operating expenses (2) | (3,984) | (3,644) | (4,121) |
| Profit before insurance net claims and impairment losses | 3,147 | 2,077 | 3,992 |
| Insurance net claims | (649) | (529) | (912) |
| Operating profit before impairment losses (3) | 2,498 | 1,548 | 3,080 |
| Impairment losses (4) | (1,314) | (1,692) | (1,947) |
| Operating profit/(loss) (3) | 1,184 | (144) | 1,133 |
| Own credit adjustments | (2,456) | (472) | (560) |
| Asset Protection Scheme | (43) | (209) | (469) |
| Payment Protection Insurance costs | (125) | - | - |
| Sovereign debt impairment | - | (224) | - |
| Amortisation of purchased intangible assets | (48) | (53) | (44) |
| Integration and restructuring costs | (460) | (478) | (145) |
| Gain/(loss) on redemption of own debt | 577 | (1) | - |
| Strategic disposals | (8) | (82) | (23) |
| Bank levy | - | (300) | - |
| Write-down of goodwill and other intangible assets | - | (11) | - |
| Other items | (25) | (2) | (8) |
| Loss before tax | (1,404) | (1,976) | (116) |
| Tax (charge)/credit | (139) | 186 | (423) |
| Loss from continuing operations | (1,543) | (1,790) | (539) |
| Profit from discontinued operations, net of tax | 5 | 10 | 10 |
| Loss for the period | (1,538) | (1,780) | (529) |
| Non-controlling interests | 14 | (18) | 1 |
| Loss attributable to ordinary and B shareholders | (1,524) | (1,798) | (528) |
For definitions of the notes refer to page 8.
| 31 March 2012 £m |
31 December 2011 £m |
|
|---|---|---|
| Loans and advances to banks (1) | 36,064 | 43,870 |
| Loans and advances to customers (1) | 440,406 | 454,112 |
| Reverse repurchase agreements and stock borrowing | 91,129 | 100,934 |
| Debt securities and equity shares | 213,534 | 224,263 |
| Other assets (2) | 168,534 | 154,070 |
| Funded assets | 949,667 | 977,249 |
| Derivatives | 453,354 | 529,618 |
| Total assets | 1,403,021 | 1,506,867 |
| Bank deposits (3) | 65,735 | 69,113 |
| Customer deposits (3) | 410,207 | 414,143 |
| Repurchase agreements and stock lending | 128,718 | 128,503 |
| Debt securities in issue | 142,943 | 162,621 |
| Settlement balances and short positions | 54,919 | 48,516 |
| Subordinated liabilities | 25,513 | 26,319 |
| Other liabilities (2) | 53,821 | 57,616 |
| Liabilities excluding derivatives | 881,856 | 906,831 |
| Derivatives | 446,534 | 523,983 |
| Total liabilities | 1,328,390 | 1,430,814 |
| Owners' equity | 73,416 | 74,819 |
| Non-controlling interests | 1,215 | 1,234 |
| Total liabilities and equity | 1,403,021 | 1,506,867 |
| Memo: Tangible equity (4) | 53,901 | 55,217 |
Notes:
(1) Excluding reverse repurchase agreements and stock borrowing, and disposal groups.
(2) Includes disposal groups (see page 84).
(3) Excluding repurchase agreements and stock lending, and disposal groups.
(4) Tangible equity is equity attributable to ordinary and B shareholders less intangible assets.
| Quarter ended | |||
|---|---|---|---|
| 31 March | 31 December | 31 March | |
| 2012 | 2011 | 2011 | |
| Net interest income | £m | £m | £m |
| Net interest income (1) | 3,008 | 3,082 | 3,289 |
| Average interest-earning assets | 641,369 | 664,613 | 658,578 |
| Net interest margin | |||
| - Group | 1.89% | 1.84% | 2.03% |
| - Retail & Commercial (2) | 2.91% | 2.90% | 3.05% |
| - Non-Core | 0.31% | 0.42% | 0.72% |
Notes:
• Group NIM fell 14 basis points, reflecting the carrying cost of the liquidity portfolio and continuing pressure on liability margins.
| Quarter ended | |||
|---|---|---|---|
| 31 March | 31 December | 31 March | |
| 2012 | 2011 | 2011 | |
| Non-interest income | £m | £m | £m |
| Net fees and commissions | 1,197 | 1,017 | 1,382 |
| Income from trading activities | 1,264 | 242 | 1,570 |
| Other operating income | 725 | 405 | 710 |
| Non-interest income (excluding insurance net premium income) | 3,186 | 1,664 | 3,662 |
| Insurance net premium income | 938 | 981 | 1,149 |
| Total non-interest income | 4,124 | 2,645 | 4,811 |
Non-Core non-interest income increased, with gains on disposals of £182 million compared with prior period losses of £36 million, along with lower fair-value write-downs.
Non-interest income was 14% lower, largely as a result of decreased trading income in Markets, reflecting a less pronounced seasonal recovery in activity and lower investor confidence compared with the same period last year.
| Quarter ended | |||||
|---|---|---|---|---|---|
| 31 March | 31 December | 31 March | |||
| 2012 | 2011 | 2011 | |||
| Operating expenses | £m | £m | £m | ||
| Staff expenses | 2,221 | 1,781 | 2,320 | ||
| Premises and equipment | 550 | 575 | 556 | ||
| Other | 819 | 838 | 865 | ||
| Administrative expenses | 3,590 | 3,194 | 3,741 | ||
| Depreciation and amortisation | 394 | 450 | 380 | ||
| Operating expenses | 3,984 | 3,644 | 4,121 | ||
| Insurance net claims | 649 | 529 | 912 | ||
| Staff costs as a % of total income | 31% | 31% | 29% |
Insurance net claims were 23% higher primarily due to adverse weather experienced in the early part of Q1 2012.
Group expenses declined 3% primarily driven by benefits from the Group cost reduction programme. Headcount declined by 1%, principally as a result of the restructuring of the Markets and International Banking businesses, and branch closures in the US.
| Quarter ended | |||
|---|---|---|---|
| 31 March | 31 December | 31 March | |
| 2012 | 2011 | 2011 | |
| Impairment losses | £m | £m | £m |
| Loan impairment losses | 1,295 | 1,654 | 1,898 |
| Securities impairment losses | 19 | 38 | 49 |
| Group impairment losses | 1,314 | 1,692 | 1,947 |
| Loan impairment losses | |||
| - individually assessed | 745 | 1,253 | 1,285 |
| - collectively assessed | 595 | 591 | 720 |
| - latent | (57) | (190) | (107) |
| Customer loans | 1,283 | 1,654 | 1,898 |
| Bank loans | 12 | - | - |
| Loan impairment losses | 1,295 | 1,654 | 1,898 |
| Core | 796 | 924 | 852 |
| Non-Core | 499 | 730 | 1,046 |
| Group | 1,295 | 1,654 | 1,898 |
| Customer loan impairment charge as a % of gross loans and advances (1) | |||
| Group | 1.1% | 1.3% | 1.5% |
| Core | 0.8% | 0.9% | 0.8% |
| Non-Core | 2.7% | 3.7% | 4.0% |
Note:
(1) Customer loan impairment charge as a percentage of gross customer loans and advances excluding reverse repurchase agreements and including disposal groups.
Total Ulster Bank (Core and Non-Core) loan impairments were £654 million compared with £570 million in Q4 2011, an increase of 15%, primarily driven by further deterioration in asset quality in the Core residential mortgage portfolio. Non-Core Ulster Bank impairments increased by 7% to £260 million.
Group loan impairment losses decreased by £603 million or 32%, driven by a significant decrease in Non-Core, principally due to lower losses on the Ulster Bank portfolio.
| 31 March | Quarter ended 31 December |
31 March | |
|---|---|---|---|
| 2012 | 2011 | 2011 | |
| One-off and other items | £m | £m | £m |
| Own credit adjustments* | (2,456) | (472) | (560) |
| Asset Protection Scheme | (43) | (209) | (469) |
| Payment Protection Insurance costs | (125) | - | - |
| Sovereign debt impairment (1) | - | (224) | - |
| Amortisation of purchased intangible assets | (48) | (53) | (44) |
| Integration and restructuring costs | (460) | (478) | (145) |
| Gain/(loss) on redemption of own debt | 577 | (1) | - |
| Strategic disposals** | (8) | (82) | (23) |
| Bank levy | - | (300) | - |
| Write-down of goodwill and other intangible assets | - | (11) | - |
| Other | |||
| - Bonus tax | - | - | (11) |
| - RFS Holdings minority interest | (25) | (2) | 3 |
| (2,588) | (1,832) | (1,249) | |
| * Own credit adjustments impact: | |||
| Income from trading activities | (1,009) | (272) | (266) |
| Other operating income | (1,447) | (200) | (294) |
| Own credit adjustments | (2,456) | (472) | (560) |
| **Strategic disposals | |||
| (Loss)/gain on sale and provision for loss on disposal of investments in: | |||
| - Global Merchant Services | - | - | 47 |
| - Goodwill relating to UK branch-based businesses | - | (80) | - |
| - Other | (8) | (2) | (70) |
| (8) | (82) | (23) |
Note:
(1) In the second quarter of 2011, the Group recorded an impairment loss of £733 million in respect of its AFS portfolio of Greek government debt as a result of Greece's continuing fiscal difficulties. In the third and fourth quarters of 2011, additional impairment losses of £142 million and £224 million respectively were recorded. In Q1 2012, as part of private sector involvement in the Greek government bail-out, the vast majority of this portfolio was exchanged for Greek sovereign debt and European Financial Stability Facility notes; the Greek sovereign debt received in the exchange was sold.
| Capital resources and ratios | 31 March 2012 |
31 December 2011 |
|---|---|---|
| Core Tier 1 capital | £47bn | £46bn |
| Tier 1 capital | £57bn | £57bn |
| Total capital | £61bn | £61bn |
| Risk-weighted assets | ||
| - gross | £496bn | £508bn |
| - benefit of Asset Protection Scheme | (£62bn) | (£69bn) |
| Risk-weighted assets | £434bn | £439bn |
| Core Tier 1 ratio (1) | 10.8% | 10.6% |
| Tier 1 ratio | 13.2% | 13.0% |
| Total capital ratio | 14.0% | 13.8% |
Note:
(1) The benefit of APS in the Core Tier 1 ratio is 85bp at 31 March 2012 and 90bp at 31 December 2011.
| Balance sheet | 31 March 2012 |
31 December 2011 |
|---|---|---|
| Funded balance sheet (1) | £950bn | £977bn |
| Total assets | £1,403bn | £1,507bn |
| Loans and advances to customers (2) | £460bn | £474bn |
| Customer deposits (3) | £432bn | £437bn |
| Loan:deposit ratio - Core (4) | 93% | 94% |
| Loan:deposit ratio - Group (4) | 106% | 108% |
| Short-term wholesale funding | £80bn | £102bn |
| Wholesale funding | £234bn | £258bn |
| Liquidity portfolio | £153bn | £155bn |
Notes:
Further analysis of the Group's liquidity and funding position is included on pages 95 to 100.
The operating profit/(loss)(1) of each division is shown below.
| Quarter ended | |||
|---|---|---|---|
| 31 March | 31 December | 31 March | |
| 2012 | 2011 | 2011 | |
| £m | £m | £m | |
| Operating profit/(loss) before impairment losses by division | |||
| UK Retail | 632 | 649 | 712 |
| UK Corporate | 668 | 642 | 724 |
| Wealth | 55 | 86 | 75 |
| International Banking | 132 | 208 | 220 |
| Ulster Bank | 84 | 94 | 96 |
| US Retail & Commercial | 121 | 242 | 205 |
| Retail & Commercial | 1,692 | 1,921 | 2,032 |
| Markets | 826 | (52) | 1,029 |
| Direct Line Group | 84 | 125 | 67 |
| Central items | (110) | 85 | (32) |
| Core | 2,492 | 2,079 | 3,096 |
| Non-Core | 6 | (531) | (16) |
| Group operating profit before impairment losses | 2,498 | 1,548 | 3,080 |
| Impairment losses/(recoveries) by division | |||
| UK Retail | 155 | 191 | 194 |
| UK Corporate | 176 | 236 | 107 |
| Wealth | 10 | 13 | 5 |
| International Banking | 35 | 56 | (6) |
| Ulster Bank | 394 | 327 | 461 |
| US Retail & Commercial | 19 | 65 | 111 |
| Retail & Commercial | 789 | 888 | 872 |
| Markets | 2 | 57 | - |
| Central items | 34 | (4) | - |
| Core | 825 | 941 | 872 |
| Non-Core | 489 | 751 | 1,075 |
| Group impairment losses | 1,314 | 1,692 | 1,947 |
Note:
(1) Operating profit/(loss) before own credit adjustments, Asset Protection Scheme, Payment Protection Insurance costs, sovereign debt impairment, amortisation of purchased intangible assets, integration and restructuring costs, gain on redemption of own debt, strategic disposals, bonus tax, bank levy, write-down of goodwill and other intangible assets, interest rate hedge adjustments on impaired available-for-sale Greek government bonds and RFS Holdings minority interest.
| Quarter ended | ||||||
|---|---|---|---|---|---|---|
| 31 March | 31 December | 31 March | ||||
| 2012 | 2011 | 2011 | ||||
| £m | £m | £m | ||||
| Operating profit/(loss) by division | ||||||
| UK Retail | 477 | 458 | 518 | |||
| UK Corporate | 492 | 406 | 617 | |||
| Wealth | 45 | 73 | 70 | |||
| International Banking | 97 | 152 | 226 | |||
| Ulster Bank | (310) | (233) | (365) | |||
| US Retail & Commercial | 102 | 177 | 94 | |||
| Retail & Commercial | 903 | 1,033 | 1,160 | |||
| Markets | 824 | (109) | 1,029 | |||
| Direct Line Group | 84 | 125 | 67 | |||
| Central items | (144) | 89 | (32) | |||
| Core | 1,667 | 1,138 | 2,224 | |||
| Non-Core | (483) | (1,282) | (1,091) | |||
| Group operating profit/(loss) | 1,184 | (144) | 1,133 |
| Quarter ended | |||||
|---|---|---|---|---|---|
| 31 March | 31 December | 31 March | |||
| 2012 | 2011 | 2011 | |||
| % | % | % | |||
| Net interest margin by division | |||||
| UK Retail | 3.61 | 3.74 | 4.08 | ||
| UK Corporate | 3.09 | 3.02 | 3.19 | ||
| Wealth | 3.67 | 3.39 | 3.24 | ||
| International Banking | 1.60 | 1.64 | 1.83 | ||
| Ulster Bank | 1.87 | 1.87 | 1.84 | ||
| US Retail & Commercial | 3.06 | 3.04 | 3.00 | ||
| Retail & Commercial | 2.91 | 2.90 | 3.05 | ||
| Non-Core | 0.31 | 0.42 | 0.72 | ||
| Group net interest margin | 1.89 | 1.84 | 2.03 |
| 31 March | 31 December | |
|---|---|---|
| 2012 | 2011 | |
| Total funded assets | £m | £m |
| UK Retail | 116,255 | 114,469 |
| UK Corporate | 113,134 | 114,098 |
| Wealth | 21,265 | 21,628 |
| International Banking | 63,684 | 69,901 |
| Ulster Bank | 33,450 | 34,637 |
| US Retail & Commercial | 72,945 | 74,925 |
| Markets | 300,574 | 313,882 |
| Direct Line Group | 13,430 | 12,912 |
| Central items | 130,742 | 126,336 |
| Core | 865,479 | 882,788 |
| Non-Core | 83,278 | 93,657 |
| 948,757 | 976,445 | |
| RFS Holdings minority interest | 910 | 804 |
| 949,667 | 977,249 |
| 31 March 2012 £bn |
31 December 2011 £bn |
Change | 31 March 2011 £bn |
Change | |
|---|---|---|---|---|---|
| Risk-weighted assets by division | |||||
| UK Retail | 48.2 | 48.4 | - | 50.3 | (4%) |
| UK Corporate | 76.9 | 79.3 | (3%) | 82.3 | (7%) |
| Wealth | 12.9 | 12.9 | - | 12.6 | 2% |
| International Banking | 41.8 | 43.2 | (3%) | 45.7 | (9%) |
| Ulster Bank | 38.4 | 36.3 | 6% | 31.7 | 21% |
| US Retail & Commercial | 58.6 | 59.3 | (1%) | 54.0 | 9% |
| Retail & Commercial | 276.8 | 279.4 | (1%) | 276.6 | - |
| Markets | 115.6 | 120.3 | (4%) | 114.3 | 1% |
| Other | 11.0 | 12.0 | (8%) | 15.8 | (30%) |
| Core | 403.4 | 411.7 | (2%) | 406.7 | (1%) |
| Non-Core | 89.9 | 93.3 | (4%) | 128.5 | (30%) |
| Group before benefit of Asset Protection Scheme | 493.3 | 505.0 | (2%) | 535.2 | (8%) |
| Benefit of Asset Protection Scheme | (62.2) | (69.1) | (10%) | (98.4) | (37%) |
| Group before RFS Holdings minority interest | 431.1 | 435.9 | (1%) | 436.8 | (1%) |
| RFS Holdings minority interest | 3.2 | 3.1 | 3% | 2.9 | 10% |
| Group | 434.3 | 439.0 | (1%) | 439.7 | (1%) |
For the purposes of the divisional return on equity ratios, notional equity has been calculated as a percentage of the monthly average of divisional risk-weighted assets, adjusted for capital deductions. Historically, notional equity was allocated at 9% for the Retail & Commercial divisions and 10% for Global Banking & Markets. A consistent 10% is now applied to the Retail & Commercial and Markets divisions.
| Employee numbers by division (full time equivalents in continuing operations rounded to the nearest hundred) |
31 March 2012 |
31 December 2011 |
31 March 2011 |
|---|---|---|---|
| UK Retail | 27,600 | 27,700 | 28,100 |
| UK Corporate | 13,400 | 13,600 | 13,200 |
| Wealth | 5,700 | 5,700 | 5,400 |
| International Banking | 5,400 | 5,400 | 5,500 |
| Ulster Bank | 4,500 | 4,200 | 4,300 |
| US Retail & Commercial | 14,700 | 15,400 | 15,600 |
| Retail & Commercial | 71,300 | 72,000 | 72,100 |
| Markets | 13,200 | 13,900 | 15,600 |
| Direct Line Group | 15,100 | 14,900 | 14,900 |
| Group Centre | 6,600 | 6,200 | 4,800 |
| Core | 106,200 | 107,000 | 107,400 |
| Non-Core | 4,300 | 4,700 | 6,700 |
| 110,500 | 111,700 | 114,100 | |
| Business Services | 33,600 | 34,000 | 34,100 |
| Integration and restructuring | 1,000 | 1,100 | 300 |
| Group | 145,100 | 146,800 | 148,500 |
| Quarter ended | |||
|---|---|---|---|
| 31 March | 31 December | 31 March | |
| 2012 | 2011 | 2011 | |
| £m | £m | £m | |
| Income statement | |||
| Net interest income | 1,001 | 1,032 | 1,086 |
| Net fees and commissions | 237 | 242 | 270 |
| Other non-interest income | 29 | 35 | 34 |
| Non-interest income | 266 | 277 | 304 |
| Total income | 1,267 | 1,309 | 1,390 |
| Direct expenses | |||
| - staff | (207) | (200) | (215) |
| - other | (79) | (116) | (113) |
| Indirect expenses | (349) | (344) | (350) |
| (635) | (660) | (678) | |
| Operating profit before impairment losses | 632 | 649 | 712 |
| Impairment losses | (155) | (191) | (194) |
| Operating profit | 477 | 458 | 518 |
| Analysis of income by product | |||
| Personal advances | 236 | 276 | 275 |
| Personal deposits Mortgages |
185 563 |
214 577 |
254 543 |
| Cards | 219 | 238 | 238 |
| Other | 64 | 4 | 80 |
| Total income | 1,267 | 1,309 | 1,390 |
| Analysis of impairments by sector | |||
| Mortgages | 34 | 32 | 61 |
| Personal | 82 | 116 | 95 |
| Cards | 39 | 43 | 38 |
| Total impairment losses | 155 | 191 | 194 |
| Loan impairment charge as % of gross customer loans and advances | |||
| (excluding reverse repurchase agreements) by sector | |||
| Mortgages | 0.1% | 0.1% | 0.3% |
| Personal | 3.5% | 4.6% | 3.3% |
| Cards | 2.8% | 3.0% | 2.7% |
| Total | 0.6% | 0.7% | 0.7% |
| Quarter ended | ||||
|---|---|---|---|---|
| 31 March | 31 December | 31 March | ||
| 2012 | 2011 | 2011 | ||
| Performance ratios | ||||
| Return on equity (1) | 24.0% | 22.8% | 24.5% | |
| Net interest margin | 3.61% | 3.74% | 4.08% | |
| Cost:income ratio | 50% | 50% | 49% |
| 31 March 2012 |
31 December 2011 |
31 March 2011 |
|||
|---|---|---|---|---|---|
| £bn | £bn | Change | £bn | Change | |
| Capital and balance sheet | |||||
| Loans and advances to customers (gross) (2) | |||||
| - mortgages | 97.5 | 95.0 | 3% | 93.0 | 5% |
| - personal | 9.4 | 10.1 | (7%) | 11.4 | (18%) |
| - cards | 5.6 | 5.7 | (2%) | 5.6 | - |
| 112.5 | 110.8 | 2% | 110.0 | 2% | |
| Customer deposits (2) | 104.2 | 101.9 | 2% | 96.1 | 8% |
| Assets under management (excluding | |||||
| deposits) | 5.8 | 5.5 | 5% | 5.8 | - |
| Risk elements in lending (2) | 4.6 | 4.6 | - | 4.6 | - |
| Loan:deposit ratio (excluding repos) | 105% | 106% | (100bp) | 112% | (700bp) |
| Risk-weighted assets | 48.2 | 48.4 | - | 50.3 | (4%) |
Notes:
(1) Divisional return on equity is based on divisional operating profit after tax divided by average notional equity (based on 10% of the monthly average of divisional RWAs, adjusted for capital deductions).
(2) Includes disposal groups: loans and advances to customers £7.3 billion; risk elements in lending £0.5 billion; customer deposits £8.7 billion (31 December 2011 - loans and advances to customers £7.3 billion; risk elements in lending £0.5 billion; customer deposits £8.8 billion).
In Q1 2012 UK Retail continued to focus on our commitment to customers to be the UK's most Helpful Bank.
On 28 March 2012, the Customer Charter 2011 results were published and showed encouraging improvements. The results were independently assessed, and, of the twenty-five goals set out in the Charter, we achieved twenty-three. This result demonstrates the progress that has been made, and has been recognised by customers, but there is still work to be done to deliver improvements in service and resolve complaints fairly, consistently and promptly.
In 2012, the Charter has evolved so it is even more relevant to customers, with simplified commitments categorised under the following four key themes: knowledgeable staff will put customer needs first, we will do more to help customers when they need it most, we will provide convenient and quick service to our customers and we will continue to help strengthen the communities in which we live and work.
Risk-weighted assets were broadly stable, with volume growth in lower risk secured mortgages more than offset by a decrease in the unsecured portfolio. Asset quality remains stable.
Net interest income fell driven by lower liability margins, due to a continued decline in long-term swap rates and competitive pricing on savings.
| 31 March | Quarter ended 31 December |
31 March | |
|---|---|---|---|
| 2012 | 2011 | 2011 | |
| £m | £m | £m | |
| Income statement | |||
| Net interest income | 756 | 758 | 811 |
| Net fees and commissions | 336 | 341 | 345 |
| Other non-interest income | 109 | 78 | 106 |
| Non-interest income | 445 | 419 | 451 |
| Total income | 1,201 | 1,177 | 1,262 |
| Direct expenses | |||
| - staff | (245) | (231) | (235) |
| - other | (85) | (99) | (104) |
| Indirect expenses | (203) | (205) | (199) |
| (533) | (535) | (538) | |
| Operating profit before impairment losses | 668 | 642 | 724 |
| Impairment losses | (176) | (236) | (107) |
| Operating profit | 492 | 406 | 617 |
| Analysis of income by business | |||
| Corporate and commercial lending | 687 | 623 | 722 |
| Asset and invoice finance | 162 | 169 | 151 |
| Corporate deposits | 166 | 171 | 174 |
| Other | 186 | 214 | 215 |
| Total income | 1,201 | 1,177 | 1,262 |
| Analysis of impairments by sector | |||
| Financial institutions | 2 | (2) | 3 |
| Hotels and restaurants | 15 | 16 | 8 |
| Housebuilding and construction | 25 | 27 | 32 |
| Manufacturing | - | 13 | 6 |
| Other | 40 | 39 | 3 |
| Private sector education, health, social work, recreational and | |||
| community services | 22 | 81 | 11 |
| Property | 30 | 19 | 18 |
| Wholesale and retail trade, repairs | 33 | 29 | 16 |
| Asset and invoice finance | 9 | 14 | 10 |
| Total impairment losses | 176 | 236 | 107 |
| Quarter ended | ||||
|---|---|---|---|---|
| 31 March | 31 December | 31 March | ||
| 2012 | 2011 | 2011 | ||
| Loan impairment charge as % of gross customer loans and advances (excluding reverse repurchase agreements) by sector |
||||
| Financial institutions | 0.1% | (0.1%) | 0.2% | |
| Hotels and restaurants | 1.0% | 1.0% | 0.5% | |
| Housebuilding and construction | 2.7% | 2.8% | 2.8% | |
| Manufacturing | - | 1.1% | 0.5% | |
| Other | 0.5% | 0.5% | - | |
| Private sector education, health, social work, recreational and | ||||
| community services | 1.0% | 3.7% | 0.5% | |
| Property | 0.4% | 0.3% | 0.2% | |
| Wholesale and retail trade, repairs | 1.5% | 1.3% | 0.7% | |
| Asset and invoice finance | 0.3% | 0.5% | 0.4% | |
| Total | 0.6% | 0.9% | 0.4% |
| Quarter ended | |||
|---|---|---|---|
| 31 March | 31 December | 31 March | |
| 2012 | 2011 | 2011 | |
| Performance ratios | |||
| Return on equity (1) | 16.2% | 13.0% | 19.2% |
| Net interest margin | 3.09% | 3.02% | 3.19% |
| Cost:income ratio | 44% | 45% | 43% |
| 31 March 31 December 2012 2011 |
31 March 2011 |
|||||
|---|---|---|---|---|---|---|
| £bn | £bn | Change | £bn | Change | ||
| Capital and balance sheet | ||||||
| Total third party assets | 113.2 | 114.2 | (1%) | 117.7 | (4%) | |
| Loans and advances to customers (gross) (2) | ||||||
| - financial institutions | 6.2 | 5.8 | 7% | 6.1 | 2% | |
| - hotels and restaurants | 6.0 | 6.1 | (2%) | 6.7 | (10%) | |
| - housebuilding and construction | 3.7 | 3.9 | (5%) | 4.5 | (18%) | |
| - manufacturing | 4.7 | 4.7 | - | 5.2 | (10%) | |
| - other | 34.4 | 34.2 | 1% | 33.6 | 2% | |
| - private sector education, health, social | ||||||
| work, recreational and community services | 8.6 | 8.7 | (1%) | 8.9 | (3%) | |
| - property | 26.7 | 28.2 | (5%) | 30.2 | (12%) | |
| - wholesale and retail trade, repairs | 9.1 | 8.7 | 5% | 9.8 | (7%) | |
| - asset and invoice finance | 10.3 | 10.4 | (1%) | 9.8 | 5% | |
| 109.7 | 110.7 | (1%) | 114.8 | (4%) | ||
| Customer deposits (2) | 124.3 | 126.3 | (2%) | 124.4 | - | |
| Risk elements in lending (2) | 4.9 | 5.0 | (2%) | 4.6 | 7% | |
| Loan:deposit ratio (excluding repos) | 87% | 86% | 100bp | 91% | (400bp) | |
| Risk-weighted assets | 76.9 | 79.3 | (3%) | 82.3 | (7%) |
(2) Includes disposal groups: loans and advances to customers £12.0 billion; risk elements in lending £1.0 billion; customer deposits £12.7 billion (31 December 2011 - loans and advances to customers £12.2 billion; risk elements in lending £1.0 billion; customer deposits £13.0 billion).
(1) Divisional return on equity is based on divisional operating profit after tax, divided by average notional equity (based on 10% of the monthly average of divisional RWAs, adjusted for capital deductions).
In Q1 2012 UK Corporate continued to demonstrate its commitment to customers and to supporting recovery in the UK economy.
As part of the 'Ahead for Business' promise, fast, reliable service and customer proximity remain at the forefront of UK Corporate's proposition. In February 2012 the division launched a new iPhone app enabling business banking customers to keep track of their finances and effectively manage opportunities and risks within their business. The division also enhanced its telephony proposition with an extended and faster service, providing expert advice to smaller businesses.
By the end of Q1 2012, RBS staff had undertaken 4,883 'Working with You' visits, spending two days at a time working in their customers' businesses, demonstrating how serious UK Corporate is about understanding and sharing its customers' ambitions.
Q1 2012 saw the launch of the National Loan Guarantee Scheme (NLGS). As part of the scheme UK Corporate offers a 1% pricing discount on loans, including asset finance facilities provided through the Lombard brand, to a large number of clients. RBS Group is the only bank to extend the discount for the complete range of loans, from £1,000 up to £25 million. Furthermore, UK Corporate demonstrated its continued support of the manufacturing sector by launching the 8th tranche of a £1 billion Manufacturing Fund in the quarter. The division also participated in a number of other UK Government supported schemes:
the Enterprise Finance Guarantee, for small firms with viable business proposals that are unable to obtain a conventional loan due to lack of security.
UK Corporate delivered a strong performance, with return on equity of 16.2% and operating profit increasing 21% to £492 million, driven by non-interest income growth and lower impairments.
| Quarter ended | ||||
|---|---|---|---|---|
| 31 March | 31 December | 31 March | ||
| 2012 | 2011 | 2011 | ||
| £m | £m | £m | ||
| Income statement | ||||
| Net interest income | 179 | 168 | 157 | |
| Net fees and commissions | 93 | 89 | 97 | |
| Other non-interest income | 18 | 23 | 17 | |
| Non-interest income | 111 | 112 | 114 | |
| Total income | 290 | 280 | 271 | |
| Direct expenses | ||||
| - staff | (117) | (96) | (100) | |
| - other | (60) | (43) | (44) | |
| Indirect expenses | (58) | (55) | (52) | |
| (235) | (194) | (196) | ||
| Operating profit before impairment losses | 55 | 86 | 75 | |
| Impairment losses | (10) | (13) | (5) | |
| Operating profit | 45 | 73 | 70 | |
| Analysis of income | ||||
| Private banking | 237 | 232 | 221 | |
| Investments | 53 | 48 | 50 | |
| Total income | 290 | 280 | 271 |
| Quarter ended | ||||
|---|---|---|---|---|
| 31 March | 31 December | 31 March | ||
| 2012 | 2011 | 2011 | ||
| Performance ratios | ||||
| Return on equity (1) | 9.5% | 15.2% | 15.0% | |
| Net interest margin | 3.67% | 3.39% | 3.24% | |
| Cost:income ratio | 81% | 69% | 72% |
| 31 March 2012 £bn |
31 December 2011 £bn |
Change | 31 March 2011 £bn |
Change | |
|---|---|---|---|---|---|
| Capital and balance sheet | |||||
| Loans and advances to customers (gross) | |||||
| - mortgages | 8.4 | 8.3 | 1% | 7.8 | 8% |
| - personal | 6.8 | 6.9 | (1%) | 7.0 | (3%) |
| - other | 1.7 | 1.7 | - | 1.7 | - |
| 16.9 | 16.9 | - | 16.5 | 2% | |
| Customer deposits (2) | 38.3 | 38.2 | - | 37.5 | 2% |
| Assets under management (excluding | |||||
| deposits) (2) | 31.4 | 30.9 | 2% | 34.4 | (9%) |
| Risk elements in lending | 0.2 | 0.2 | - | 0.2 | - |
| Loan:deposit ratio (excluding repos) (2) | 44% | 44% | - | 44% | - |
| Risk-weighted assets | 12.9 | 12.9 | - | 12.6 | 2% |
Notes:
(1) Divisional return on equity is based on divisional operating profit after tax divided by average notional equity (based on 10% of the monthly average of divisional RWAs, adjusted for capital deductions).
(2) 31 March 2011 comparatives were revised in Q3 2011 to reflect the current reporting methodology.
Q1 2012 saw further progress in the implementation of the refreshed Coutts divisional strategy across all jurisdictions.
Coutts continued to prepare the deployment of a single global technology platform with the UK rollout completed in Q1 2012. The bank's strategic investment will enable the business to operate as a global organisation on a single IT platform, transforming the way clients are served.
Operating profit decreased 38% to £45 million, with a 4% increase in income more than offset by increased expenses.
| 31 March | Quarter ended 31 December |
||
|---|---|---|---|
| 2012 | 2011 | 31 March 2011 |
|
| £m | £m | £m | |
| Income statement | |||
| Net interest income from banking activities | 260 | 293 | 303 |
| Non-interest income | 282 | 300 | 344 |
| Total income | 542 | 593 | 647 |
| Direct expenses | |||
| - staff | (187) | (160) | (195) |
| - other | (48) | (51) | (61) |
| Indirect expenses | (175) | (174) | (171) |
| (410) | (385) | (427) | |
| Operating profit before impairment losses | 132 | 208 | 220 |
| Impairment (losses)/recoveries | (35) | (56) | 6 |
| Operating profit | 97 | 152 | 226 |
| Of which: | |||
| Ongoing businesses | 113 | 145 | 235 |
| Run-off businesses | (16) | 7 | (9) |
| Analysis of income by product | |||
| Cash management | 268 | 241 | 216 |
| Trade finance | 72 | 67 | 62 |
| Portfolio | 197 | 257 | 353 |
| Ongoing businesses | 537 | 565 | 631 |
| Run-off businesses | 5 | 28 | 16 |
| Total income | 542 | 593 | 647 |
| Analysis of impairments by sector | |||
| Manufacturing and infrastructure | (17) | (75) | (32) |
| Property and construction | - | - | (6) |
| Transport and storage | 4 | - | (9) |
| Telecommunications, media and technology | (9) | - | - |
| Banks and financial institutions | (12) | - | 1 |
| Other | (1) | 19 | 52 |
| Total impairment (losses)/recoveries | (35) | (56) | 6 |
| Loan impairment charge as % of gross customer loans and advances (excluding reverse repurchase agreements) |
0.3% | 0.4% | - |
| Quarter ended | ||||
|---|---|---|---|---|
| 31 March 31 December |
31 March | |||
| 2012 | 2011 | 2011 | ||
| Performance ratios (ongoing businesses) | ||||
| Return on equity (1) | 7.5% | 9.1% | 13.2% | |
| Net interest margin | 1.60% | 1.64% | 1.83% | |
| Cost:income ratio | 72% | 64% | 64% |
Note:
(1) Divisional return on equity is based on divisional operating profit after tax, divided by average notional equity (based on 10% of the monthly average of divisional RWAs, adjusted for capital deductions), for the ongoing businesses.
| 31 March 2012 |
31 December 2011 |
31 March 2011 |
|||
|---|---|---|---|---|---|
| £bn | £bn | Change | £bn | Change | |
| Capital and balance sheet | |||||
| Loans and advances to customers | 52.3 | 56.9 | (8%) | 62.6 | (16%) |
| Loans and advances to banks | 3.9 | 3.4 | 15% | 3.8 | 3% |
| Securities | 4.0 | 6.0 | (33%) | 5.9 | (32%) |
| Cash and eligible bills | 0.3 | 0.3 | - | 1.0 | (70%) |
| Other | 3.2 | 3.3 | (3%) | 3.5 | (9%) |
| Total third party assets (excluding derivatives | |||||
| mark-to-market) | 63.7 | 69.9 | (9%) | 76.8 | (17%) |
| Customer deposits (excluding repos) | 45.0 | 45.1 | - | 44.1 | 2% |
| Risk elements in lending | 0.9 | 1.6 | (44%) | 1.5 | (40%) |
| Loan:deposit ratio (excluding repos) | 116% | 126% | (1,000bp) | 142% | (2,600bp) |
| Risk-weighted assets | 41.8 | 43.2 | (3%) | 45.7 | (9%) |
| Quarter ended | |||||
| 31 March | 31 December | 31 March | |||
| 2012 | 2011 | 2011 | |||
| £m | £m | £m | |||
| Run-off businesses (1) | |||||
| Total income | 5 | 28 | 16 | ||
| Direct expenses | (21) | (21) | (25) | ||
| Operating (loss)/profit | (16) | 7 | (9) |
Note:
(1) Run-off businesses consist of the exited corporate finance business.
The formation of International Banking in January 2012 created a significant and integrated client focused business, well placed to serve clients' financing, working capital and risk management needs internationally. Cash management and trade finance, both in the UK and internationally, remain key offerings for the Group's customers and, overall, International Banking continues to invest in improving existing products and in developing new ones.
Since the restructure, substantial progress has been made on the integration. The senior management team is in place. Early engagement with clients on the integrated proposition has been positive and management are reviewing a number of revenue enhancing opportunities arising from leveraging the Group's network coverage and product capabilities.
The loan to deposit ratio improved from 126% to 116% mainly driven by reductions in the loan book.
Operating profit was down £129 million reflecting lower Portfolio income and higher impairments, partially offset by lower discretionary expenses.
| Quarter ended | |||
|---|---|---|---|
| 31 March | 31 December | 31 March | |
| 2012 | 2011 | 2011 | |
| £m | £m | £m | |
| Income statement | |||
| Net interest income | 165 | 177 | 181 |
| Net fees and commissions | 38 | 28 | 36 |
| Other non-interest income | 11 | 21 | 15 |
| Non-interest income | 49 | 49 | 51 |
| Total income | 214 | 226 | 232 |
| Direct expenses | |||
| - staff | (52) | (53) | (56) |
| - other | (12) | (15) | (18) |
| Indirect expenses | (66) | (64) | (62) |
| (130) | (132) | (136) | |
| Operating profit before impairment losses Impairment losses |
84 (394) |
94 (327) |
96 (461) |
| Operating loss | (310) | (233) | (365) |
| Analysis of income by business | |||
| Corporate | 102 | 98 | 113 |
| Retail Other |
88 24 |
101 27 |
113 6 |
| Total income | 214 | 226 | 232 |
| Analysis of impairments by sector | |||
| Mortgages Corporate |
215 | 133 | 233 |
| - property | 54 | 83 | 97 |
| - other corporate | 114 | 100 | 120 |
| Other lending | 11 | 11 | 11 |
| Total impairment losses | 394 | 327 | 461 |
| Loan impairment charge as % of gross customer loans and advances | |||
| (excluding reverse repurchase agreements) by sector | |||
| Mortgages | 4.3% | 2.7% | 4.3% |
| Corporate | |||
| - property | 4.4% | 6.9% | 7.2% |
| - other corporate | 5.8% | 5.2% | 5.5% |
| Other lending | 3.4% | 2.8% | 2.9% |
| Total | 4.6% | 3.8% | 5.0% |
| 31 March 31 December 2012 2011 |
31 March |
|---|---|
| 2011 | |
| (20.7%) | (36.8%) |
| 1.87% | 1.84% |
| 58% | 59% |
| (25.8%) 1.87% 61% |
| 31 March 2012 £bn |
31 December 2011 £bn |
Change | 31 March 2011 £bn |
Change | |
|---|---|---|---|---|---|
| Capital and balance sheet | |||||
| Loans and advances to customers (gross) | |||||
| - mortgages | 19.8 | 20.0 | (1%) | 21.5 | (8%) |
| - corporate | |||||
| - property | 4.9 | 4.8 | 2% | 5.4 | (9%) |
| - other corporate | 7.9 | 7.7 | 3% | 8.8 | (10%) |
| - other lending | 1.3 | 1.6 | (19%) | 1.5 | (13%) |
| 33.9 | 34.1 | (1%) | 37.2 | (9%) | |
| Customer deposits | 21.0 | 21.8 | (4%) | 23.8 | (12%) |
| Risk elements in lending | |||||
| - mortgages | 2.5 | 2.2 | 14% | 1.8 | 39% |
| - corporate | |||||
| - property | 1.3 | 1.3 | - | 1.0 | 30% |
| - other corporate | 1.9 | 1.8 | 6% | 1.6 | 19% |
| - other lending | 0.2 | 0.2 | - | 0.2 | - |
| Total risk elements in lending | 5.9 | 5.5 | 7% | 4.6 | 28% |
| Loan:deposit ratio (excluding repos) | 147% | 143% | 400bp | 147% | - |
| Risk-weighted assets | 38.4 | 36.3 | 6% | 31.7 | 21% |
| Spot exchange rate - €/£ | 1.200 | 1.196 | - | 1.131 | 6% |
Note:
(1) Divisional return on equity is based on divisional operating loss after tax divided by average notional equity (based on 10% of the monthly average of divisional RWAs, adjusted for capital deductions).
Economic conditions in Ireland remain challenging. Despite growth in the export sector, the domestic economy continues to be weak, unemployment remains elevated and residential property values continue to decline. These conditions adversely affected financial performance in Q1 2012, particularly the level of impairments on the residential mortgage portfolio.
Ulster Bank remains focused on the recovery of the business and on the rebuilding of a sustainable franchise into the future. Ulster Bank also continues to support the changing needs of customers, in difficult economic conditions, through the provision of a range of restructuring solutions.
Deposit gathering remains a priority and the implementation of a number of cost management initiatives across the business is progressing.
Risk-weighted assets increased by £2.1 billion, mainly as a result of deterioration in mortgage credit metrics.
Operating loss decreased by £55 million to £310 million, with lower impairment losses partly offset by lower income.
| Quarter ended | ||||
|---|---|---|---|---|
| 31 March | 31 December | 31 March | ||
| 2012 | 2011 | 2011 | ||
| £m | £m | £m | ||
| Income statement | ||||
| Net interest income | 496 | 496 | 452 | |
| Net fees and commissions | 195 | 199 | 202 | |
| Other non-interest income | 65 | 95 | 73 | |
| Non-interest income | 260 | 294 | 275 | |
| Total income | 756 | 790 | 727 | |
| Direct expenses | ||||
| - staff | (223) | (216) | (201) | |
| - other | (116) | (137) | (126) | |
| - litigation settlement | (88) | - | - | |
| Indirect expenses | (208) | (195) | (195) | |
| (635) | (548) | (522) | ||
| Operating profit before impairment losses | 121 | 242 | 205 | |
| Impairment losses | (19) | (65) | (111) | |
| Operating profit | 102 | 177 | 94 | |
| Average exchange rate - US\$/£ | 1.571 | 1.573 | 1.601 | |
| Analysis of income by product | ||||
| Mortgages and home equity | 134 | 128 | 109 | |
| Personal lending and cards | 99 | 100 | 112 | |
| Retail deposits | 220 | 237 | 218 | |
| Commercial lending | 160 | 148 | 138 | |
| Commercial deposits | 114 | 110 | 99 | |
| Other | 29 | 67 | 51 | |
| Total income | 756 | 790 | 727 | |
| Analysis of impairments by sector | ||||
| Residential mortgages | 6 | 4 | 6 | |
| Home equity | 22 | 20 | 39 | |
| Corporate and commercial | (16) | 8 | 19 | |
| Other consumer | 3 | 21 | 20 | |
| Securities | 4 | 12 | 27 | |
| Total impairment losses | 19 | 65 | 111 | |
| Loan impairment charge as % of gross customer loans and advances | ||||
| (excluding reverse repurchase agreements) by sector | ||||
| Residential mortgages | 0.4% | 0.3% | 0.4% | |
| Home equity | 0.6% | 0.5% | 1.1% | |
| Corporate and commercial | (0.3%) | 0.1% | 0.4% | |
| Other consumer | 0.2% | 1.1% | 1.3% | |
| Total | 0.1% | 0.4% | 0.7% |
| Quarter ended | |||
|---|---|---|---|
| 31 March | 31 December | 31 March | |
| 2012 | 2011 | 2011 | |
| Performance ratios | |||
| Return on equity (1) | 4.5% | 8.0% | 4.5% |
| Return on equity - excluding litigation settlement (1) | 8.4% | 8.0% | 4.5% |
| Net interest margin | 3.06% | 3.04% | 3.00% |
| Cost:income ratio | 84% | 69% | 72% |
| Cost:income ratio - excluding litigation settlement | 72% | 69% | 72% |
| 31 March 2012 |
31 December 2011 |
31 March 2011 |
|||
|---|---|---|---|---|---|
| £bn | £bn | Change | £bn | Change | |
| Capital and balance sheet | |||||
| Total third party assets | 73.7 | 75.8 | (3%) | 71.8 | 3% |
| Loans and advances to customers (gross) | |||||
| - residential mortgages | 6.0 | 6.1 | (2%) | 5.6 | 7% |
| - home equity | 14.2 | 14.9 | (5%) | 14.7 | (3%) |
| - corporate and commercial | 22.6 | 22.9 | (1%) | 20.3 | 11% |
| - other consumer | 8.1 | 7.7 | 5% | 6.4 | 27% |
| 50.9 | 51.6 | (1%) | 47.0 | 8% | |
| Customer deposits (excluding repos) | 58.7 | 60.0 | (2%) | 57.2 | 3% |
| Risk elements in lending | |||||
| - retail | 0.6 | 0.6 | - | 0.5 | 20% |
| - commercial | 0.3 | 0.4 | (25%) | 0.5 | (40%) |
| Total risk elements in lending | 0.9 | 1.0 | (10%) | 1.0 | (10%) |
| Loan:deposit ratio (excluding repos) | 86% | 85% | 100bp | 81% | 500bp |
| Risk-weighted assets | 58.6 | 59.3 | (1%) | 54.0 | 9% |
| Spot exchange rate - US\$/£ | 1.599 | 1.548 | 1.605 |
Note:
(1) Divisional return on equity is based on divisional operating profit after tax divided by average notional equity (based on 10% of the monthly average of divisional RWAs, adjusted for capital deductions).
| Quarter ended | |||
|---|---|---|---|
| 31 March | 31 December | 31 March | |
| 2012 \$m |
2011 \$m |
2011 \$m |
|
| Income statement | |||
| Net interest income | 779 | 781 | 724 |
| Net fees and commissions | 307 | 314 | 324 |
| Other non-interest income | 102 | 148 | 116 |
| Non-interest income | 409 | 462 | 440 |
| Total income | 1,188 | 1,243 | 1,164 |
| Direct expenses | |||
| - staff | (350) | (339) | (322) |
| - other | (182) | (216) | (203) |
| - litigation settlement | (138) | - | - |
| Indirect expenses | (327) | (307) | (312) |
| (997) | (862) | (837) | |
| Operating profit before impairment losses Impairment losses |
191 (31) |
381 (102) |
327 (177) |
| Operating profit | 160 | 279 | 150 |
| Analysis of income by product | |||
| Mortgages and home equity | 211 | 202 | 175 |
| Personal lending and cards | 156 | 157 | 179 |
| Retail deposits | 346 | 373 | 349 |
| Commercial lending | 251 | 233 | 221 |
| Commercial deposits | 179 | 173 | 158 |
| Other | 45 | 105 | 82 |
| Total income | 1,188 | 1,243 | 1,164 |
| Analysis of impairments by sector | |||
| Residential mortgages | 9 | 6 | 9 |
| Home equity | 35 | 31 | 63 |
| Corporate and commercial | (25) | 13 | 30 |
| Other consumer | 6 | 33 | 32 |
| Securities | 6 | 19 | 43 |
| Total impairment losses | 31 | 102 | 177 |
| Loan impairment charge as % of gross customer loans and advances | |||
| (excluding reverse repurchase agreements) by sector | |||
| Residential mortgages | 0.4% | 0.3% | 0.4% |
| Home equity | 0.6% | 0.5% | 1.1% |
| Corporate and commercial | (0.3%) | 0.1% | 0.4% |
| Other consumer | 0.2% | 1.1% | 1.2% |
| Total | 0.1% | 0.4% | 0.7% |
| Quarter ended | |||||
|---|---|---|---|---|---|
| 31 March 2012 |
31 December 2011 |
31 March 2011 |
|||
| Performance ratios | |||||
| Return on equity (1) | 4.5% | 8.0% | 4.5% | ||
| Return on equity - excluding litigation settlement (1) | 8.4% | 8.0% | 4.5% | ||
| Net interest margin | 3.06% | 3.04% | 3.00% | ||
| Cost:income ratio | 84% | 69% | 72% | ||
| Cost:income ratio - excluding litigation settlement | 72% | 69% | 72% | ||
| 31 March | 31 December | 31 March | |||
| 2012 | 2011 | 2011 | |||
| \$bn | \$bn | Change | \$bn | Change | |
| Capital and balance sheet | |||||
| Total third party assets | 117.9 | 117.3 | 1% | 115.2 | 2% |
| Loans and advances to customers (gross) | |||||
| - residential mortgages | 9.5 | 9.4 | 1% | 9.1 | 4% |
| - home equity | 22.6 | 23.1 | (2%) | 23.6 | (4%) |
| - corporate and commercial | 36.2 | 35.3 | 3% | 32.2 | 12% |
| - other consumer | 13.2 | 12.0 | 10% | 10.5 | 26% |
| 81.5 | 79.8 | 2% | 75.4 | 8% | |
| Customer deposits (excluding repos) | 93.9 | 92.8 | 1% | 91.8 | 2% |
| Risk elements in lending | |||||
| - retail | 0.9 | 1.0 | (10%) | 0.8 | 13% |
| - commercial | 0.6 | 0.6 | - | 0.8 | (25%) |
| Total risk elements in lending | 1.5 | 1.6 | (6%) | 1.6 | (6%) |
| Loan:deposit ratio (excluding repos) | 86% | 85% | 100bp | 81% | 500bp |
| Risk-weighted assets | 93.7 | 91.8 | 2% | 86.7 | 8% |
Note:
(1) Divisional return on equity is based on divisional operating profit after tax divided by average notional equity (based on 10% of monthly average of divisional RWAs, adjusted for capital deductions).
In Q1 2012 US R&C continued to focus on its back-to-basics strategy, with the goal of increasing profitability through developing the customer franchise, managing expenses, and enhancing credit quality.
Consumer Banking accelerated the roll-out of its four core customer commitments to the entire branch footprint, finishing ahead of schedule. The aim of the commitments is to enhance the customer experience and further strengthen the Citizens brand, and is built around feedback received from customers.
Q1 2012 also saw Treasury Solutions (Domestic Global Transaction Services) reintegrated into the Commercial Banking Division. This reintegration will strengthen the cross-sell of Treasury Solutions products to the Commercial client base and follows the formation of a consolidated Consumer Banking division in H2 2011, aimed at strengthening the retail alignment and improving efficiencies.
A continued focus on strengthening and growing valued customer and client relationships has delivered results. For example, in Consumer Banking, the penetration of on-line banking customers, a key indicator of customer retention, continued to improve in Q1 2012 and the penetration of loan products to deposit households has shown a steady increase over the past eleven consecutive quarters.
In Commercial Banking, a recent Greenwich Associates survey indicated strong year-on-year improvements. Clients placed Citizens number one or number two versus peers in several key categories, including 'values long-term relationships', 'understanding of your industry', 'likelihood to recommend bank' and 'likelihood to continue using for future banking needs'.
Impairment losses were down \$71 million, or 70%, reflecting an improved credit environment and lower impairments related to securities. REIL decreased from \$1.6 billion to \$1.5 billion.
Operating profit increased to \$160 million from \$150 million, an increase of \$10 million, or 7%, substantially driven by significantly lower impairments and increased income, largely offset by the settlement of an outstanding litigation. Excluding the litigation settlement operating profit increased by \$148 million, or 99%, to \$298 million.
| Quarter ended | |||
|---|---|---|---|
| 31 March | 31 December | 31 March | |
| 2012 | 2011 | 2011 | |
| £m | £m | £m | |
| Income statement | |||
| Net interest income from banking activities | 24 | 23 | 56 |
| Net fees and commissions receivable | 127 | 62 | 207 |
| Income from trading activities | 1,548 | 580 | 1,817 |
| Other operating income (net of related funding costs) | 35 | 27 | 28 |
| Non-interest income | 1,710 | 669 | 2,052 |
| Total income | 1,734 | 692 | 2,108 |
| Direct expenses | |||
| - staff | (544) | (354) | (727) |
| - other | (166) | (197) | (166) |
| Indirect expenses | (198) | (193) | (186) |
| (908) | (744) | (1,079) | |
| Operating profit/(loss) before impairment losses | 826 | (52) | 1,029 |
| Impairment losses | (2) | (57) | - |
| Operating profit/(loss) | 824 | (109) | 1,029 |
| Of which: | |||
| Ongoing businesses | 861 | (96) | 1,039 |
| Run-off businesses | (37) | (13) | (10) |
| Analysis of income by product Rates |
801 | 396 | 749 |
| Currencies | 246 | 259 | 241 |
| Asset backed products | 427 | 29 | 617 |
| Credit markets | 313 | 36 | 430 |
| Investor products and equity derivatives | 123 | 118 | 216 |
| Total income continuing businesses | 1,910 | 838 | 2,253 |
| Inter-divisional revenue share | (186) | (177) | (208) |
| Run-off businesses | 10 | 31 | 63 |
| Total income | 1,734 | 692 | 2,108 |
| Memo - Fixed income and currencies | |||
| Rates/currencies/ABP/credit markets | 1,785 | 718 | 2,038 |
| Less: primary credit markets | (171) | (134) | (229) |
| Total fixed income and currencies | 1,614 | 584 | 1,809 |
| Quarter ended | |||
|---|---|---|---|
| 31 March 2012 |
31 March | ||
| 2011 | |||
| 21.1% | (2.4%) | 26.0% | |
| 50% | 106% | 49% | |
| 29% | 49% | 33% | |
| 31 December 2011 |
| 31 March 2012 £bn |
31 December 2011 £bn |
Change | 31 March 2011 £bn |
Change | |
|---|---|---|---|---|---|
| Capital and balance sheet (ongoing businesses) |
|||||
| Loans and advances | 50.5 | 61.2 | (17%) | 67.5 | (25%) |
| Reverse repos | 90.8 | 100.4 | (10%) | 104.9 | (13%) |
| Securities | 106.6 | 108.1 | (1%) | 128.7 | (17%) |
| Cash and eligible bills | 24.2 | 28.1 | (14%) | 33.9 | (29%) |
| Other | 27.7 | 14.8 | 87% | 31.6 | (12%) |
| Total third party assets (excluding derivatives | |||||
| mark-to-market) | 299.8 | 312.6 | (4%) | 366.6 | (18%) |
| Net derivative assets (after netting) | 29.3 | 37.0 | (21%) | 34.5 | (15%) |
| Risk-weighted assets | 115.6 | 120.3 | (4%) | 114.3 | 1% |
Notes:
(1) Divisional return on equity is based on divisional operating profit after tax divided by average notional equity (based on 10% of the monthly average of divisional RWAs, adjusted for capital deductions), for the ongoing businesses.
(2) Compensation ratio is based on staff costs as a percentage of total income.
| Quarter ended | |||
|---|---|---|---|
| 31 March 31 December |
31 March | ||
| 2012 | 2011 | 2011 | |
| £m | £m | £m | |
| Run-off businesses (1) | |||
| Total income | 10 | 31 | 63 |
| Direct expenses | (47) | (44) | (73) |
| Operating loss | (37) | (13) | (10) |
| Balance sheet | £bn | £bn | £bn |
| Total third party assets (excluding derivatives mark to market) | 0.8 | 1.3 | 3.0 |
Note:
(1) Run-off businesses consist of the exited cash equities, corporate broking and equity capital markets operations.
Good progress has been made on the restructure announced in January 2012. The sale of Hoare Govett has been completed and sales of other businesses designated for exit are well advanced. The Markets management team and governance structure is in place and implementation of the new structure through the lower levels of the organisation is underway.
Markets benefited from a traditionally strong first quarter of the year as investors returned boosted by the ECB's Long Term Refinancing Operation (LTRO) programme and a re-emergence of confidence. However, overall activity and risk appetite remained tempered by continued concerns over the economic outlook, especially in Europe.
| Quarter ended | ||||
|---|---|---|---|---|
| 31 March | 31 December | 31 March | ||
| 2012 | 2011 | 2011 | ||
| £m | £m | £m | ||
| Income statement | ||||
| Earned premiums | 1,020 | 1,043 | 1,065 | |
| Reinsurers' share | (82) | (71) | (54) | |
| Net premium income | 938 | 972 | 1,011 | |
| Fees and commissions | (109) | (161) | (75) | |
| Instalment income | 31 | 33 | 35 | |
| Other income | 16 | 19 | 35 | |
| Total income | 876 | 863 | 1,006 | |
| Net claims | (649) | (589) | (784) | |
| Underwriting profit | 227 | 274 | 222 | |
| Staff expenses | (79) | (75) | (76) | |
| Other expenses | (91) | (79) | (87) | |
| Total direct expenses | (170) | (154) | (163) | |
| Indirect expenses | (63) | (55) | (56) | |
| (233) | (209) | (219) | ||
| Technical result | (6) | 65 | 3 | |
| Investment income | 90 | 60 | 64 | |
| Operating profit | 84 | 125 | 67 | |
| Analysis of income by product | ||||
| Personal lines motor excluding broker | ||||
| - own brands | 411 | 425 | 440 | |
| - partnerships | 31 | 34 | 73 | |
| Personal lines home excluding broker | ||||
| - own brands | 116 | 119 | 117 | |
| - partnerships | 88 | 81 | 98 | |
| Personal lines rescue and other excluding broker | ||||
| - own brands | 45 | 46 | 46 | |
| - partnerships | 42 | (16) | 46 | |
| Commercial | 79 | 81 | 74 | |
| International | 84 | 89 | 80 | |
| Other (1) | (20) | 4 | 32 | |
| Total income | 876 | 863 | 1,006 |
For the notes to this table refer to page 51.
| Quarter ended | ||||
|---|---|---|---|---|
| 31 March | 31 December | 31 March | ||
| 2012 | 2011 | 2011 | ||
| In-force policies (000s) | ||||
| Personal lines motor excluding broker | ||||
| - own brands | 3,827 | 3,787 | 4,071 | |
| - partnerships | 322 | 320 | 559 | |
| Personal lines home excluding broker | ||||
| - own brands | 1,812 | 1,811 | 1,776 | |
| - partnerships | 2,520 | 2,497 | 2,501 | |
| Personal lines rescue and other excluding broker | ||||
| - own brands | 1,803 | 1,844 | 1,971 | |
| - partnerships | 7,493 | 7,307 | 7,909 | |
| Commercial | 417 | 422 | 383 | |
| International | 1,412 | 1,387 | 1,234 | |
| Other (1) | 43 | 1 | 418 | |
| Total in-force policies (2) | 19,649 | 19,376 | 20,822 | |
| Gross written premium (£m) | ||||
| Personal lines motor excluding broker | ||||
| - own brands | 398 | 348 | 390 | |
| - partnerships | 37 | 28 | 37 | |
| Personal lines home excluding broker | ||||
| - own brands | 110 | 112 | 112 | |
| - partnerships | 136 | 132 | 138 | |
| Personal lines rescue and other excluding broker | ||||
| - own brands | 43 | 40 | 42 | |
| - partnerships | 41 | 44 | 40 | |
| Commercial | 107 | 102 | 112 | |
| International | 173 | 142 | 169 | |
| Other (1) | 1 | 2 | (3) | |
| Total gross written premium | 1,046 | 950 | 1,037 |
For the notes to this table refer to page 51.
| Quarter ended | ||||
|---|---|---|---|---|
| 31 March | 31 December | 31 March | ||
| 2012 | 2011 | 2011 | ||
| Performance ratios | ||||
| Return on tangible equity (3) | 7.4% | 11.0% | 6.3% | |
| Loss ratio (4) | 69% | 61% | 78% | |
| Commission ratio (5) | 12% | 17% | 7% | |
| Expense ratio (6) | 25% | 22% | 22% | |
| Combined operating ratio (7) | 106% | 100% | 107% | |
| Balance sheet | ||||
| Total insurance reserves - (£m) (8) | 8,132 | 7,284 | 7,617 |
Notes:
Direct Line Group continues to make good progress ahead of its divestment from the RBS Group. Q1 2012 operating profit of £84 million was negatively affected by adverse weather, but benefited from reserve releases from prior years.
The second phase of Direct Line Group's transformation plan - to rebuild competitive advantage - is continuing and tangible benefits are beginning to be delivered. During Q1 2012, Direct Line Group began renewing own brand Home policies on its new rating engine as part of the ongoing roll out of increased functionality. Additionally, since July last year, over 200,000 claims have been registered on the new claims management system and over 1,500 new claims are now processed every day. The rationalisation of sites continues as planned with one further location exited during Q1 2012.
In the period from 2009 to 2011 Motor in-force policies decreased by 27%, in line with the de-risking and exit of certain business lines during the first phase of Direct Line Group's transformation plan. During Q1 2012 Motor in-force policies grew by 1% marking a stabilisation of the portfolio. This was achieved whilst maintaining underwriting discipline.
During Q1 2012 Direct Line Group made progress with a number of partnership arrangements, which represent a significant portion of the Home segment. Expanding on the established relationship with Nationwide Building Society, a contract was signed to extend the provision of home insurance until the end of 2015. Direct Line Group is also concluding terms with UK Retail division for an arm's length, five year distribution agreement for the continued provision of general insurance products to its customers after the divestment of Direct Line Group. Additionally, following the launch of the Sainsbury's Bank car insurance partnership, during Q1 2012 the contract was extended to provide home insurance for Sainsbury's customers.
Following a period of strong growth, the International division consolidated its position in the quarter. Growth in Italy arose primarily from price increases, while in Germany a contract was signed with Check24 to expand Direct Line Group's market reach.
Commercial maintained underwriting discipline in a difficult market and work continued to improve the product offering and service to brokers.
Investment markets remained challenging with continued low yields. Direct Line Group's investment portfolio is composed primarily of cash, investment grade corporate bonds and gilts with minimal exposure to periphery Eurozone nations. At 31 March 2012, there was no exposure to debt issued in Portugal or Greece and a total exposure of £57 million, less than 1% of the portfolio, to debt issued in Ireland, Italy and Spain.
Ahead of the planned divestment from RBS Group, which is targeted to commence in the second half of 2012 by way of a public flotation, subject to market conditions, Direct Line Group has continued with activities in readiness for standalone status. The first stage of the separation programme is progressing as Direct Line Group begins the novation or transfer of contracts with RBS Group suppliers, and where necessary, commencement of the tendering process for new contracts. Standalone head office and other control functions are being established and key senior management have been appointed. On 23 March 2012 the appointment of Mike Biggs as Chairman of Direct Line Group was announced. He brings with him extensive industry experience and a successful track record.
A significant milestone was reached for Direct Line Group's principal underwriting entity, U K Insurance Limited, being assigned an inaugural credit rating of A, with a stable outlook, from Standard and Poor's and an A2 rating, with a stable outlook, from Moody's Investors Service. Following publication of these ratings, Direct Line Group issued £500 million of Tier 2 subordinated debt on 27 April 2012.
Overall, Direct Line Group has powerful brands and is focused on delivering a disciplined, profitable business while maintaining a robust balance sheet. It has continued to make progress in executing the second phase of its business transformation plan, rebuilding competitive advantage.
| Quarter ended | |||
|---|---|---|---|
| 31 March | 31 December | 31 March | |
| 2012 | 2011 | 2011 | |
| £m | £m | £m | |
| Central items not allocated | (144) | 89 | (32) |
Note:
(1) Costs/charges are denoted by brackets.
Funding and operating costs have been allocated to operating divisions based on direct service usage, the requirement for market funding and other appropriate drivers where services span more than one division.
Residual unallocated items relate to volatile corporate items that do not naturally reside within a division.
Q4 2011 benefited from higher securities gains and a VAT recovery.
Central items not allocated represented a debit of £144 million, a decrease of £112 million compared with Q1 2011.
| 31 March | Quarter ended 31 December |
31 March | |
|---|---|---|---|
| 2012 | 2011 | 2011 | |
| £m | £m | £m | |
| Income statement | |||
| Net interest income | 115 | 155 | 252 |
| Net fees and commissions | 31 | (47) | 47 |
| Loss from trading activities | (270) | (407) | (298) |
| Insurance net premium income | - | 9 | 138 |
| Other operating income | |||
| - rental income | 168 | 163 | 192 |
| - other (1) | 225 | (151) | 104 |
| Non-interest income | 154 | (433) | 183 |
| Total income/(loss) | 269 | (278) | 435 |
| Direct expenses | |||
| - staff | (71) | (82) | (91) |
| - operating lease depreciation | (83) | (91) | (87) |
| - other | (41) | (57) | (69) |
| Indirect expenses | (68) | (84) | (76) |
| (263) | (314) | (323) | |
| Operating profit/(loss) before other operating charges and impairment losses | 6 | (592) | 112 |
| Insurance net claims | - | 61 | (128) |
| Impairment losses | (489) | (751) | (1,075) |
| Operating loss | (483) | (1,282) | (1,091) |
Note:
(1) Includes gains/(losses) on disposals (Q1 2012 - £182 million gain; Q4 2011 - £36 million loss; Q1 2011 - £34 million loss).
| 31 March | Quarter ended 31 December |
31 March | |
|---|---|---|---|
| 2012 | 2011 | 2011 | |
| £m | £m | £m | |
| Analysis of income/(loss) by business | |||
| Banking and portfolios | 177 | (142) | 556 |
| International businesses | 85 | 92 | 81 |
| Markets | 7 | (228) | (202) |
| Total income/(loss) | 269 | (278) | 435 |
| Loss from trading activities | |||
| Monoline exposures | (128) | (243) | (130) |
| Credit derivative product companies | (38) | (19) | (40) |
| Asset-backed products (1) | 31 | (22) | 66 |
| Other credit exotics | 20 | (8) | (168) |
| Equities | (1) | 1 | 1 |
| Banking book hedges | - | (36) | (29) |
| Other | (154) | (80) | 2 |
| (270) | (407) | (298) | |
| Impairment losses | |||
| Banking and portfolios | 484 | 714 | 1,058 |
| International businesses | 11 | 30 | 20 |
| Markets | (6) | 7 | (3) |
| Total impairment losses | 489 | 751 | 1,075 |
| Loan impairment charge as % of gross customer loans and advances (excluding reverse repurchase agreements) (2) |
|||
| Banking and portfolios | 2.8% | 3.6% | 4.1% |
| International businesses | 2.1% | 5.3% | 2.1% |
| Markets | (0.8%) | (8.8%) | (0.1%) |
| Total | 2.7% | 3.7% | 4.0% |
Notes:
(1) Asset-backed products include super senior asset-backed structures and other asset-backed products.
(2) Includes disposal groups.
| Quarter ended | |||||
|---|---|---|---|---|---|
| 31 March | 31 December | 31 March | |||
| 2012 | 2011 | 2011 | |||
| Performance ratios | |||||
| Net interest margin | 0.31% | 0.42% | 0.72% | ||
| Cost:income ratio | 98% | nm | 74% | ||
| Adjusted cost:income ratio | 98% | nm | 105% | ||
| 31 March | 31 December | 31 March | |||
| 2012 | 2011 | 2011 | |||
| £bn | £bn | Change | £bn | Change | |
| Capital and balance sheet | |||||
| Total third party assets (excluding | |||||
| derivatives) (1) | 83.3 | 93.7 | (11%) | 124.8 | (33%) |
| Total third party assets (including | |||||
| derivatives) | 91.8 | 104.7 | (12%) | 137.1 | (33%) |
| Loans and advances to customers (gross) (2) | 72.7 | 79.4 | (8%) | 101.0 | (28%) |
| Customer deposits (2) | 3.1 | 3.5 | (11%) | 7.1 | (56%) |
| Risk elements in lending (2) | 23.5 | 24.0 | (2%) | 24.0 | (2%) |
| Risk-weighted assets (1) | 89.9 | 93.3 | (4%) | 128.5 | (30%) |
nm = not meaningful
(1) Includes RBS Sempra Commodities JV (31 March 2012 third party assets, excluding derivatives (TPAs) nil, RWAs £1.0 billion, 31 December 2011 TPAs £0.1 billion, RWAs £2.4 billion, 31 March 2011 TPAs £3.9 billion, RWAs £1.6 billion).
(2) Excludes disposal groups.
| 31 March 2012 |
31 December 2011 |
31 March 2011 |
|
|---|---|---|---|
| £bn | £bn | £bn | |
| Gross customer loans and advances | |||
| Banking and portfolios | 70.8 | 77.3 | 98.0 |
| International businesses | 1.9 | 2.0 | 2.9 |
| Markets | - | 0.1 | 0.1 |
| 72.7 | 79.4 | 101.0 | |
| Risk-weighted assets | |||
| Banking and portfolios | 66.1 | 64.8 | 76.5 |
| International businesses | 3.8 | 4.1 | 5.1 |
| Markets | 20.0 | 24.4 | 46.9 |
| 89.9 | 93.3 | 128.5 | |
| Third party assets (excluding derivatives) | |||
| Banking and portfolios | 73.2 | 81.3 | 105.4 |
| International businesses | 2.7 | 2.9 | 3.8 |
| Markets | 7.4 | 9.5 | 15.6 |
| 83.3 | 93.7 | 124.8 |
| 31 December 2011 £bn |
Run-off £bn |
Disposals/ restructuring £bn |
Drawings/ £bn |
roll overs Impairments £bn |
FX £bn |
31 March 2012 £bn |
|
|---|---|---|---|---|---|---|---|
| Commercial real estate | 31.5 | (1.5) | (0.4) | 0.1 | (0.4) | (0.2) | 29.1 |
| Corporate | 42.2 | (0.8) | (1.1) | 0.4 | (0.1) | (0.5) | 40.1 |
| SME | 2.1 | (0.3) | - | 0.1 | - | - | 1.9 |
| Retail | 6.1 | (0.2) | (1.6) | - | - | (0.1) | 4.2 |
| Other | 1.9 | (1.2) | - | - | - | (0.1) | 0.6 |
| Markets | 9.8 | (0.2) | (2.1) | 0.1 | - | (0.2) | 7.4 |
| Total (excluding derivatives) Markets - RBS Sempra |
93.6 | (4.2) | (5.2) | 0.7 | (0.5) | (1.1) | 83.3 |
| Commodities JV | 0.1 | (0.1) | - | - | - | - | - |
| Total (1) | 93.7 | (4.3) | (5.2) | 0.7 | (0.5) | (1.1) | 83.3 |
| 30 September 2011 £bn |
Run-off £bn |
Disposals/ restructuring £bn |
Drawings/ £bn |
roll overs Impairments £bn |
FX £bn |
31 December 2011 £bn |
|
|---|---|---|---|---|---|---|---|
| Commercial real estate | 35.3 | (1.8) | (1.1) | 0.1 | (0.6) | (0.4) | 31.5 |
| Corporate | 46.9 | (1.6) | (3.6) | 0.6 | (0.1) | - | 42.2 |
| SME | 2.4 | (0.3) | - | 0.1 | (0.1) | - | 2.1 |
| Retail | 7.4 | (0.2) | (1.1) | - | - | - | 6.1 |
| Other | 1.9 | - | - | - | - | - | 1.9 |
| Markets | 10.9 | (0.2) | (1.0) | - | - | 0.1 | 9.8 |
| Total (excluding derivatives) Markets - RBS Sempra |
104.8 | (4.1) | (6.8) | 0.8 | (0.8) | (0.3) | 93.6 |
| Commodities JV | 0.3 | - | (0.2) | - | - | - | 0.1 |
| Total (1) | 105.1 | (4.1) | (7.0) | 0.8 | (0.8) | (0.3) | 93.7 |
Note:
(1) Disposals of £5 billion have been signed as at 31 March 2012 but are pending completion (31 December 2011 - £0.2 billion; 31 March 2011 - £7 billion).
| Quarter ended | ||||
|---|---|---|---|---|
| 31 March | 31 December | 31 March | ||
| 2012 £m |
2011 £m |
2011 £m |
||
| Impairment losses by donating division and sector | ||||
| UK Retail | ||||
| Mortgages | - | - | 3 | |
| Personal | 2 | (28) | (3) | |
| Total UK Retail | 2 | (28) | - | |
| UK Corporate | ||||
| Manufacturing and infrastructure | 7 | 26 | - | |
| Property and construction | 55 | 83 | 13 | |
| Transport | (2) | 6 | 20 | |
| Financial institutions | 1 | 1 | 3 | |
| Lombard | 10 | 20 | 18 | |
| Other | 6 | 21 | 11 | |
| Total UK Corporate | 77 | 157 | 65 | |
| Ulster Bank | ||||
| Commercial real estate | ||||
| - investment | 84 | 151 | 223 | |
| - development | 142 | 77 | 503 | |
| Other corporate | 34 | 15 | 107 | |
| Other EMEA | 4 | 2 | 6 | |
| Total Ulster Bank | 264 | 245 | 839 | |
| US Retail & Commercial | ||||
| Auto and consumer | 9 | 7 | 25 | |
| Cards | 5 | 1 | (7) | |
| SBO/home equity | 18 | 33 | 53 | |
| Residential mortgages | 3 | 2 | 4 | |
| Commercial real estate | (3) | 14 | 19 | |
| Commercial and other | (4) | 7 | (3) | |
| Total US Retail & Commercial | 28 | 64 | 91 | |
| International Banking | ||||
| Manufacturing and infrastructure | 6 | 42 | (2) | |
| Property and construction | 86 | 241 | 105 | |
| Transport | 13 | 10 | (6) | |
| Telecoms, media and technology | 16 | 18 | (11) | |
| Banking and financial institutions | (12) | (31) | 1 | |
| Other | 9 | 29 | (8) | |
| Total International Banking | 118 | 309 | 79 | |
| Other | ||||
| Wealth | (1) | - | 1 | |
| Central items | 1 | 4 | - | |
| Total Other | - | 4 | 1 | |
| Total impairment losses | 489 | 751 | 1,075 |
| Gross loans and advances to customers (excluding reverse repurchase agreements) by donating division and sector UK Retail Mortgages - 1.4 Personal 0.1 0.1 Total UK Retail 0.1 1.5 UK Corporate Manufacturing and infrastructure 0.1 0.1 Property and construction 4.8 5.9 Transport 4.3 4.5 Financial institutions 0.6 0.6 Lombard 0.9 1.0 Other 7.0 7.5 Total UK Corporate 17.7 19.6 Ulster Bank Commercial real estate - investment 3.7 3.9 3.9 - development 8.0 8.5 8.9 Other corporate 1.7 1.6 2.0 Other EMEA 0.4 0.4 0.5 Total Ulster Bank 13.8 14.4 15.3 US Retail & Commercial Auto and consumer 0.8 0.8 2.4 Cards 0.1 0.1 0.1 SBO/home equity 2.4 2.5 2.9 Residential mortgages 0.5 0.6 0.7 Commercial real estate 0.9 1.0 1.4 Commercial and other - 0.4 0.4 Total US Retail & Commercial 4.7 5.4 7.9 International Banking Manufacturing and infrastructure 5.8 6.6 8.9 Property and construction 15.4 15.3 19.1 Transport 2.4 3.2 4.5 Telecoms, media and technology 0.7 0.7 1.1 Banking and financial institutions 5.7 5.6 11.1 Other 6.4 7.0 Total International Banking 36.4 38.4 Other Wealth 0.2 0.2 Direct Line Group - - Central items (0.3) (0.2) Total Other (0.1) - Gross loans and advances to customers (excluding reverse repurchase agreements) 72.6 79.3 |
31 March 2012 £bn |
31 December 2011 £bn |
31 March 2011 £bn |
|---|---|---|---|
| 1.6 | |||
| 0.3 | |||
| 1.9 | |||
| 0.2 | |||
| 8.0 | |||
| 5.1 | |||
| 0.8 | |||
| 1.5 | |||
| 7.5 | |||
| 23.1 | |||
| 8.4 | |||
| 53.1 | |||
| 0.4 | |||
| 0.1 | |||
| (1.0) | |||
| (0.5) | |||
| 100.8 |
Non-Core has maintained momentum from 2011 and delivered further reductions in third party assets, impairments and costs during Q1 2012.
Third party assets fell to £83 billion in the first quarter, a reduction of £11 billion driven principally by disposals of £5 billion and run-off of £4 billion. The division has also signed, but not yet completed, a further £5 billion of disposals, including the sale of RBS Aviation Capital.
The division continues to focus upon reducing exposures to current and future capital intensive positions. Risk-weighted assets decreased by £3 billion resulting from foreign exchange and mark-tomarket movements of £4 billion, sales and run-off of £2 billion and market risk movements of £2 billion, largely offset by higher operational risk RWAs, up £4 billion. Restructuring and disposal activity also reduced Non-Core deductions to the capital base by £0.8 billion in Q1 2012.
An operating loss of £483 million in Q1 2012 was £799 million lower than Q4 2011. Income increased as the losses associated with restructuring monoline exposures and valuation movements on equity positions in Q4 2011 were not repeated. In addition, trading income increased as a result of tightening spreads and favourable market conditions. Impairments declined by £262 million which reflected improvements across the portfolio in general, although Ulster Bank charges remain elevated.
Third party assets fell by £11 billion to £83 billion in Q1 2012 principally reflecting disposals of £5 billion and run-off of £4 billion.
Third party assets of £83 billion were £42 billion lower than Q1 2011 principally reflecting disposals of £22 billion and run-off of £19 billion.
for the quarter ended 31 March 2012
| 31 March | Quarter ended 31 December |
31 March | |
|---|---|---|---|
| 2012 | 2011 | 2011 | |
| £m | £m | £m | |
| Interest receivable | 5,017 | 5,234 | 5,401 |
| Interest payable | (2,018) | (2,160) | (2,100) |
| Net interest income | 2,999 | 3,074 | 3,301 |
| Fees and commissions receivable | 1,487 | 1,590 | 1,642 |
| Fees and commissions payable | (290) | (573) | (260) |
| Income from trading activities | 212 | (238) | 835 |
| Gain/(loss) on redemption of own debt | 577 | (1) | - |
| Other operating income (excluding insurance net premium income) | (747) | 205 | 391 |
| Insurance net premium income | 938 | 981 | 1,149 |
| Non-interest income | 2,177 | 1,964 | 3,757 |
| Total income | 5,176 | 5,038 | 7,058 |
| Staff costs | (2,570) | (1,993) | (2,399) |
| Premises and equipment | (563) | (674) | (571) |
| Other administrative expenses | (1,016) | (1,296) | (921) |
| Depreciation and amortisation | (468) | (513) | (424) |
| Write-down of goodwill and other intangible assets | - | (91) | - |
| Operating expenses | (4,617) | (4,567) | (4,315) |
| Profit before insurance net claims and impairment losses | 559 | 471 | 2,743 |
| Insurance net claims | (649) | (529) | (912) |
| Impairment losses | (1,314) | (1,918) | (1,947) |
| Operating loss before tax | (1,404) | (1,976) | (116) |
| Tax (charge)/credit | (139) | 186 | (423) |
| Loss from continuing operations | (1,543) | (1,790) | (539) |
| Profit from discontinued operations, net of tax | 5 | 10 | 10 |
| Loss for the period | (1,538) | (1,780) | (529) |
| Non-controlling interests | 14 | (18) | 1 |
| Loss attributable to ordinary and B shareholders | (1,524) | (1,798) | (528) |
| Basic loss per ordinary and B share from continuing operations | (1.4p) | (1.7p) | (0.5p) |
| Diluted loss per ordinary and B share from continuing operations | (1.4p) | (1.7p) | (0.5p) |
| Basic loss per ordinary and B share from discontinued operations | - | - | - |
| Diluted loss per ordinary and B share from discontinued operations | - | - | - |
In the income statement above, one-off and other items as shown on page 17 are included in the appropriate captions. A reconciliation between the income statement above and the managed view income statement on page 11 is given in Appendix 1 to this announcement.
| Quarter ended | |||
|---|---|---|---|
| 31 March 2012 £m |
31 December 2011 £m |
31 March 2011 £m |
|
| Loss for the period | (1,538) | (1,780) | (529) |
| Other comprehensive income/(loss) | |||
| Available-for-sale financial assets | 525 | (107) | (37) |
| Cash flow hedges | 33 | 124 | (227) |
| Currency translation | (554) | (117) | (360) |
| Actuarial losses on defined benefit plans | - | (581) | - |
| Other comprehensive income/(loss) before tax | 4 | (681) | (624) |
| Tax (charge)/credit | (19) | (500) | 32 |
| Other comprehensive loss after tax | (15) | (1,181) | (592) |
| Total comprehensive loss for the period | (1,553) | (2,961) | (1,121) |
| Total comprehensive loss is attributable to: | |||
| Non-controlling interests | (3) | (12) | (9) |
| Ordinary and B shareholders | (1,550) | (2,949) | (1,112) |
| (1,553) | (2,961) | (1,121) |
| 31 March 2012 |
31 December 2011 |
|
|---|---|---|
| £m | £m | |
| Assets | ||
| Cash and balances at central banks | 82,363 | 79,269 |
| Net loans and advances to banks | 36,064 | 43,870 |
| Reverse repurchase agreements and stock borrowing | 34,626 | 39,440 |
| Loans and advances to banks | 70,690 | 83,310 |
| Net loans and advances to customers | 440,406 | 454,112 |
| Reverse repurchase agreements and stock borrowing | 56,503 | 61,494 |
| Loans and advances to customers | 496,909 | 515,606 |
| Debt securities | 195,931 | 209,080 |
| Equity shares | 17,603 | 15,183 |
| Settlement balances | 20,970 | 7,771 |
| Derivatives | 453,354 | 529,618 |
| Intangible assets | 14,771 | 14,858 |
| Property, plant and equipment | 11,442 | 11,868 |
| Deferred tax | 3,849 | 3,878 |
| Prepayments, accrued income and other assets | 10,079 | 10,976 |
| Assets of disposal groups | 25,060 | 25,450 |
| Total assets | 1,403,021 | 1,506,867 |
| Liabilities | ||
| Bank deposits | 65,735 | 69,113 |
| Repurchase agreements and stock lending | 41,415 | 39,691 |
| Deposits by banks | 107,150 | 108,804 |
| Customer deposits | 410,207 | 414,143 |
| Repurchase agreements and stock lending | 87,303 | 88,812 |
| Customer accounts | 497,510 | 502,955 |
| Debt securities in issue | 142,943 | 162,621 |
| Settlement balances | 17,597 | 7,477 |
| Short positions | 37,322 | 41,039 |
| Derivatives | 446,534 | 523,983 |
| Accruals, deferred income and other liabilities | 20,278 | 23,125 |
| Retirement benefit liabilities | 1,840 | 2,239 |
| Deferred tax | 1,788 | 1,945 |
| Insurance liabilities | 6,251 | 6,312 |
| Subordinated liabilities | 25,513 | 26,319 |
| Liabilities of disposal groups | 23,664 | 23,995 |
| Total liabilities | 1,328,390 | 1,430,814 |
| Equity | ||
| Non-controlling interests | 1,215 | 1,234 |
| Owners' equity* | ||
| Called up share capital | 15,397 | 15,318 |
| Reserves | 58,019 | 59,501 |
| Total equity | 74,631 | 76,053 |
| Total liabilities and equity | 1,403,021 | 1,506,867 |
| * Owners' equity attributable to: | ||
| Ordinary and B shareholders | 68,672 | 70,075 |
| Other equity owners | 4,744 | 4,744 |
| 73,416 | 74,819 |
Total assets of £1,403.0 billion at 31 March 2012 were down £103.8 billion, 7%, compared with 31 December 2011. This was principally driven by a decrease in the mark-to-market value of derivatives and a reduction in loans and advances to banks and customers.
Cash and balances at central banks increased £3.1 billion, 4%, to £82.4 billion principally due to the placing of short term surpluses.
Loans and advances to banks decreased £12.6 billion, 15%, to £70.7 billion. Within this, reverse repurchase agreements and stock borrowing ('reverse repos') were down £4.8 billion, 12%, to £34.6 billion and bank placings declined £7.8 billion, 18%, to £36.1 billion.
Loans and advances to customers declined £18.7 billion, 4%, to £496.9 billion. Within this, reverse repurchase agreements were down £5.0 billion, 8%, to £56.5 billion. Customer lending decreased by £13.7 billion, 3%, to £440.4 billion, or £13.4 billion, 3%, to £460.5 billion before impairments. This reflected planned reductions in Non-Core of £6.1 billion, along with declines in International Banking, £4.0 billion, Markets, £2.3 billion, UK Corporate, £0.9 billion, and Ulster Bank, £0.1 billion, together with the effect of exchange rate and other movements, £2.9 billion. These were partially offset by growth in UK Retail, £1.8 billion, US Retail & Commercial, £1.0 billion and Wealth, £0.1 billion.
Debt securities were down £13.1 billion, 6%, to £195.9 billion, driven mainly by reductions in holdings of Government securities within Markets and Group Treasury.
Equity shares increased £2.4 billion, 16%, to £17.6 billion reflecting seasonal increases in holdings.
Settlement balances increased £13.2 billion to £21.0 billion as a result of increased customer activity from seasonal year-end lows.
Movements in the value of derivative assets, down £76.3 billion, 14%, to £453.4 billion, and liabilities, down £77.4 billion, 15% to £446.5 billion, primarily reflect the mark-to-market movements on interest rate contracts and the effect of currency movements, with Sterling strengthening against both the US dollar and the Euro.
Deposits by banks decreased £1.7 billion, 2%, to £107.1 billion, with a decrease in inter-bank deposits, down £3.4 billion, 5%, to £65.7 billion partly offset by higher repurchase agreements and stock lending ('repos'), up £1.7 billion, 4%, to £41.4 billion.
Customer accounts were down £5.4 billion, 1%, to £497.5 billion. Within this, repos decreased £1.5 billion, 2%, to £87.3 billion. Excluding repos, customer deposits were down £3.9 billion, 1%, at £410.2 billion, reflecting decreases in Markets, £1.7 billion, UK Corporate, £1.8 billion, Ulster Bank, £0.7 billion, Non-Core, £0.6 billion and exchange and other movements, £2.5 billion. This was partly offset by increases in UK Retail, £2.4 billion, US Retail & Commercial, £0.6 billion, and International Banking, £0.4 billion.
Debt securities in issue declined £19.7 billion, 12%, to £142.9 billion largely due to the maturity of government guaranteed medium term notes within Markets and Group Treasury.
Settlement balances increased £10.1 billion to £17.6 billion as a result of increased customer activity from seasonal year-end lows.
Short positions were down £3.7 billion, 9%, to £37.3 billion, mirroring decreases in debt securities.
Subordinated liabilities were down £0.8 billion, 3%, to £25.5 billion, primarily reflecting the £0.6 billion net decrease in dated loan capital as a result of the liability management exercise completed in March 2012, with redemptions of £3.4 billion offset by the issuance of £2.8 billion new capital, together with exchange rate movements and other adjustments of £0.2 billion.
Owners' equity decreased by £1.4 billion, 2%, to £73.4 billion, due to the attributable loss for the period of £1.5 billion and exchange and other movements of £0.5 billion, partially offset by positive movements in available-for-sale reserves of £0.5 billion and the issue of £0.1 billion new ordinary shares in settlement of deferred variable compensation awards.
| Quarter ended | ||
|---|---|---|
| 31 March | 31 December | |
| 2012 | 2011 | |
| % | % | |
| Average yields, spreads and margins of the banking business | ||
| Gross yield on interest-earning assets of banking business | 3.15 | 3.13 |
| Cost of interest-bearing liabilities of banking business | (1.57) | (1.64) |
| Interest spread of banking business | 1.58 | 1.49 |
| Benefit from interest-free funds | 0.31 | 0.35 |
| Net interest margin of banking business | 1.89 | 1.84 |
| Average interest rates | ||
| The Group's base rate | 0.50 | 0.50 |
| London inter-bank three month offered rates | ||
| - Sterling | 1.06 | 0.99 |
| - Eurodollar | 0.51 | 0.43 |
| - Euro | 0.97 | 1.50 |
| Quarter ended 31 March 2012 |
Quarter ended 31 December 2011 |
|||||||
|---|---|---|---|---|---|---|---|---|
| Average balance £m |
Interest £m |
Rate % |
Average balance £m |
Interest £m |
Rate % |
|||
| Assets | ||||||||
| Loans and advances to banks | 87,025 | 148 | 0.68 | 91,359 | 207 | 0.90 | ||
| Loans and advances to | ||||||||
| customers | 443,418 | 4,252 | 3.86 | 453,051 | 4,335 | 3.80 | ||
| Debt securities | 110,926 | 625 | 2.27 | 120,203 | 693 | 2.29 | ||
| Interest-earning assets - | ||||||||
| banking business | 641,369 | 5,025 | 3.15 | 664,613 | 5,235 | 3.13 | ||
| Trading business | 251,081 | 271,183 | ||||||
| Non-interest earning assets | 633,284 | 655,374 | ||||||
| Total assets | 1,525,734 | 1,591,170 | ||||||
| Memo: Funded assets | 1,012,285 | 1,058,372 | ||||||
| Liabilities | ||||||||
| Deposits by banks | 44,387 | 180 | 1.63 | 60,526 | 228 | 1.49 | ||
| Customer accounts | 333,915 | 917 | 1.10 | 340,742 | 922 | 1.07 | ||
| Debt securities in issue | 122,891 | 749 | 2.45 | 140,208 | 833 | 2.36 | ||
| Subordinated liabilities | 22,530 | 146 | 2.61 | 22,906 | 146 | 2.53 | ||
| Internal funding of trading | ||||||||
| business | (6,432) | 25 | (1.56) | (44,408) | 24 | (0.21) | ||
| Interest-bearing liabilities - | ||||||||
| banking business | 517,291 | 2,017 | 1.57 | 519,974 | 2,153 | 1.64 | ||
| Trading business Non-interest-bearing liabilities |
262,047 | 299,789 | ||||||
| - demand deposits | 72,370 | 70,538 | ||||||
| - other liabilities | 600,226 | 625,702 | ||||||
| Owners' equity | 73,800 | 75,167 | ||||||
| Total liabilities and | ||||||||
| owners' equity | 1,525,734 | 1,591,170 |
Notes:
(1) Interest receivable and interest payable on trading assets and liabilities are included in income from trading activities.
(2) Interest payable has been decreased by £8 million (Q4 2011 - £2 million) to exclude RFS Holdings minority interest. Related interest-bearing liabilities have also been adjusted.
(3) Interest receivable has been increased by £8 million (Q4 2011 - £1 million) and interest payable has been increased by £52 million (Q4 2011 - £40 million) to record interest on financial assets and liabilities designated as at fair value through profit or loss. Related interest-earning assets and interest-bearing liabilities have also been adjusted.
(4) Interest payable has been decreased by £45 million (Q4 2011 - £45 million) in respect of non-recurring adjustments.
| Quarter ended | |||||
|---|---|---|---|---|---|
| 31 March | 31 December | 31 March | |||
| 2012 | 2011 | 2011 | |||
| £m | £m | £m | |||
| Called-up share capital | |||||
| At beginning of period | 15,318 | 15,318 | 15,125 | ||
| Ordinary shares issued | 79 | - | 31 | ||
| At end of period | 15,397 | 15,318 | 15,156 | ||
| Paid-in equity | |||||
| At beginning and end of period | 431 | 431 | 431 | ||
| Share premium account | |||||
| At beginning of period | 24,001 | 23,923 | 23,922 | ||
| Ordinary shares issued | 26 | 78 | - | ||
| At end of period | 24,027 | 24,001 | 23,922 | ||
| Merger reserve | |||||
| At beginning and end of period | 13,222 | 13,222 | 13,272 | ||
| Available-for-sale reserve (1) | |||||
| At beginning of period | (957) | (292) | (2,037) | ||
| Unrealised gains/(losses) | 724 | (179) | 162 | ||
| Realised (gains)/losses | (212) | 69 | (197) | ||
| Tax | 6 | (555) | 9 | ||
| At end of period | (439) | (957) | (2,063) | ||
| Cash flow hedging reserve | |||||
| At beginning of period | 879 | 798 | (140) | ||
| Amount recognised in equity | 290 | 389 | 14 | ||
| Amount transferred from equity to earnings | (257) | (265) | (241) | ||
| Tax | 9 | (43) | 53 | ||
| At end of period | 921 | 879 | (314) |
Note:
(1) Analysis provided on page 87.
for the quarter ended 31 March 2012 (continued)
| Quarter ended | |||||
|---|---|---|---|---|---|
| 31 March | 31 December | 31 March | |||
| 2012 | 2011 | 2011 | |||
| £m | £m | £m | |||
| Foreign exchange reserve | |||||
| At beginning of period | 4,775 | 4,847 | 5,138 | ||
| Retranslation of net assets | (648) | (111) | (429) | ||
| Foreign currency gains on hedges of net assets | 96 | 20 | 76 | ||
| Tax | 4 | 13 | (31) | ||
| Recycled to profit or loss on disposal of businesses | - | 6 | - | ||
| At end of period | 4,227 | 4,775 | 4,754 | ||
| Capital redemption reserve | |||||
| At beginning and end of period | 198 | 198 | 198 | ||
| Contingent capital reserve | |||||
| At beginning and end of period | (1,208) | (1,208) | (1,208) | ||
| Retained earnings | |||||
| At beginning of period | 18,929 | 20,977 | 21,239 | ||
| (Loss)/profit attributable to ordinary and B shareholders and other | |||||
| equity owners | |||||
| - continuing operations | (1,524) | (1,798) | (530) | ||
| - discontinued operations | - | - | 2 | ||
| Actuarial losses recognised in retirement benefit schemes | |||||
| - gross | - | (581) | - | ||
| - tax | (38) | 86 | - | ||
| Shares issued under employee share schemes | (13) | 151 | (41) | ||
| Share-based payments | |||||
| - gross | 45 | 98 | 38 | ||
| - tax | 6 | (4) | 5 | ||
| At end of period | 17,405 | 18,929 | 20,713 |
for the quarter ended 31 March 2012 (continued)
| Quarter ended | |||||
|---|---|---|---|---|---|
| 31 March | 31 December | 31 March | |||
| 2012 | 2011 | 2011 | |||
| £m | £m | £m | |||
| Own shares held | |||||
| At beginning of period | (769) | (771) | (808) | ||
| (Purchase)/disposal of own shares | (2) | 1 | 12 | ||
| Shares issued under employee share schemes | 6 | 1 | 11 | ||
| At end of period | (765) | (769) | (785) | ||
| Owners' equity at end of period | 73,416 | 74,819 | 74,076 | ||
| Non-controlling interests | |||||
| At beginning of period | 1,234 | 1,433 | 1,719 | ||
| Currency translation adjustments and other movements | (2) | (32) | (7) | ||
| (Loss)/profit attributable to non-controlling interests | |||||
| - continuing operations | (20) | 8 | (9) | ||
| - discontinued operations | 6 | 10 | 8 | ||
| Dividends paid | - | (1) | - | ||
| Movements in available-for-sale securities | |||||
| - unrealised (losses)/gains | (4) | 1 | 1 | ||
| - realised losses | 17 | 2 | (3) | ||
| - tax | - | (1) | 1 | ||
| Equity withdrawn and disposals | (16) | (186) | - | ||
| At end of period | 1,215 | 1,234 | 1,710 | ||
| Total equity at end of period | 74,631 | 76,053 | 75,786 | ||
| Total comprehensive loss recognised in the statement of | |||||
| changes in equity is attributable to: | |||||
| Non-controlling interests | (3) | (12) | (9) | ||
| Ordinary and B shareholders | (1,550) | (2,949) | (1,112) | ||
| (1,553) | (2,961) | (1,121) |
Having reviewed the Group's forecasts, projections and other relevant evidence, the directors have a reasonable expectation that the Group will continue in operational existence for the foreseeable future. Accordingly, the Interim Management Statement for the quarter ended 31 March 2012 has been prepared on a going concern basis.
The annual accounts are 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). There have been no significant changes to the Group's principal accounting policies as set out on pages 314 to 323 of the 2011 Annual Report and Accounts.
| 31 March | Quarter ended 31 December |
31 March | |
|---|---|---|---|
| 2012 | 2011 | 2011 | |
| £m | £m | £m | |
| Loans and advances to customers | 4,252 | 4,336 | 4,593 |
| Loans and advances to banks | 148 | 207 | 172 |
| Debt securities | 617 | 691 | 636 |
| Interest receivable | 5,017 | 5,234 | 5,401 |
| Customer accounts | 914 | 926 | 831 |
| Deposits by banks | 191 | 226 | 259 |
| Debt securities in issue | 698 | 794 | 817 |
| Subordinated liabilities | 190 | 190 | 185 |
| Internal funding of trading businesses | 25 | 24 | 8 |
| Interest payable | 2,018 | 2,160 | 2,100 |
| Net interest income | 2,999 | 3,074 | 3,301 |
| Fees and commissions receivable | 1,487 | 1,590 | 1,642 |
| Fees and commissions payable | |||
| - banking | (179) | (339) | (181) |
| - insurance related | (111) | (234) | (79) |
| Net fees and commissions | 1,197 | 1,017 | 1,382 |
| Foreign exchange | 225 | 308 | 203 |
| Interest rate | 672 | 76 | 649 |
| Credit | (799) | (695) | (248) |
| Other | 114 | 73 | 231 |
| Income/(loss) from trading activities | 212 | (238) | 835 |
| Gain on redemption of own debt | 577 | (1) | - |
| Operating lease and other rental income | 301 | 308 | 322 |
| Own credit adjustments | (1,447) | (200) | (294) |
| Changes in the fair value of securities and other financial assets and liabilities | 81 | 6 | 68 |
| Changes in the fair value of investment properties | 32 | (65) | (25) |
| Profit on sale of securities | 223 | 179 | 236 |
| Profit/(loss) on sale of property, plant and equipment | 5 | (5) | 11 |
| Loss on sale of subsidiaries and associates | (12) | (15) | (29) |
| Life business losses | (2) | - | (2) |
| Dividend income | 16 | 15 | 15 |
| Share of (losses)/profits less losses of associated entities | (4) | 6 | 7 |
| Other income/(loss) | 60 | (24) | 82 |
| Other operating (loss)/income | (747) | 205 | 391 |
Refer to Appendix 1 for a reconciliation between the managed and statutory bases for key line items.
| Quarter ended | |||||
|---|---|---|---|---|---|
| 31 March | 31 December | 31 March | |||
| 2012 | 2011 | 2011 | |||
| £m | £m | £m | |||
| Non-interest income (excluding insurance net premium income) | 1,239 | 983 | 2,608 | ||
| Insurance net premium income | 938 | 981 | 1,149 | ||
| Total non-interest income | 2,177 | 1,964 | 3,757 | ||
| Total income | 5,176 | 5,038 | 7,058 | ||
| Staff costs | 2,570 | 1,993 | 2,399 | ||
| Premises and equipment | 563 | 674 | 571 | ||
| Other | 1,016 | 1,296 | 921 | ||
| Administrative expenses | 4,149 | 3,963 | 3,891 | ||
| Depreciation and amortisation | 468 | 513 | 424 | ||
| Write-down of goodwill and other intangible assets | - | 91 | - | ||
| Operating expenses | 4,617 | 4,567 | 4,315 | ||
| Loan impairment losses | 1,295 | 1,654 | 1,898 | ||
| Securities impairment losses | |||||
| - sovereign debt impairment and related interest rate hedge adjustments | - | 224 | - | ||
| - other | 19 | 40 | 49 | ||
| Impairment losses | 1,314 | 1,918 | 1,947 |
Refer to Appendix 1 for a reconciliation between the managed and statutory bases for key line items.
To reflect current experience of PPI complaints received, the Group has strengthened its provision for PPI by £125 million in Q1 2012, bringing the cumulative charge taken to £1.2 billion, of which £501 million in redress had been paid by 31 March 2012. The eventual cost is dependent upon complaint volumes, uphold rates and average redress costs. Assumptions relating to these are inherently uncertain and the ultimate financial impact may be different than the amount provided. The Group will continue to monitor the position closely and refresh its assumptions as more information becomes available.
| Quarter ended |
Year ended |
|
|---|---|---|
| 31 March | 31 December | |
| 2012 | 2011 | |
| £m | £m | |
| At beginning of period | 745 | - |
| Transfers from accruals and other liabilities | - | 215 |
| Charge to income statement | 125 | 850 |
| Utilisations | (181) | (320) |
| At end of period | 689 | 745 |
Operating loss is stated after charging loan impairment losses of £1,295 million (Q4 2011 - £1,654 million; Q1 2011 - £1,898 million). The balance sheet loan impairment provisions increased in the quarter ended 31 March 2012 from £19,883 million to £20,211 million and the movements thereon were:
| Quarter ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 31 March 2012 | 31 December 2011 | 31 March 2011 | |||||||||
| Non | Non | RFS | Non | ||||||||
| Core | Core | Total | Core | Core | MI | Total | Core | Core | Total | ||
| £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | ||
| At beginning of period | 8,414 | 11,469 | 19,883 | 8,873 | 11,850 | - 20,723 | 7,866 | 10,316 | 18,182 | ||
| Transfers to disposal | |||||||||||
| groups | - | - | - | (773) | - | - | (773) | - | (9) | (9) | |
| Intra-group transfers | - | - | - | - | - | - | - | 177 | (177) | - | |
| Currency translation and | |||||||||||
| other adjustments | (8) | (80) | (88) | (75) | (162) | - | (237) | 56 | 95 | 151 | |
| Disposals | - | - | - | - | - | (3) | (3) | - | - | - | |
| Amounts written-off | (405) | (440) | (845) | (526) | (981) | - (1,507) | (514) | (438) | (952) | ||
| Recoveries of amounts | |||||||||||
| previously written-off | 62 | 33 | 95 | 48 | 99 | - | 147 | 39 | 80 | 119 | |
| Charge to income | |||||||||||
| statement | |||||||||||
| - continuing | 796 | 499 | 1,295 | 924 | 730 | - | 1,654 | 852 | 1,046 | 1,898 | |
| - discontinued | - | - | - | - | - | 3 | 3 | - | - | - | |
| Unwind of discount | |||||||||||
| (recognised in interest | |||||||||||
| income) | (62) | (67) | (129) | (57) | (67) | - | (124) | (60) | (71) | (131) | |
| At end of period | 8,797 | 11,414 | 20,211 | 8,414 | 11,469 | - 19,883 | 8,416 | 10,842 | 19,258 |
Provisions at 31 March 2012 include £135 million (31 December 2011 - £123 million; 31 March 2011 - £130 million) in respect of loans and advances to banks.
The table above excludes impairments relating to securities (see page 106).
The actual tax (charge)/credit differs from the expected tax credit computed by applying the standard UK corporation tax rate of 24.5% (2011 - 26.5%) as follows:
| Quarter ended | |||||
|---|---|---|---|---|---|
| 31 March | 31 December | 31 March | |||
| 2012 £m |
2011 £m |
2011 £m |
|||
| Loss before tax | (1,404) | (1,976) | (116) | ||
| Expected tax credit | 344 | 524 | 31 | ||
| Sovereign debt impairment where no deferred tax asset recognised | - | (56) | - | ||
| Derecognition of deferred tax asset in respect of losses in Australia | (161) | - | - | ||
| Other losses in period where no deferred tax asset recognised | (173) | (195) | (166) | ||
| Foreign profits taxed at other rates | (102) | (46) | (200) | ||
| UK tax rate change - deferred tax impact | (30) | 27 | (87) | ||
| Unrecognised timing differences | - | - | 5 | ||
| Non-deductible goodwill impairment | - | (24) | - | ||
| Items not allowed for tax | |||||
| - losses on strategic disposals and write-downs | (4) | (58) | (3) | ||
| - UK bank levy | (18) | (80) | - | ||
| - employee share schemes | (15) | (101) | (4) | ||
| - other disallowable items | (51) | (123) | (36) | ||
| Non-taxable items | |||||
| - gain on sale of Global Merchant Services | - | - | 12 | ||
| - other non-taxable items | 24 | 208 | 12 | ||
| Taxable foreign exchange movements | 1 | 2 | 2 | ||
| Losses brought forward and utilised | 15 | (29) | 16 | ||
| Adjustments in respect of prior periods | 31 | 137 | (5) | ||
| Actual tax (charge)/credit | (139) | 186 | (423) |
The tax charge in the quarter ended 31 March 2012 reflects profits in high tax regimes (principally US) and losses in low tax regimes (principally Ireland), losses in overseas subsidiaries for which a deferred tax asset has not been recognised (principally Ireland and the Netherlands) and the derecognition of deferred tax assets of £161 million in respect of losses in Australia, following the strategic changes to the Markets and International Banking businesses announced in January 2012.
The combined effect of the tax losses in Ireland and the Netherlands in the quarter ended 31 March 2012 for which no deferred tax asset has been recognised and the derecognition of the deferred tax asset in respect of losses in Australia account for £387 million (80%) of the difference between the actual tax charge and the tax credit derived from applying the standard UK Corporation Tax rate to the results for the period.
The Group has recognised a deferred tax asset at 31 March 2012 of £3,849 million (31 December 2011 - £3,878 million; 31 March 2011 - £6,299 million) of which £3,134 million (31 December 2011 - £2,933 million; 31 March 2011 - £3,770 million) relates to carried forward trading losses in the UK. Under UK tax legislation, these UK losses can be carried forward indefinitely to be utilised against profits arising in the future. The Group has considered the carrying value of this asset as at 31 March 2012 and concluded that it is recoverable based on future profit projections.
| Quarter ended | ||||||
|---|---|---|---|---|---|---|
| 31 March | 31 December | 31 March | ||||
| 2012 | 2011 | 2011 | ||||
| £m | £m | £m | ||||
| RBS Sempra Commodities JV | - | (5) | (9) | |||
| RFS Holdings BV Consortium Members | (19) | 8 | 10 | |||
| Other | 5 | 15 | (2) | |||
| (Loss)/profit attributable to non-controlling interests | (14) | 18 | (1) |
On 26 November 2009, RBS entered into a State Aid Commitment Deed with HM Treasury containing commitments and undertakings that were designed to ensure that HM Treasury was able to comply with the commitments to be given by it to the European Commission for the purposes of obtaining approval for the State aid provided to RBS. As part of these commitments and undertakings, RBS agreed not to pay discretionary coupons and dividends on its existing hybrid capital instruments for a period of two years. This period commenced on 30 April 2010 for RBS Group instruments (the two year deferral period for RBS Holdings N.V. instruments commenced on 1 April 2011). On 30 April 2012 this period ended for RBS Group instruments. RBS has determined that it is now in a position to recommence payments on the RBS Group instruments.
The Core Tier 1 capital impact of discretionary amounts that will be payable over the remainder of 2012 on the RBS Group instruments on which payments have previously been stopped is c.£350 million. In the context of recent macro-prudential policy discussions, the Board of RBS has decided to neutralise any impact on Core Tier 1 capital through equity issuance. Approximately £250 million of this is ascribed to equity funding of employee incentive awards through the sale of surplus shares held by the Group's Employee Benefit Trust, which is now substantially complete. An additional c.£100 million will be raised through the issue of new ordinary shares, which is expected to take place over time during the second half of 2012.
The Directors have declared the discretionary dividends on Series M, N, P, Q, R, S, and T noncumulative dollar preference shares of US\$0.01 each for the three months to 30 June 2012, and the discretionary dividend on the Series 2 non-cumulative Euro preference shares of €0.01 for the 12 months to 30 June 2012. These discretionary dividends as well as the discretionary distributions on the RBSG/RBS innovative securities RBS Capital Trust A, RBS Capital Trust B, RBS Capital Trust D, RBS Capital Trust I, RBS Capital Trust II and RBS Capital Trust IV will be paid on their scheduled payment dates in June 2012. Future coupons and dividends on RBS Group hybrid capital instruments will only be paid subject to, and in accordance with, the terms of the relevant instruments.
Earnings per ordinary and B share have been calculated based on the following:
| Quarter ended | |||||
|---|---|---|---|---|---|
| 31 March | 31 December | 31 March | |||
| 2012 | 2011 | 2011 | |||
| Earnings | |||||
| Loss from continuing operations attributable to ordinary and | |||||
| B shareholders (£m) | (1,524) | (1,798) | (530) | ||
| Profit from discontinued operations attributable to ordinary and | |||||
| B shareholders (£m) | - | - | 2 | ||
| Ordinary shares in issue during the period (millions) | 57,704 | 57,552 | 56,798 | ||
| B shares in issue during the period (millions) | 51,000 | 51,000 | 51,000 | ||
| Weighted average number of ordinary and B shares in issue during | |||||
| the period (millions) | 108,704 | 108,552 | 107,798 | ||
| Basic loss per ordinary and B share from continuing operations | (1.4p) | (1.7p) | (0.5p) | ||
| Own credit adjustments | 1.7p | 0.2p | 0.4p | ||
| Asset Protection Scheme | - | 0.1p | 0.3p | ||
| Payment Protection Insurance costs | 0.1p | - | - | ||
| Sovereign debt impairment | - | 0.2p | - | ||
| Integration and restructuring costs | 0.4p | 0.5p | 0.2p | ||
| Gain on redemption of own debt | (0.4p) | - | - | ||
| Strategic disposals | - | 0.1p | - | ||
| Bank levy | - | 0.3p | - | ||
| Adjusted earnings/(loss) per ordinary and B share from continuing | |||||
| operations | 0.4p | (0.3p) | 0.4p | ||
| Loss/(earnings) from Non-Core attributable to ordinary and B shareholders | 0.2p | (0.2p) | 0.3p | ||
| Core adjusted earnings/(loss) per ordinary and B share from continuing | |||||
| operations | 0.6p | (0.5p) | 0.7p | ||
| Core impairment losses | 0.3p | (0.3p) | 0.3p | ||
| Pre-impairment Core adjusted earnings/(loss) per ordinary and B share | 0.9p | (0.8p) | 1.0p | ||
| Memo: Core adjusted earnings per ordinary and B share from continuing | |||||
| operations assuming normalised tax rate of 24.5% (2011 - 26.5%) | 1.2p | 0.8p | 1.5p | ||
| Diluted loss per ordinary and B share from continuing operations | (1.4p) | (1.7p) | (0.5p) |
In January 2012, the Group announced the reorganisation of its wholesale businesses into 'Markets' and 'International Banking'. Divisional results have been presented based on the new organisational structure. In addition, the Group had previously included movements in the fair value of own derivative liabilities within the Markets operating segment. These movements have now been combined with movements in the fair value of own debt in a single measure, 'own credit adjustments' and presented as a reconciling item. Refer to 'presentation of information' on page 5 for further details. Comparatives have been restated accordingly.
The following tables provide an analysis of divisional operating profit/(loss) for the quarters ended 31 March 2012, 31 December 2011 and 31 March 2011 by main income statement captions. The divisional income statements on pages 20 to 62 reflect certain presentational reallocations as described in the notes below. These do not affect the overall operating profit/(loss).
| Net | Non | ||||||
|---|---|---|---|---|---|---|---|
| interest | interest | Total | Operating | Insurance | Impairment | Operating | |
| income | income | income | expenses | net claims | losses | profit/(loss) | |
| Quarter ended 31 March 2012 | £m | £m | £m | £m | £m | £m | £m |
| UK Retail | 1,001 | 266 | 1,267 | (635) | - | (155) | 477 |
| UK Corporate | 756 | 445 | 1,201 | (533) | - | (176) | 492 |
| Wealth | 179 | 111 | 290 | (235) | - | (10) | 45 |
| International Banking (1) | 251 | 291 | 542 | (410) | - | (35) | 97 |
| Ulster Bank | 165 | 49 | 214 | (130) | - | (394) | (310) |
| US Retail & Commercial | 496 | 260 | 756 | (635) | - | (19) | 102 |
| Markets (2) | 16 | 1,718 | 1,734 | (908) | - | (2) | 824 |
| Direct Line Group (3) | 84 | 882 | 966 | (233) | (649) | - | 84 |
| Central items | (5) | (103) | (108) | (2) | - | (34) | (144) |
| Core | 2,943 | 3,919 | 6,862 | (3,721) | (649) | (825) | 1,667 |
| Non-Core (4) | 64 | 205 | 269 | (263) | - | (489) | (483) |
| Managed basis | 3,007 | 4,124 | 7,131 | (3,984) | (649) | (1,314) | 1,184 |
| Reconciling items | |||||||
| Own credit adjustments (5) | - | (2,456) | (2,456) | - | - | - | (2,456) |
| Asset Protection Scheme (6) | - | (43) | (43) | - | - | - | (43) |
| PPI costs | - | - | - | (125) | - | - | (125) |
| Amortisation of purchased intangible | |||||||
| assets | - | - | - | (48) | - | - | (48) |
| Integration and restructuring costs | - | - | - | (460) | - | - | (460) |
| Gain on redemption of own debt | - | 577 | 577 | - | - | - | 577 |
| Strategic disposals | - | (8) | (8) | - | - | - | (8) |
| RFS Holdings minority interest | (8) | (17) | (25) | - | - | - | (25) |
| Statutory basis | 2,999 | 2,177 | 5,176 | (4,617) | (649) | (1,314) | (1,404) |
Notes:
(1) Reallocation of £9 million between net interest income and non-interest income in respect of funding costs of rental assets.
(2) Reallocation of £8 million between net interest income and non-interest income to record interest on financial assets and liabilities designated as at fair value through profit or loss.
(3) Total income includes £90 million investment income of which £53 million is included in net interest income and £37 million in non-interest income. Reallocation of £31 million between non-interest income and net interest income in respect of instalment income.
(4) Reallocation of £51 million between net interest income and non-interest income in respect of funding costs of rental assets.
(5) Comprises £1,009 million loss included in 'Income from trading activities' and £1,447 million loss included in 'Other operating income' on a statutory basis.
(6) Included in 'Income from trading activities' on a statutory basis.
| Net | Non | ||||||
|---|---|---|---|---|---|---|---|
| interest | interest | Total | Operating | Insurance | Impairment | Operating | |
| income | income | income | expenses | net claims | losses | profit/(loss) | |
| Quarter ended 31 December 2011 | £m | £m | £m | £m | £m | £m | £m |
| UK Retail | 1,032 | 277 | 1,309 | (660) | - | (191) | 458 |
| UK Corporate | 758 | 419 | 1,177 | (535) | - | (236) | 406 |
| Wealth | 168 | 112 | 280 | (194) | - | (13) | 73 |
| International Banking (1) | 281 | 312 | 593 | (385) | - | (56) | 152 |
| Ulster Bank | 177 | 49 | 226 | (132) | - | (327) | (233) |
| US Retail & Commercial | 496 | 294 | 790 | (548) | - | (65) | 177 |
| Markets (2) | 20 | 672 | 692 | (744) | - | (57) | (109) |
| Direct Line Group (3) | 82 | 841 | 923 | (209) | (589) | - | 125 |
| Central items | (37) | 46 | 9 | 77 | (1) | 4 | 89 |
| Core | 2,977 | 3,022 | 5,999 | (3,330) | (590) | (941) | 1,138 |
| Non-Core (4) | 99 | (377) | (278) | (314) | 61 | (751) | (1,282) |
| Managed basis | 3,076 | 2,645 | 5,721 | (3,644) | (529) | (1,692) | (144) |
| Reconciling items | |||||||
| Own credit adjustments (5) | - | (472) | (472) | - | - | - | (472) |
| Asset Protection Scheme (6) | - | (209) | (209) | - | - | - | (209) |
| Sovereign debt impairment | - | - | - | - | - | (224) | (224) |
| Amortisation of purchased intangible | |||||||
| assets | - | - | - | (53) | - | - | (53) |
| Integration and restructuring costs | - | - | - | (478) | - | - | (478) |
| Loss on redemption of own debt | - | (1) | (1) | - | - | - | (1) |
| Strategic disposals | - | (2) | (2) | (80) | - | - | (82) |
| Bank levy | - | - | - | (300) | - | - | (300) |
| Write-down of goodwill and other | |||||||
| intangible assets | - | - | - | (11) | - | - | (11) |
| RFS Holdings minority interest | (2) | 3 | 1 | (1) | - | (2) | (2) |
| Statutory basis | 3,074 | 1,964 | 5,038 | (4,567) | (529) | (1,918) | (1,976) |
Notes:
(1) Reallocation of £12 million between net interest income and non-interest income in respect of funding costs of rental assets.
(2) Reallocation of £3 million between net interest income and non-interest income to record interest on financial assets and liabilities designated as at fair value through profit or loss.
(3) Total income includes £60 million investment income of which £49 million is included in net interest income and £11 million in non-interest income. Reallocation of £33 million between non-interest income and net interest income in respect of instalment income.
(4) Reallocation of £56 million between net interest income and non-interest income in respect of funding costs of rental assets, £55 million and to record interest on financial assets and liabilities designated as at fair value through profit or loss, £1 million.
(5) Comprises £272 million loss included in 'Income from trading activities' and £200 million loss included in 'Other operating income' on a statutory basis.
(6) Included in 'Income from trading activities' on a statutory basis.
| Statutory basis | 3,301 | 3,757 | 7,058 | (4,315) | (912) | (1,947) | (116) |
|---|---|---|---|---|---|---|---|
| RFS Holdings minority interest | 1 | 2 | 3 | - | - | - | 3 |
| Bonus tax | - | - | - | (11) | - | - | (11) |
| Strategic disposals | - | (23) | (23) | - | - | - | (23) |
| Integration and restructuring costs | (2) | (4) | (6) | (139) | - | - | (145) |
| Amortisation of purchased intangible assets |
- | - | - | (44) | - | - | (44) |
| Asset Protection Scheme (6) | - | (469) | (469) | - | - | - | (469) |
| Reconciling items Own credit adjustments (5) |
- | (560) | (560) | - | - | - | (560) |
| Managed basis | 3,302 | 4,811 | 8,113 | (4,121) | (912) | (1,947) | 1,133 |
| Non-Core (4) | 199 | 236 | 435 | (323) | (128) | (1,075) | (1,091) |
| Core | 3,103 | 4,575 | 7,678 | (3,798) | (784) | (872) | 2,224 |
| Central items | (18) | (11) | (29) | (3) | - | - | (32) |
| Direct Line Group (3) | 88 | 982 | 1,070 | (219) | (784) | - | 67 |
| Markets (2) | 53 | 2,055 | 2,108 | (1,079) | - | - | 1,029 |
| US Retail & Commercial | 452 | 275 | 727 | (522) | - | (111) | 94 |
| Ulster Bank | 181 | 51 | 232 | (136) | - | (461) | (365) |
| International Banking (1) | 293 | 354 | 647 | (427) | - | 6 | 226 |
| Wealth | 157 | 114 | 271 | (196) | - | (5) | 70 |
| UK Retail UK Corporate |
1,086 811 |
304 451 |
1,390 1,262 |
(678) (538) |
- - |
(194) (107) |
518 617 |
| Quarter ended 31 March 2011 | income £m |
income £m |
income £m |
expenses £m |
net claims £m |
losses £m |
profit/(loss) £m |
| interest | interest | Total | Operating | Insurance | Impairment | Operating | |
| Net | Non |
Notes:
(1) Reallocation of £10 million between net interest income and non-interest income in respect of funding costs of rental assets.
(2) Reallocation of £3 million between net interest income and non-interest income to record interest on financial assets and liabilities designated as at fair value through profit or loss.
(3) Total income includes £64 million investment income, £53 million in net interest income and £11 million in non-interest income. Reallocation of £35 million between non-interest income and net interest income in respect of instalment income.
(4) Reallocation of £53 million between net interest income and non-interest income in respect of funding costs of rental assets, £51 million and to record interest on financial assets and liabilities designated as at fair value through profit or loss, £2 million.
(5) Comprises £266 million loss included in 'Income from trading activities' and £294 million loss included in 'Other operating income' on a statutory basis.
(6) Included in 'Income from trading activities' on a statutory basis.
| 31 March | 31 December | 31 March | |||
|---|---|---|---|---|---|
| 2012 | 2011 | 2011 | |||
| £m | £m | £m | |||
| 8 | 15 | 8 | |||
| (1) | (1) | (1) | |||
| - | (3) | - | |||
| 7 | 11 | 7 | |||
| (3) | (1) | (3) | |||
| 4 | 10 | 4 | |||
| 1 | - | 6 | |||
| 5 | 10 | 10 | |||
| Quarter ended |
Discontinued operations reflect the results of RFS Holdings attributable to the State of the Netherlands and Santander following the legal separation of ABN AMRO Bank N.V. on 1 April 2010.
| 31 March 2012 | ||||
|---|---|---|---|---|
| UK branch | ||||
| based | 31 December | |||
| businesses £m |
Other £m |
Total £m |
2011 £m |
|
| Assets of disposal groups | ||||
| Cash and balances at central banks | 63 | 24 | 87 | 127 |
| Loans and advances to banks | - | 112 | 112 | 87 |
| Loans and advances to customers | 18,535 | 729 | 19,264 | 19,405 |
| Debt securities and equity shares | - | 5 | 5 | 5 |
| Derivatives | 360 | 8 | 368 | 439 |
| Intangible assets | - | 15 | 15 | 15 |
| Settlement balances | - | 4 | 4 | 14 |
| Property, plant and equipment | 113 | 4,496 | 4,609 | 4,749 |
| Other assets | - | 438 | 438 | 456 |
| Discontinued operations and other disposal groups | 19,071 | 5,831 | 24,902 | 25,297 |
| Assets acquired exclusively with a view to disposal | - | 158 | 158 | 153 |
| 19,071 | 5,989 | 25,060 | 25,450 | |
| Liabilities of disposal groups | ||||
| Deposits by banks | - | 83 | 83 | 1 |
| Customer accounts | 21,447 | 834 | 22,281 | 22,610 |
| Derivatives | 41 | 8 | 49 | 126 |
| Settlement balances | - | - | - | 8 |
| Other liabilities | - | 1,239 | 1,239 | 1,233 |
| Discontinued operations and other disposal groups | 21,488 | 2,164 | 23,652 | 23,978 |
| Liabilities acquired exclusively with a view to disposal | - | 12 | 12 | 17 |
| 21,488 | 2,176 | 23,664 | 23,995 |
The assets and liabilities of disposal groups at 31 March 2012 primarily comprise the RBS England and Wales and NatWest Scotland branch-based businesses ("UK branch-based businesses") and the RBS Aviation Capital business.
Loans, REIL and impairment provisions at 31 March 2012 relating to the Group's UK branch-based businesses are set out below.
| Impairment | ||
|---|---|---|
| Gross loans | REIL | provisions |
| £m | £m | £m |
| 5,716 | 184 | 32 |
| 1,751 | 333 | 287 |
| 4,042 | 453 | 136 |
| 585 | 171 | 55 |
| 4,226 | 318 | 159 |
| 2,995 | 51 | 32 |
| - | - | 79 |
| 19,315 | 1,510 | 780 |
When valuing financial instruments in the trading book, adjustments are made to mid-market valuations to cover bid-offer spread, liquidity and credit risk.
Credit valuation adjustments (CVA) represent an estimate of the adjustment to fair value that a market participant would make to incorporate the credit risk inherent in counterparty derivative exposures. The following table shows credit valuation adjustments and other reserves.
| 31 March 2012 £m |
31 December 2011 £m |
|
|---|---|---|
| CVA | ||
| Monoline insurers | 991 | 1,198 |
| Credit derivative product companies (CDPCs) | 624 | 1,034 |
| Other counterparties | 2,014 | 2,254 |
| 3,629 | 4,486 | |
| Bid-offer, liquidity and other reserves | 2,228 | 2,704 |
| 5,857 | 7,190 |
The following table shows the cumulative own credit adjustment recorded on securities classified as fair value through profit or loss and derivative liabilities.
| Debt securities in issue (2) | Subordinated liabilities |
||||||
|---|---|---|---|---|---|---|---|
| Cumulative own credit adjustment (1) | HFT £m |
DFV £m |
Total £m |
DFV £m |
Total £m |
Derivatives £m |
Total (3) £m |
| 31 March 2012 | 91 | 1,207 | 1,298 | 520 | 1,818 | 466 | 2,284 |
| 31 December 2011 | 882 | 2,647 | 3,529 | 679 | 4,208 | 602 | 4,810 |
| Carrying values of underlying liabilities | £bn | £bn | £bn | £bn | £bn | ||
| 31 March 2012 | 10.7 | 33.3 | 44.0 | 1.0 | 45.0 | ||
| 31 December 2011 | 11.5 | 35.7 | 47.2 | 0.9 | 48.1 |
Notes:
(1) The own credit adjustment for fair value does not alter cash flows and is not used for performance management. It is disregarded for regulatory capital reporting processes and will reverse over time as the liabilities mature.
(2) Consists of wholesale and retail note issuances.
(3) The reserve movement between periods will not equate to the reported profit or loss for own credit. The balance sheet reserves are stated by conversion of underlying currency balances at spot rates for each period whereas the income statement includes intra-period foreign exchange sell-offs.
The Q1 2012 movement in available-for-sale financial assets primarily reflects net unrealised gains on securities of £724 million, largely as yields tightened on sovereign bonds.
| Quarter ended | ||||||
|---|---|---|---|---|---|---|
| 31 March | 31 December | 31 March | ||||
| 2012 | 2011 | 2011 | ||||
| Available-for-sale reserve | £m | £m | £m | |||
| At beginning of period | (957) | (292) | (2,037) | |||
| Unrealised losses on Greek sovereign debt | - | (224) | - | |||
| Impairment of Greek sovereign debt | - | 224 | - | |||
| Other unrealised net gains | 724 | 45 | 162 | |||
| Realised net gains | (212) | (155) | (197) | |||
| Tax | 6 | (555)* | 9 | |||
| At end of period | (439) | (957) | (2,063) |
* The Q4 2011 tax charge included a £664 million write-off of deferred tax assets in The Netherlands.
In Q2 2011, as a result of the deterioration in Greece's fiscal position and the announcement of proposals to restructure Greek government debt, the Group concluded that the Greek sovereign debt was impaired. Accordingly, £733 million of unrealised losses recognised in available-for-sale reserves together with £109 million related interest rate hedge adjustments were recycled to the income statement. Further losses of £224 million were recorded in Q4 2011.
Ireland, Italy, Portugal and Spain are facing less acute fiscal difficulties and the Group's sovereign exposures to these countries were not considered impaired at 31 March 2012.
| 31 March 2012 | 31 December 2011 | |||||||
|---|---|---|---|---|---|---|---|---|
| Core £m |
Non-Core £m |
Total £m |
Core £m |
Non-Core £m |
Total £m |
|||
| Contingent liabilities | ||||||||
| Guarantees and assets pledged as | ||||||||
| collateral security | 22,660 | 921 | 23,581 | 23,702 | 1,330 | 25,032 | ||
| Other contingent liabilities | 11,582 | 223 | 11,805 | 10,667 | 245 | 10,912 | ||
| 34,242 | 1,144 | 35,386 | 34,369 | 1,575 | 35,944 | |||
| Commitments | ||||||||
| Undrawn formal standby facilities, credit | ||||||||
| lines and other commitments to lend | 225,237 | 11,575 | 236,812 | 227,419 | 12,544 | 239,963 | ||
| Other commitments | 666 | 1,919 | 2,585 | 301 | 2,611 | 2,912 | ||
| 225,903 | 13,494 | 239,397 | 227,720 | 15,155 | 242,875 | |||
| Total contingent liabilities and | ||||||||
| commitments | 260,145 | 14,638 | 274,783 | 262,089 | 16,730 | 278,819 |
Additional contingent liabilities arise in the normal course of the Group's business. It is not anticipated that any material loss will arise from these transactions.
Except for the developments noted below, there have been no material changes to the litigation and investigations, reviews and proceedings as disclosed in the Annual Results for the year ended 31 December 2011.
RBS Citizens N.A. and its affiliates were among more than thirty banks named as defendants in US class action lawsuits alleging that the way in which banks posted transactions to consumer accounts caused customers to incur excessive overdraft fees. The complaints against Citizens, which concerned the period between 2002 and 2010, alleged that this conduct violated its duty of good faith and fair dealing, and was unconscionable, an unfair trade practice and a conversion of customers' funds. Citizens has agreed to settle this case for \$137.5 million. A notice of settlement has been filed with the court, which requests that all proceedings in the case be stayed. If the settlement is given final approval by the court, consumers who do not opt out of the settlement will be deemed to have released any claims related to the allegations in the lawsuits.
On 26 March 2012, the FSA published a Final Notice, having reached a settlement with Coutts & Co under which Coutts agreed to pay a fine of £8.75 million. This follows an investigation by the FSA into Coutts & Co's anti-money laundering (AML) systems and controls in relation to high risk clients. The fine relates to activity undertaken between December 2007 and November 2010.
Coutts has cooperated fully and openly with the FSA throughout the investigation. Coutts accepts the findings contained in the FSA's Final Notice regarding certain failures to meet the relevant regulatory standards between December 2007 and November 2010. Coutts has found no evidence that money laundering took place during that time.
Since concerns were first identified by the FSA, Coutts & Co has enhanced its client relationship management process which included a review of its AML procedures, and is confident in its current processes and procedures.
During March 2008, the Group was advised by the SEC that it had commenced a non-public, formal investigation relating to the Group's United States sub-prime securities exposures and United States residential mortgage exposures. In December 2010, the SEC contacted the Group and indicated that it would also examine valuations of various RBS N.V. structured products, including CDOs. With respect to the latter inquiry, in March 2012, the SEC communicated to the Group that it had completed its investigation and that it did not, as of the date of that communication and based upon the information then in its possession, intend to recommend any enforcement action against RBS.
The Group continues to respond to investigations by various authorities into its submissions, communications and procedures relating to the setting of LIBOR and other interest rates, including the US Commodity Futures Trading Commission, the US Department of Justice, the European Commission, the FSA and the Japanese Financial Services Agency. In addition to co-operating with the investigations as described above, the Group is also keeping relevant regulators informed. It is not possible to estimate with any certainty what effect these investigations and any related developments may have on the Group, including the timing and effect of any resolution of these investigations.
On 19 April 2011, the Group announced its intention to transfer a substantial part of the business activities of The Royal Bank of Scotland N.V. (RBS N.V.) to RBS plc (the "Proposed Transfers"), subject, amongst other matters, to regulatory and other approvals, further tax and other analysis in respect of the assets and liabilities to be transferred and employee consultation procedures.
It is expected that the Proposed Transfers will be implemented on a phased basis over a period ending 31 December 2013. The transfer of substantially all of the UK business was completed during Q4 2011. A large part of the remainder of Proposed Transfers is expected to have taken place by the end of 2012.
On 26 March 2012, the Boards of The Royal Bank of Scotland Group plc, RBS plc, RBS Holdings N.V., RBS N.V. and RBS II B.V. announced that (1) RBS N.V. (as the demerging company) and RBS II B.V. (as the acquiring company) filed a proposal with the Dutch Trade Register for a legal demerger and (2) following a preliminary hearing at the Court of Session in Scotland, RBS plc and RBS II B.V. made filings with Companies House in the UK and the Dutch Trade Register respectively for a proposed cross-border merger of RBS II B.V. into RBS plc ("the Dutch Scheme").
Upon implementation of these proposals, a substantial part of the business conducted by RBS N.V. in the Netherlands as well as in certain EMEA branches of RBS N.V. will be transferred to RBS plc. Implementation will be by the demerger of the transferring businesses into RBS II B.V. by way of a Dutch statutory demerger followed by the merger of RBS II B.V. into RBS plc through a cross-border merger. RBS plc and RBS N.V. have discussed the transfer in detail with De Nederlandsche Bank and the Financial Services Authority.
Implementation is subject, amongst other matters, to regulatory and court approvals. Subject to these matters, it is expected that the Dutch Scheme will take effect on 9 July 2012.
On 15 February 2012, Moody's placed the ratings of 114 European banks and 17 firms with global capital markets activities on review for possible downgrade. Included in the rating reviews were the ratings of RBS and certain subsidiaries. Moody's' long term ratings of RBS Group plc (A3), RBS plc (A2), NatWest (A2), RBS N.V. (A2), Ulster Bank Ltd (Baa1) and Ulster Bank Ireland Ltd (Baa1) are on review for possible downgrade; along with the short-term P-1 ratings of RBS plc, NatWest and RBS N.V. The short-term ratings of RBS Group plc, Ulster Bank Ireland Ltd and Ulster Bank Ltd were affirmed at P-2. Moody's cite three reasons for their reviews across all of the affected firms; (i) the adverse and prolonged impact of the euro area crisis; (ii) the deteriorating creditworthiness of euro, area sovereigns; and (iii) the substantial challenges faced by banks and securities firms with significant capital market activities.
Following their ratings announcement on 15 February 2012, on 22 February 2012 Moody's also placed on review for possible downgrade selected ratings of North American bank subsidiaries of European banks. Included in these rating actions were the long-term (A2) and short-term (P-1) ratings of RBS Citizens, NA and Citizens Bank of Pennsylvania.
During the quarter, no material rating actions have been undertaken on the Group and RBS plc by the rating agencies, Standard & Poor's and Fitch Ratings.
This announcement was approved by the Board of directors on 3 May 2012.
There have been no significant events between 31 March 2012 and the date of approval of this announcement which would require a change to or additional disclosure in the announcement.
The Group aims to maintain an appropriate level of capital to meet its business needs and regulatory requirements. Capital adequacy and risk management are closely aligned. The Group's risk-weighted assets and risk asset ratios, calculated in accordance with Financial Services Authority (FSA) definitions, are set out below.
| 31 March 2012 |
31 December 2011 |
|
|---|---|---|
| Risk-weighted assets (RWAs) by risk | £bn | £bn |
| Credit risk | 332.9 | 344.3 |
| Counterparty risk | 56.8 | 61.9 |
| Market risk | 61.0 | 64.0 |
| Operational risk | 45.8 | 37.9 |
| 496.5 | 508.1 | |
| Asset Protection Scheme (APS) relief | (62.2) | (69.1) |
| 434.3 | 439.0 | |
| Risk asset ratios | % | % |
| Core Tier 1 | 10.8 | 10.6 |
| Tier 1 | 13.2 | 13.0 |
| Total | 14.0 | 13.8 |
The Group's regulatory capital resources in accordance with FSA definitions were as follows:
| 31 March | 31 December | |
|---|---|---|
| 2012 £m |
2011 £m |
|
| Shareholders' equity (excluding non-controlling interests) | ||
| Shareholders' equity per balance sheet | 73,416 | 74,819 |
| Preference shares - equity | (4,313) | (4,313) |
| Other equity instruments | (431) | (431) |
| 68,672 | 70,075 | |
| Non-controlling interests | ||
| Non-controlling interests per balance sheet | 1,215 | 1,234 |
| Non-controlling preference shares | (548) | (548) |
| Other adjustments to non-controlling interests for regulatory purposes | (259) | (259) |
| 408 | 427 | |
| Regulatory adjustments and deductions | ||
| Own credit | (845) | (2,634) |
| Unrealised losses on AFS debt securities | 547 | 1,065 |
| Unrealised gains on AFS equity shares | (108) | (108) |
| Cash flow hedging reserve | (921) | (879) |
| Other adjustments for regulatory purposes | 630 | 571 |
| Goodwill and other intangible assets | (14,771) | (14,858) |
| 50% excess of expected losses over impairment provisions (net of tax) | (2,791) | (2,536) |
| 50% of securitisation positions | (1,530) | (2,019) |
| 50% of APS first loss | (2,489) | (2,763) |
| (22,278) | (24,161) | |
| Core Tier 1 capital | 46,802 | 46,341 |
| Other Tier 1 capital | ||
| Preference shares - equity | 4,313 | 4,313 |
| Preference shares - debt | 1,064 | 1,094 |
| Innovative/hybrid Tier 1 securities | 4,557 | 4,667 |
| 9,934 | 10,074 | |
| Tier 1 deductions | ||
| 50% of material holdings | (300) | (340) |
| Tax on excess of expected losses over impairment provisions | 906 | 915 |
| 606 | 575 | |
| Total Tier 1 capital | 57,342 | 56,990 |
| 1,838 |
|---|
| 14,527 |
| 108 |
| 635 |
| 11 |
| 17,119 |
| (2,019) |
| (3,451) |
| (340) |
| (2,763) |
| (8,573) |
| 8,546 |
| (4,354) |
| (239) |
| (235) |
| (4,828) |
| 60,708 |
| 31 March 2012 £m |
| 46,341 |
| 265 |
| (548) |
| (19) |
| Other movements | 168 |
|---|---|
| At end of the quarter | 46,802 |
Decrease in capital deductions including APS first loss 508 Decrease in goodwill and other intangible assets 87
Risk-weighted assets by risk category and division are set out below.
| Credit | Counterparty | Market | Operational | Gross | |
|---|---|---|---|---|---|
| risk | risk | risk | risk | RWAs | |
| 31 March 2012 | £bn | £bn | £bn | £bn | £bn |
| UK Retail | 40.4 | - | - | 7.8 | 48.2 |
| UK Corporate | 68.3 | - | - | 8.6 | 76.9 |
| Wealth | 10.9 | - | 0.1 | 1.9 | 12.9 |
| International Banking | 37.0 | - | - | 4.8 | 41.8 |
| Ulster Bank | 35.9 | 0.7 | 0.1 | 1.7 | 38.4 |
| US Retail & Commercial | 52.8 | 0.9 | - | 4.9 | 58.6 |
| Retail & Commercial | 245.3 | 1.6 | 0.2 | 29.7 | 276.8 |
| Markets | 15.0 | 36.5 | 48.4 | 15.7 | 115.6 |
| Other | 9.0 | 0.2 | - | 1.8 | 11.0 |
| Core | 269.3 | 38.3 | 48.6 | 47.2 | 403.4 |
| Non-Core | 60.6 | 18.5 | 12.4 | (1.6) | 89.9 |
| Group before RFS Holdings MI | 329.9 | 56.8 | 61.0 | 45.6 | 493.3 |
| RFS Holdings MI | 3.0 | - | - | 0.2 | 3.2 |
| Group | 332.9 | 56.8 | 61.0 | 45.8 | 496.5 |
| APS relief | (53.9) | (8.3) | - | - | (62.2) |
| Net RWAs | 279.0 | 48.5 | 61.0 | 45.8 | 434.3 |
| 31 December 2011 | |||||
| UK Retail | 41.1 | - | - | 7.3 | 48.4 |
| UK Corporate | 71.2 | - | - | 8.1 | 79.3 |
| Wealth | 10.9 | - | 0.1 | 1.9 | 12.9 |
| International Banking | 38.9 | - | - | 4.3 | 43.2 |
| Ulster Bank | 33.6 | 0.6 | 0.3 | 1.8 | 36.3 |
| US Retail & Commercial | 53.6 | 1.0 | - | 4.7 | 59.3 |
| Retail & Commercial | 249.3 | 1.6 | 0.4 | 28.1 | 279.4 |
| Markets | 16.7 | 39.9 | 50.6 | 13.1 | 120.3 |
| Other | 9.8 | 0.2 | - | 2.0 | 12.0 |
| Core | 275.8 | 41.7 | 51.0 | 43.2 | 411.7 |
| Non-Core | 65.6 | 20.2 | 13.0 | (5.5) | 93.3 |
| Group before RFS Holdings MI | 341.4 | 61.9 | 64.0 | 37.7 | 505.0 |
| RFS Holdings MI | 2.9 | - | - | 0.2 | 3.1 |
| Group | 344.3 | 61.9 | 64.0 | 37.9 | 508.1 |
| APS relief | (59.6) | (9.5) | - | - | (69.1) |
| Net RWAs | 284.7 | 52.4 | 64.0 | 37.9 | 439.0 |
The Group continued to strengthen and de-risk its balance sheet, the benefits of which are reflected in improvements in its strong liquidity and funding metrics.
The table below shows the Group's primary funding sources including deposits in disposal groups and excluding repurchase agreements.
| 31 March 2012 | 31 December 2011 | |||
|---|---|---|---|---|
| £m | % | £m | % | |
| Deposits by banks | ||||
| - derivative cash collateral | 29,390 | 4.4 | 31,807 | 4.6 |
| - other deposits | 36,428 | 5.5 | 37,307 | 5.3 |
| 65,818 | 9.9 | 69,114 | 9.9 | |
| Debt securities in issue | ||||
| - conduit asset backed commercial paper (ABCP) | 9,354 | 1.4 | 11,164 | 1.6 |
| - other commercial paper (CP) | 3,253 | 0.5 | 5,310 | 0.8 |
| - certificates of deposit (CDs) | 14,575 | 2.2 | 16,367 | 2.4 |
| - medium-term notes (MTNs) | 90,674 | 13.6 | 105,709 | 15.2 |
| - covered bonds | 10,107 | 1.5 | 9,107 | 1.3 |
| - securitisations | 14,980 | 2.2 | 14,964 | 2.1 |
| 142,943 | 21.4 | 162,621 | 23.4 | |
| Subordinated liabilities | 25,513 | 3.9 | 26,319 | 3.8 |
| Notes issued | 168,456 | 25.3 | 188,940 | 27.2 |
| Wholesale funding | 234,274 | 35.2 | 258,054 | 37.1 |
| Customer deposits | ||||
| - cash collateral | 8,829 | 1.3 | 9,242 | 1.4 |
| - other deposits | 423,659 | 63.5 | 427,511 | 61.5 |
| Total customer deposits | 432,488 | 64.8 | 436,753 | 62.9 |
| Total funding | 666,762 | 100.0 | 694,807 | 100.0 |
| Disposal group deposits included above | ||||
| - banks | 83 | 1 | ||
| - customers | 22,281 | 22,610 | ||
| 22,364 | 22,611 |
| Short-term wholesale funding (STWF) (1) | 31 March 2012 £bn |
31 December 2011 £bn |
|---|---|---|
| Bank deposits | 32.7 | 32.9 |
| Notes issued (2) | 47.0 | 69.5 |
| STWF excluding derivative collateral | 79.7 | 102.4 |
| Derivative collateral | 29.4 | 31.8 |
| STWF including derivative collateral | 109.1 | 134.2 |
| Interbank funding excluding derivative collateral (3) | ||
| - bank deposits | 36.4 | 37.3 |
| - bank loans | (19.7) | (24.3) |
| Net interbank funding | 16.7 | 13.0 |
Notes:
(1) Short-term balances denote those with a residual maturity of less than one year and includes longer-term instruments that mature within twelve months of the reporting date.
(2) See page 97 for details.
(3) Deposits and loans include all maturities.
The table below shows the Group's debt securities in issue and subordinated liabilities by remaining maturity.
| Debt securities in issue | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Other | Total | Total | |||||||
| Conduit | CP and | Covered | Subordinated | notes | notes | ||||
| ABCP | CDs | MTNs | bonds Securitisations | Total | liabilities | issued | issued | ||
| £m | £m | £m | £m | £m | £m | £m | £m | % | |
| 31 March 2012 | |||||||||
| Less than 1 year | 9,354 | 17,532 | 19,686 | - | 22 | 46,594 | 454 47,048 | 28 | |
| 1-3 years | - | 290 | 30,795 | 2,787 | 1,231 | 35,103 | 4,693 39,796 | 24 | |
| 3-5 years | - | 1 | 16,416 | 3,666 | - | 20,083 | 4,998 25,081 | 15 | |
| More than 5 years | - | 5 | 23,777 | 3,654 | 13,727 | 41,163 | 15,368 56,531 | 33 | |
| 9,354 | 17,828 | 90,674 | 10,107 | 14,980 142,943 | 25,513 168,456 | 100 | |||
| 31 December 2011 | |||||||||
| Less than 1 year | 11,164 | 21,396 | 36,302 | - | 27 | 68,889 | 624 69,513 | 37 | |
| 1-3 years | - | 278 | 26,595 | 2,760 | 479 | 30,112 | 3,338 33,450 | 18 | |
| 3-5 years | - | 2 | 16,627 | 3,673 | - | 20,302 | 7,232 27,534 | 14 | |
| More than 5 years | - | 1 | 26,185 | 2,674 | 14,458 | 43,318 | 15,125 58,443 | 31 | |
| 11,164 | 21,677 105,709 | 9,107 | 14,964 162,621 | 26,319 188,940 | 100 |
The table below shows debt securities with an original maturity of one year or more issued by the Group during the last two quarters.
| Quarter ended | ||
|---|---|---|
| 31 March 2012 |
31 December 2011 |
|
| £m | £m | |
| Public | ||
| - secured | 1,784 | 3,223 |
| Private | ||
| - unsecured | 1,676 | 911 |
| - secured | - | 500 |
| Gross issuance | 3,460 | 4,634 |
| Buybacks | (1,129) | (1,270) |
| Net issuance | 2,331 | 3,364 |
In addition, the Group issued £2.8 billion of new ten year lower tier 2 securities as part of a liability management exercise.
The table below shows the composition of the Group's liquidity portfolio (at estimated liquidity value). All assets within the liquidity portfolio are unencumbered.
| 31 March 2012 | 31 December 2011 | |||
|---|---|---|---|---|
| Quarterly average £m |
Period end £m |
Quarterly average £m |
Period end £m |
|
| Cash and balances at central banks | 91,287 | 69,489 | 89,377 | 69,932 |
| Treasury bills | - | - | 444 | - |
| Central and local government bonds (1) | ||||
| - AAA rated governments and US agencies | 19,085 | 29,639 | 30,421 | 29,632 |
| - AA- to AA+ rated governments (2) | 8,924 | 14,903 | 5,056 | 14,102 |
| - governments rated below AA | 797 | 544 | 1,011 | 955 |
| - local government | 3,980 | 2,933 | 4,517 | 4,302 |
| 32,786 | 48,019 | 41,005 | 48,991 | |
| Other assets (3) | ||||
| - AAA rated | 26,435 | 24,243 | 25,083 | 25,202 |
| - below AAA rated and other high quality assets | 9,194 | 10,972 | 11,400 | 11,205 |
| 35,629 | 35,215 | 36,483 | 36,407 | |
| Total liquidity portfolio | 159,702 | 152,723 | 167,309 | 155,330 |
Notes:
(1) Includes FSA eligible government bonds of £30.5 billion at 31 March 2012 (31 December 2011 - £36.7 billion).
(2) Includes AAA rated US government guaranteed and US government sponsored agencies.
(3) Includes assets eligible for discounting at central banks.
The table below shows the quarterly trends in the Group's loan:deposit ratio and customer funding gap, including disposal groups.
| Loan:deposit ratio | Customer funding gap |
||
|---|---|---|---|
| Group % |
Core % |
Group £bn |
|
| 31 March 2012 | 106 | 93 | 27 |
| 31 December 2011 | 108 | 94 | 37 |
| 30 September 2011 | 112 | 95 | 52 |
| 30 June 2011 | 114 | 96 | 60 |
| 31 March 2011 | 116 | 96 | 67 |
Note:
(1) Loans are net of provisions and exclude repurchase agreements.
The table below shows the Group's net stable funding ratio (NSFR), estimated by applying the Basel III guidance issued in December 2010.
| 31 March 2012 | 31 December 2011 | ||||
|---|---|---|---|---|---|
| ASF (1) | ASF (1) | Weighting | |||
| £bn | £bn | £bn | £bn | % | |
| Equity | 75 | 75 | 76 | 76 | 100 |
| Wholesale funding > 1 year | 125 | 125 | 124 | 124 | 100 |
| Wholesale funding < 1 year | 109 | - | 134 | - | - |
| Derivatives | 447 | - | 524 | - | - |
| Repurchase agreements | 129 | - | 129 | - | - |
| Deposits | |||||
| - Retail and SME - more stable | 230 | 207 | 227 | 204 | 90 |
| - Retail and SME - less stable | 30 | 24 | 31 | 25 | 80 |
| - Other | 173 | 87 | 179 | 89 | 50 |
| Other (2) | 85 | - | 83 | - | - |
| Total liabilities and equity | 1,403 | 518 | 1,507 | 518 | |
| Cash | 82 | - | 79 | - | - |
| Inter-bank lending | 36 | - | 44 | - | - |
| Debt securities > 1 year | |||||
| - central and local governments AAA to AA- | 70 | 3 | 77 | 4 | 5 |
| - other eligible bonds | 64 | 13 | 73 | 15 | 20 |
| - other bonds | 20 | 20 | 14 | 14 | 100 |
| Debt securities < 1 year | 42 | - | 45 | - | - |
| Derivatives | 453 | - | 530 | - | - |
| Reverse repurchase agreements | 91 | - | 101 | - | - |
| Customer loans and advances > 1 year | |||||
| - residential mortgages | 145 | 94 | 145 | 94 | 65 |
| - other | 167 | 167 | 173 | 173 | 100 |
| Customer loans and advances < 1 year | |||||
| - retail loans | 19 | 16 | 19 | 16 | 85 |
| - other | 129 | 65 | 137 | 69 | 50 |
| Other (3) | 85 | 85 | 70 | 70 | 100 |
| Total assets | 1,403 | 463 | 1,507 | 455 | |
| Undrawn commitments | 237 | 12 | 240 | 12 | 5 |
| Total assets and undrawn commitments | 1,640 | 475 | 1,747 | 467 | |
| Net stable funding ratio | 109% | 111% |
Notes:
(1) Available stable funding.
(2) Deferred tax, insurance liabilities and other liabilities.
(3) Prepayments, accrued income, deferred tax, settlement balances and other assets.
Credit risk is the risk of financial loss due to the failure of a customer to meet its obligation to settle outstanding amounts. The quantum and nature of credit risk assumed across the Group's different businesses vary considerably, while the overall credit risk outcome usually exhibits a high degree of correlation with the macroeconomic environment.
In the table below loans and advances exclude disposal groups and repurchase agreements. Totals including disposal groups are also presented. Non-Core includes amounts relating to RFS MI of £0.5 billion at 31 March 2012 (31 December 2011 - £0.4 billion).
| 31 March 2012 | 31 December 2011 | |||||
|---|---|---|---|---|---|---|
| Core | Non-Core | Total | Core | Non-Core | Total | |
| £m | £m | £m | £m | £m | £m | |
| Central and local government | 8,577 | 1,397 | 9,974 | 8,359 | 1,383 | 9,742 |
| Finance | 42,035 | 3,442 | 45,477 | 46,452 | 3,229 | 49,681 |
| Residential mortgages | 139,784 | 3,438 | 143,222 | 138,509 | 5,102 143,611 | |
| Personal lending | 31,209 | 1,297 | 32,506 | 31,067 | 1,556 | 32,623 |
| Property | 38,355 | 36,346 | 74,701 | 38,704 | 38,064 | 76,768 |
| Construction | 6,065 | 2,434 | 8,499 | 6,781 | 2,672 | 9,453 |
| Manufacturing | 22,587 | 4,207 | 26,794 | 23,201 | 4,931 | 28,132 |
| Service industries and business activities | ||||||
| - retail, wholesale and repairs | 20,528 | 1,981 | 22,509 | 21,314 | 2,339 | 23,653 |
| - transport and storage | 15,760 | 4,525 | 20,285 | 16,454 | 5,477 | 21,931 |
| - health, education and recreation | 13,294 | 1,304 | 14,598 | 13,273 | 1,419 | 14,692 |
| - hotels and restaurants | 7,072 | 1,013 | 8,085 | 7,143 | 1,161 | 8,304 |
| - utilities | 6,355 | 1,777 | 8,132 | 6,543 | 1,849 | 8,392 |
| - other | 23,660 | 3,663 | 27,323 | 24,228 | 3,772 | 28,000 |
| Agriculture, forestry and fishing | 3,497 | 83 | 3,580 | 3,471 | 129 | 3,600 |
| Finance leases and instalment credit | 8,534 | 5,596 | 14,130 | 8,440 | 6,059 | 14,499 |
| Interest accruals | 551 | 116 | 667 | 675 | 116 | 791 |
| Gross loans | 387,863 | 72,619 | 460,482 | 394,614 | 79,258 473,872 | |
| Loan impairment provisions | (8,663) | (11,413) | (20,076) | (8,292) | (11,468) (19,760) | |
| Net loans | 379,200 | 61,206 | 440,406 | 386,322 | 67,790 454,112 | |
| Gross loans including disposal groups | 407,178 | 73,364 | 480,542 | 414,063 | 80,005 494,068 | |
| Loan impairment provisions including disposal groups | (9,443) | (11,429) | (20,872) | (9,065) | (11,486) (20,551) | |
| Net loans including disposal groups | 397,735 | 61,935 | 459,670 | 404,998 | 68,519 473,517 |
The table below analyses the Group's risk elements in lending (REIL). REIL are stated without giving effect to any security held which could reduce the eventual loss should it occur, nor any provision marked.
| 31 March 2012 | 31 December 2011 | ||||||
|---|---|---|---|---|---|---|---|
| Non | Non | ||||||
| Core £m |
Core £m |
Total £m |
Core £m |
Core £m |
Total £m |
||
| Impaired loans (1) | 15,007 | 23,023 | 38,030 | 15,306 | 23,441 | 38,747 | |
| Accruing loans past due 90 days or more (2) | 1,323 | 447 | 1,770 | 1,556 | 542 | 2,098 | |
| Total REIL | 16,330 | 23,470 | 39,800 | 16,862 | 23,983 | 40,845 | |
| REIL including disposal groups | 41,330 | 42,394 | |||||
| REIL as a % of gross loans and advances (3) | 4.3% | 32.2% | 8.6% | 4.4% | 30.1% | 8.6% | |
| Provisions as a % of REIL | 54% | 49% | 51% | 50% | 48% | 49% |
Notes:
(1) All loans against which an impairment provision is held.
(2) Loans where an impairment event has taken place but no impairment provision recognised. This category is used for fully collateralised non-revolving credit facilities.
(3) Includes disposal groups and excludes reverse repos.
The table below details the movements in REIL for the quarter ended 31 March 2012.
| Impaired loans | Other loans (1) | REIL | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Non | Non | Non | |||||||
| Core | Core | Total | Core | Core | Total | Core | Core | Total | |
| £m | £m | £m | £m | £m | £m | £m | £m | £m | |
| At 1 January 2012 | 15,306 | 23,441 | 38,747 | 1,556 | 542 | 2,098 | 16,862 | 23,983 | 40,845 |
| Currency translation and | |||||||||
| other adjustments | (31) | (136) | (167) | 10 | (6) | 4 | (21) | (142) | (163) |
| Additions | 1,627 | 981 | 2,608 | 637 | 74 | 711 | 2,264 | 1,055 | 3,319 |
| Transfers | (92) | 17 | (75) | (10) | (22) | (32) | (102) | (5) | (107) |
| Disposals and restructurings | (597) | (123) | (720) | (93) | (6) | (99) | (690) | (129) | (819) |
| Repayments | (801) | (717) | (1,518) | (777) | (135) | (912) | (1,578) | (852) | (2,430) |
| Amounts written-off | (405) | (440) | (845) | - | - | - | (405) | (440) | (845) |
| At 31 March 2012 | 15,007 | 23,023 | 38,030 | 1,323 | 447 | 1,770 | 16,330 | 23,470 | 39,800 |
Note:
(1) Accruing loans past due 90 days or more.
The table below analyses loans and advances to banks and customers (excluding reverse repos) and related REIL, provisions, impairments, write-offs and coverage ratios by division.
| REIL as a | ||||||||
|---|---|---|---|---|---|---|---|---|
| Gross | Gross | % of gross | Provisions | |||||
| loans | loans to | loans to | as a % | Impairment | Amounts | |||
| to banks | customers | REIL Provisions | customers | of REIL | charge | written-off | ||
| 31 March 2012 | £m | £m | £m | £m | % | % | £m | £m |
| UK Retail | 942 | 105,196 | 4,120 | 2,364 | 3.9 | 57 | 155 | 155 |
| UK Corporate | 926 | 97,702 | 3,929 | 1,698 | 4.0 | 43 | 176 | 98 |
| Wealth | 2,028 | 16,967 | 228 | 87 | 1.3 | 38 | 10 | 3 |
| International Banking | 4,045 | 53,060 | 873 | 845 | 1.6 | 97 | 35 | 31 |
| Ulster Bank | 1,555 | 33,932 | 5,874 | 3,101 | 17.3 | 53 | 394 | 14 |
| US Retail & Commercial | 185 | 50,949 | 910 | 391 | 1.8 | 43 | 16 | 87 |
| Retail & Commercial | 9,681 | 357,806 15,934 | 8,486 | 4.5 | 53 | 786 | 388 | |
| Markets | 21,963 | 28,848 | 396 | 311 | 1.4 | 79 | 10 | 17 |
| Direct Line Group and other | 4,129 | 1,209 | - | - | - | - | - | - |
| Core | 35,773 | 387,863 16,330 | 8,797 | 4.2 | 54 | 796 | 405 | |
| Non-Core | 426 | 72,619 23,470 | 11,414 | 32.3 | 49 | 499 | 440 | |
| Group | 36,199 | 460,482 39,800 | 20,211 | 8.6 | 51 | 1,295 | 845 | |
| Total including disposal groups | 36,311 | 480,542 41,330 | 21,007 | 8.6 | 51 | 1,295 | 845 | |
| 31 December 2011 | ||||||||
| UK Retail | 628 | 103,377 | 4,087 | 2,344 | 4.0 | 57 | 191 | 165 |
| UK Corporate | 806 | 98,563 | 3,988 | 1,623 | 4.0 | 41 | 236 | 156 |
| Wealth | 2,422 | 16,913 | 211 | 81 | 1.2 | 38 | 13 | 3 |
| International Banking | 3,411 | 57,728 | 1,632 | 851 | 2.8 | 52 | 56 | 20 |
| Ulster Bank | 2,079 | 34,052 | 5,523 | 2,749 | 16.2 | 50 | 327 | 61 |
| US Retail & Commercial | 208 | 51,562 | 1,007 | 455 | 2.0 | 45 | 53 | 105 |
| Retail & Commercial | 9,554 | 362,195 16,448 | 8,103 | 4.5 | 49 | 876 | 510 | |
| Markets | 29,991 | 31,490 | 414 | 311 | 1.3 | 75 | 48 | 16 |
| Direct Line Group and other | 3,829 | 929 | - | - | - | - | - | - |
| Core | 43,374 | 394,614 16,862 | 8,414 | 4.3 | 50 | 924 | 526 | |
| Non-Core | 619 | 79,258 23,983 | 11,469 | 30.3 | 48 | 730 | 981 | |
| Group | 43,993 | 473,872 40,845 | 19,883 | 8.6 | 49 | 1,654 | 1,507 | |
| Total including disposal groups | 44,080 | 494,068 42,394 | 20,674 | 8.6 | 49 | 1,654 | 1,507 | |
| 31 March 2011 | ||||||||
| UK Retail | 448 | 110,045 | 4,641 | 2,652 | 4.2 | 57 | 194 | 274 |
| UK Corporate | 101 | 114,840 | 4,618 | 1,929 | 4.0 | 42 | 107 | 107 |
| Wealth | 2,200 | 16,475 | 214 | 64 | 1.3 | 30 | 5 | 5 |
| International Banking | 3,822 | 63,320 | 1,531 | 802 | 2.4 | 52 | (6) | 19 |
| Ulster Bank | 2,689 | 37,167 | 4,638 | 2,111 | 12.5 | 46 | 461 | 11 |
| US Retail & Commercial | 186 | 46,960 | 972 | 499 | 2.1 | 51 | 84 | 96 |
| Retail & Commercial | 9,446 | 388,807 16,614 | 8,057 | 4.3 | 48 | 845 | 512 | |
| Markets | 46,931 | 22,473 | 404 | 359 | 1.8 | 89 | 7 | 2 |
| Direct Line Group and other | 2,057 | 1,217 | - | - | - | - | - | - |
| Core | 58,434 | 412,497 17,018 | 8,416 | 4.1 | 49 | 852 | 514 | |
| Non-Core | 999 | 100,779 24,023 | 10,842 | 23.8 | 45 | 1,046 | 438 | |
| Group | 59,433 | 513,276 41,041 | 19,258 | 8.0 | 47 | 1,898 | 952 | |
| Total including disposal groups | 60,046 | 516,886 41,087 | 19,289 | 7.9 | 47 | 1,898 | 952 | |
The table below analyses impairment provisions in respect of loans and advances to banks and customers.
| 31 March 2012 | 31 December 2011 | ||||||
|---|---|---|---|---|---|---|---|
| Core Non-Core | Total | Core Non-Core | Total | ||||
| £m | £m | £m | £m | £m | £m | ||
| Individually assessed | 2,829 | 9,998 | 12,827 | 2,674 | 9,960 | 12,634 | |
| Collectively assessed | 4,543 | 792 | 5,335 | 4,279 | 861 | 5,140 | |
| Latent loss | 1,291 | 623 | 1,914 | 1,339 | 647 | 1,986 | |
| Loans to customers | 8,663 | 11,413 | 20,076 | 8,292 | 11,468 | 19,760 | |
| Loans to banks | 134 | 1 | 135 | 122 | 1 | 123 | |
| Total provisions | 8,797 | 11,414 | 20,211 | 8,414 | 11,469 | 19,883 | |
| Provisions as a % of REIL | 54% | 49% | 51% | 50% | 48% | 49% | |
| Customer provisions as a % of customer loans (1) | 2.3% | 15.7% | 4.4% | 2.2% | 14.4% | 4.2% |
Note:
(1) Includes disposal groups and excludes reverse repos.
The table below analyses the impairment charge for loans and securities.
| Quarter ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 31 March 2012 | 31 December 2011 | 31 March 2011 | ||||||||
| Non | Non | Non | ||||||||
| Core | Core | Total | Core | Core RFS MI | Total | Core | Core | Total | ||
| £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | |
| Individually assessed | 294 | 451 | 745 | 533 | 720 | - | 1,253 | 384 | 901 | 1,285 |
| Collectively assessed | 530 | 65 | 595 | 478 | 113 | - | 591 | 584 | 136 | 720 |
| Latent loss | (40) | (17) | (57) | (87) | (103) | - | (190) | (116) | 9 | (107) |
| Loans to customers | 784 | 499 | 1,283 | 924 | 730 | - | 1,654 | 852 | 1,046 | 1,898 |
| Loans to banks | 12 | - | 12 | - | - | - | - | - | - | - |
| Securities - sovereign debt (1) | - | - | - | 224 | - | - | 224 | - | - | - |
| - other | 29 | (10) | 19 | 17 | 21 | 2 | 40 | 20 | 29 | 49 |
| Charge to income statement | 825 | 489 | 1,314 | 1,165 | 751 | 2 | 1,918 | 872 | 1,075 | 1,947 |
| Charge as a % of gross loans (2) | 0.8% | 2.7% | 1.1% | 0.9% | 3.7% | - | 1.3% | 0.8% | 4.0% | 1.5% |
(1) Sovereign debt impairment and related interest rate hedge adjustments.
(2) Customer loan impairment charge as a percentage of gross customer loans including disposal groups and excluding reverse repurchase agreements.
For more details on Ulster Bank (Core and Non-Core) loans, REIL, provisions and related coverage ratios, refer to pages 110 and 111.
The table below analyses debt securities by issuer and measurement classification.
| Central and local government | Other | |||||||
|---|---|---|---|---|---|---|---|---|
| financial | Of which | |||||||
| 31 March 2012 | UK £m |
US £m |
Other £m |
Banks £m |
institutions £m |
Corporate £m |
Total £m |
ABS £m |
| Held-for-trading | 6,855 | 17,079 | 37,552 | 2,986 | 24,726 | 3,052 | 92,250 | 22,422 |
| Designated as at fair value | 1 | - | 132 | 97 | 581 | 7 | 818 | 556 |
| Available-for-sale | 11,871 | 20,547 | 20,012 | 12,214 | 30,509 | 2,228 | 97,381 | 38,759 |
| Loans and receivables | 10 | - | 4 | 368 | 4,638 | 462 | 5,482 | 4,630 |
| Long positions | 18,737 | 37,626 | 57,700 | 15,665 | 60,454 | 5,749 | 195,931 | 66,367 |
| - Of which US agencies | - | 4,778 | - | - | 27,221 | - | 31,999 | 30,185 |
| Short positions (HFT) | (2,133) | (8,855) | (18,613) | (1,997) | (2,125) | (903) | (34,626) | (213) |
| Available-for-sale | ||||||||
| Gross unrealised gains | 1,141 | 1,083 | 1,071 | 88 | 658 | 93 | 4,134 | 747 |
| Gross unrealised losses | - | - | (63) | (603) | (1,601) | (9) | (2,276) | (2,179) |
| 31 December 2011 | ||||||||
| Held-for-trading | 9,004 | 19,636 | 36,928 | 3,400 | 23,160 | 2,948 | 95,076 | 20,816 |
| Designated as at fair value | 1 | - | 127 | 53 | 457 | 9 | 647 | 558 |
| Available-for-sale | 13,436 | 20,848 | 25,552 | 13,175 | 31,752 | 2,535 | 107,298 | 40,735 |
| Loans and receivables | 10 | - | 1 | 312 | 5,259 | 477 | 6,059 | 5,200 |
| Long positions | 22,451 | 40,484 | 62,608 | 16,940 | 60,628 | 5,969 | 209,080 | 67,309 |
| - Of which US agencies | - | 4,896 | - | - | 25,924 | - | 30,820 | 28,558 |
| Short positions (HFT) | (3,098) | (10,661) | (19,136) | (2,556) | (2,854) | (754) | (39,059) | (352) |
| Available-for-sale | ||||||||
| Gross unrealised gains | 1,428 | 1,311 | 1,180 | 52 | 913 | 94 | 4,978 | 1,001 |
| Gross unrealised losses | - | - | (171) | (838) | (2,386) | (13) | (3,408) | (3,158) |
The table below analyses debt securities by issuer and external ratings. Ratings are based on the lowest of S&P, Moody's and Fitch.
| Central and local government | Other | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| financial | Of which | |||||||||
| UK | US | Other | Banks | institutions Corporate | Total | % of | ABS | |||
| 31 March 2012 | £m | £m | £m | £m | £m | £m | £m | total | £m | |
| AAA | 18,737 | 12 | 22,792 | 2,651 | 14,460 | 156 | 58,808 | 30 | 12,982 | |
| AA to AA+ | - | 37,609 | 9,432 | 3,553 | 31,988 | 702 | 83,284 | 43 | 36,532 | |
| A to AA- | - | - | 17,285 | 5,978 | 4,032 | 1,496 | 28,791 | 15 | 5,761 | |
| BBB- to A- | - | 5 | 7,569 | 2,719 | 4,616 | 1,411 | 16,320 | 8 | 6,306 | |
| Non-investment grade | - | - | 620 | 421 | 3,876 | 1,247 | 6,164 | 3 | 3,837 | |
| Unrated | - | - | 2 | 343 | 1,482 | 737 | 2,564 | 1 | 949 | |
| 18,737 | 37,626 | 57,700 | 15,665 | 60,454 | 5,749 195,931 | 100 | 66,367 | |||
| 31 December 2011 | ||||||||||
| AAA | 22,451 | 45 | 32,522 | 5,155 | 15,908 | 452 | 76,533 | 37 | 17,156 | |
| AA to AA+ | - | 40,435 | 2,000 | 2,497 | 30,403 | 639 | 75,974 | 36 | 33,615 | |
| A to AA- | - | 1 | 24,966 | 6,387 | 4,979 | 1,746 | 38,079 | 18 | 6,331 | |
| BBB- to A- | - | - | 2,194 | 2,287 | 2,916 | 1,446 | 8,843 | 4 | 4,480 | |
| Non-investment grade | - | - | 924 | 575 | 5,042 | 1,275 | 7,816 | 4 | 4,492 | |
| Unrated | - | 3 | 2 | 39 | 1,380 | 411 | 1,835 | 1 | 1,235 | |
| 22,451 | 40,484 | 62,608 | 16,940 | 60,628 | 5,969 209,080 | 100 | 67,309 |
The table below analyses available-for-sale debt securities and related reserves, gross of tax.
| 31 March 2012 | 31 December 2011 | |||||||
|---|---|---|---|---|---|---|---|---|
| US | UK | Other (1) | Total | US | UK | Other (1) | Total | |
| £m | £m | £m | £m | £m | £m | £m | £m | |
| Central and local Government | 20,547 | 11,871 | 20,012 | 52,430 | 20,848 | 13,436 | 25,552 | 59,836 |
| Banks | 326 | 1,207 | 10,681 | 12,214 | 376 | 1,391 | 11,408 | 13,175 |
| Other financial institutions | 15,858 | 3,129 | 11,522 | 30,509 | 17,453 | 3,100 | 11,199 | 31,752 |
| Corporate | 191 | 1,060 | 977 | 2,228 | 131 | 1,105 | 1,299 | 2,535 |
| Total | 36,922 | 17,267 | 43,192 | 97,381 | 38,808 | 19,032 | 49,458 | 107,298 |
| Of which ABS | 18,547 | 3,848 | 16,364 | 38,759 | 20,256 | 3,659 | 16,820 | 40,735 |
| AFS reserves (gross) | 616 | 723 | (1,315) | 24 | 486 | 845 | (1,815) | (484) |
Note:
(1) Includes eurozone countries that are detailed on pages 116 to 127.
At 31 March 2012, Ulster Bank Group accounted for 10% of the Group's total gross customer loans and 9% of the Group's Core gross customer loans. The impairment charge of £654 million for Q1 2012 was £84 million higher than the charge for Q4 2011. The Q1 2012 charge was mainly driven by the residential mortgage and commercial real estate portfolios as high unemployment, austerity measures and economic uncertainty have reduced incomes and, together with limited liquidity, have depressed the property market.
The impairment charge for Q1 2012 of £394 million was £67 million higher than the Q4 2011 charge. The mortgage sector accounted for £215 million (55%) of the Q1 2012 impairment charge (Q4 2011 - 41%). High unemployment, lower incomes and falling house prices have driven increases in mortgage impairments. An increase in the mortgage default portfolio in the quarter accounted for 75% of the rise in Q1 2012 REIL.
REIL increased by £351 million in the quarter, largely due to the continuing difficult conditions in residential mortgages.
The impairment charge for Q1 2012 was £260 million (Q4 2011 - £243 million), with the commercial real estate sector accounting for £226 million (87%) of the Q1 2012 charge. At 31 March 2012, 67% of REIL was in Non-Core (Q4 2011 - 68%). The majority of the Non-Core commercial real estate development portfolio (94%) is REIL, with 58% provision coverage.
| REIL | Provisions | Provisions | ||||||
|---|---|---|---|---|---|---|---|---|
| Gross | as a % of | as a % of | as a % of | Impairment | Amounts | |||
| loans | REIL Provisions | gross loans | REIL | gross loans | charge | written-off | ||
| 31 March 2012 | £m | £m | £m | % | % | % | £m | £m |
| Core | ||||||||
| Mortgages | 19,814 | 2,449 | 1,144 | 12.4 | 47 | 5.8 | 215 | 6 |
| Personal unsecured | 1,317 | 203 | 188 | 15.4 | 93 | 14.3 | 11 | 7 |
| Commercial real estate | ||||||||
| - investment | 3,835 | 976 | 448 | 25.4 | 46 | 11.7 | 40 | - |
| - development | 825 | 325 | 158 | 39.4 | 49 | 19.2 | 14 | - |
| Other corporate | 8,141 | 1,921 | 1,163 | 23.6 | 61 | 14.3 | 114 | 1 |
| 33,932 | 5,874 | 3,101 | 17.3 | 53 | 9.1 | 394 | 14 | |
| Non-Core | ||||||||
| Commercial real estate | ||||||||
| - investment | 3,719 | 3,010 | 1,429 | 80.9 | 47 | 38.4 | 84 | - |
| - development | 7,969 | 7,492 | 4,382 | 94.0 | 58 | 55.0 | 142 | 20 |
| Other corporate | 1,696 | 1,170 | 664 | 69.0 | 57 | 39.2 | 34 | 5 |
| 13,384 | 11,672 | 6,475 | 87.2 | 55 | 48.4 | 260 | 25 | |
| Ulster Bank Group | ||||||||
| Mortgages | 19,814 | 2,449 | 1,144 | 12.4 | 47 | 5.8 | 215 | 6 |
| Personal unsecured | 1,317 | 203 | 188 | 15.4 | 93 | 14.3 | 11 | 7 |
| Commercial real estate | ||||||||
| - investment | 7,554 | 3,986 | 1,877 | 52.8 | 47 | 24.8 | 124 | - |
| - development | 8,794 | 7,817 | 4,540 | 88.9 | 58 | 51.6 | 156 | 20 |
| Other corporate | 9,837 | 3,091 | 1,827 | 31.4 | 59 | 18.6 | 148 | 6 |
| 47,316 | 17,546 | 9,576 | 37.1 | 55 | 20.2 | 654 | 39 | |
| 31 December 2011 | ||||||||
| Core | ||||||||
| Mortgages | 20,020 | 2,184 | 945 | 10.9 | 43 | 4.7 | 133 | 7 |
| Personal unsecured | 1,533 | 201 | 184 | 13.1 | 92 | 12.0 | 11 | 6 |
| Commercial real estate | ||||||||
| - investment | 3,882 | 1,014 | 413 | 26.1 | 41 | 10.6 | 51 | - |
| - development | 881 | 290 | 145 | 32.9 | 50 | 16.5 | 32 | 16 |
| Other corporate | 7,736 | 1,834 | 1,062 | 23.7 | 58 | 13.7 | 100 | 33 |
| 34,052 | 5,523 | 2,749 | 16.2 | 50 | 8.1 | 327 | 62 | |
| Non-Core | ||||||||
| Commercial real estate | ||||||||
| - investment | 3,860 | 2,916 | 1,364 | 75.5 | 47 | 35.3 | 151 | - |
| - development | 8,490 | 7,536 | 4,295 | 88.8 | 57 | 50.6 | 77 | 31 |
| Other corporate | 1,630 | 1,159 | 642 | 71.1 | 55 | 39.4 | 15 | 5 |
| 13,980 | 11,611 | 6,301 | 83.1 | 54 | 45.1 | 243 | 36 | |
| Ulster Bank Group | ||||||||
| Mortgages | 20,020 | 2,184 | 945 | 10.9 | 43 | 4.7 | 133 | 7 |
| Personal unsecured | 1,533 | 201 | 184 | 13.1 | 92 | 12.0 | 11 | 6 |
| Commercial real estate | ||||||||
| - investment | 7,742 | 3,930 | 1,777 | 50.8 | 45 | 23.0 | 202 | - |
| - development | 9,371 | 7,826 | 4,440 | 83.5 | 57 | 47.4 | 109 | 47 |
| Other corporate | 9,366 | 2,993 | 1,704 | 32.0 | 57 | 18.2 | 115 | 38 |
| 48,032 | 17,134 | 9,050 | 35.7 | 53 | 18.8 | 570 | 98 | |
| 31 March 2011 | Gross loans £m |
REIL £m |
Provisions £m |
REIL as a % of gross loans % |
Provisions as a % of REIL % |
Provisions as a % of gross loans % |
Impairment charge £m |
Amounts written-off £m |
|---|---|---|---|---|---|---|---|---|
| Core | ||||||||
| Mortgages | 21,495 | 1,780 | 676 | 8.3 | 38 | 3.1 | 233 | 2 |
| Personal unsecured | 1,499 | 193 | 164 | 12.9 | 85 | 10.9 | 11 | 8 |
| Commercial real estate | ||||||||
| - investment | 4,272 | 773 | 282 | 18.1 | 36 | 6.6 | 73 | - |
| - development | 1,015 | 210 | 99 | 20.7 | 47 | 9.8 | 24 | - |
| Other corporate | 8,886 | 1,682 | 890 | 18.9 | 53 | 10.0 | 120 | 1 |
| 37,167 | 4,638 | 2,111 | 12.5 | 46 | 5.7 | 461 | 11 | |
| Non-Core | ||||||||
| Commercial real estate | ||||||||
| - investment | 3,947 | 2,449 | 1,060 | 62.0 | 43 | 26.9 | 223 | - |
| - development | 8,881 | 7,588 | 3,524 | 85.4 | 46 | 39.7 | 503 | - |
| Other corporate | 1,995 | 1,186 | 658 | 59.4 | 55 | 33.0 | 107 | - |
| 14,823 | 11,223 | 5,242 | 75.7 | 47 | 35.4 | 833 | - | |
| Ulster Bank Group | ||||||||
| Mortgages | 21,495 | 1,780 | 676 | 8.3 | 38 | 3.1 | 233 | 2 |
| Personal unsecured | 1,499 | 193 | 164 | 12.9 | 85 | 10.9 | 11 | 8 |
| Commercial real estate | ||||||||
| - investment | 8,219 | 3,222 | 1,342 | 39.2 | 42 | 16.3 | 296 | - |
| - development | 9,896 | 7,798 | 3,623 | 78.8 | 46 | 36.6 | 527 | - |
| Other corporate | 10,881 | 2,868 | 1,548 | 26.4 | 54 | 14.2 | 227 | 1 |
| 51,990 | 15,861 | 7,353 | 30.5 | 46 | 14.1 | 1,294 | 11 |
The table below shows how the continued decrease in property values has affected the distribution of residential mortgages by indexed loan-to-value (LTV). LTV is based upon gross loan amounts and, whilst including defaulted loans, does not take account of provisions made.
| LTV distribution calculated on a value basis | 31 March 2012 £m |
31 December 2011 £m |
|---|---|---|
| <= 70% | 4,393 | 4,526 |
| > 70% and <= 90% | 2,275 | 2,501 |
| > 90% and <= 110% | 2,806 | 3,086 |
| > 110% and <= 130% | 2,850 | 3,072 |
| > 130% | 7,486 | 6,517 |
| Total portfolio average LTV at quarter end | 112.5% | 106.1% |
| Average LTV on new originations during the year | 69.8% | 73.9% |
The commercial real estate lending portfolio for Ulster Bank Group totalled £16.3 billion at 31 March 2012, of which £11.7 billion or 71% is Non-Core. The geographic split of the total Ulster Bank Group commercial real estate portfolio remained similar to 2011, with 26% in Northern Ireland, 63% in the Republic of Ireland and 11% in the UK excluding Northern Ireland.
| Development | Investment | ||||
|---|---|---|---|---|---|
| Commercial | Residential | Commercial | Residential | Total | |
| Exposure by geography | £m | £m | £m | £m | £m |
| 31 March 2012 | |||||
| Ireland (ROI & NI) | 2,472 | 5,897 | 4,965 | 1,106 | 14,440 |
| UK (excluding NI) | 72 | 315 | 1,353 | 100 | 1,840 |
| RoW | 6 | 32 | 25 | 5 | 68 |
| 2,550 | 6,244 | 6,343 | 1,211 | 16,348 | |
| 31 December 2011 | |||||
| Ireland (ROI & NI) | 2,591 | 6,317 | 5,097 | 1,132 | 15,137 |
| UK (excluding NI) | 95 | 336 | 1,371 | 111 | 1,913 |
| RoW | - | 32 | 27 | 4 | 63 |
| 2,686 | 6,685 | 6,495 | 1,247 | 17,113 |
Country risk is the risk of material losses arising from significant country-specific events such as sovereign events (default or restructuring); economic events (contagion of sovereign default to other parts of the economy, cyclical economic shock); political events (transfer or convertibility restrictions and expropriation or nationalisation); and natural disaster or conflict. Such events have the potential to affect elements of the Group's credit portfolio that are directly or indirectly linked to the country in question and can also give rise to market, liquidity, operational and franchise risk related losses.
For further details of the Group's approach to country risk management, refer to pages 208 to 210 of the Group's 2011 Annual Report and Accounts.
The following tables show the Group's exposures by country of incorporation of the counterparty at 31 March 2012. Countries shown are those where the Group's balance sheet exposure to counterparties incorporated in the country exceeded £1 billion and the country had an external rating of A+ or below from S&P, Moody's or Fitch at 31 March 2012, as well as selected eurozone countries. The numbers are stated before taking into account the impact of mitigants, such as collateral (with the exception of repos), insurance or guarantees, which may have been taken to reduce or eliminate exposure to country risk events. Exposures relating to ocean-going vessels are not included due to their multinational nature.
Definitions of headings in the following tables:
Lending comprises gross loans and advances to: central and local government; central banks, including cash balances; other banks and financial institutions, incorporating overdraft and other shortterm facilities; corporates, in large part loans and leases; and individuals, comprising mortgages, personal loans and credit card balances. Lending includes impaired loans and loans where an impairment event has taken place but no impairment provision is recognised.
Debt securities comprise securities classified as available-for-sale (AFS), loans and receivables (LAR), held-for-trading (HFT) and designated as at fair value through profit or loss (DFV). All debt securities other than LAR securities are carried at fair value. LAR debt securities are carried at amortised cost less impairment. HFT debt securities are presented as gross long positions (including DFV securities) and short positions per country. Impairment losses and exchange differences relating to AFS debt securities, together with interest are recognised in the income statement; other changes in the fair value of AFS securities are reported within AFS reserves, which are presented gross of tax.
Derivatives comprise the mark-to-market (mtm) value of such contracts after the effect of legally enforceable netting agreements, but gross of collateral. Reverse repurchase agreements (repos) comprise the mtm value of counterparty exposure arising from repo transactions net of collateral.
Balance sheet exposures comprise lending exposures, debt securities and derivatives and repo exposures.
Contingent liabilities and commitments comprise contingent liabilities, including guarantees, and committed undrawn facilities.
Asset quality (AQ) - for the probability of default range relating to each internal asset quality band, refer to page 172 of the Group's 2011 Annual Report and Accounts.
Credit default swaps (CDSs) - under a CDS contract, the credit risk on the reference entity is transferred from the buyer to the seller. The fair value, or mtm, represents the balance sheet carrying value. The mtm value of CDSs is included within derivatives against the counterparty of the trade, as opposed to the reference entity. The notional is the par amount of the credit protection bought or sold and is included against the reference entity of the CDS contract.
The column CDS notional less fair value represents the notional less fair value amounts arising from sold positions netted against those arising from bought positions, and represents the net change in exposure for a given reference entity should the CDS contract be triggered by a credit event, assuming there is zero recovery rate. However, in most cases, the Group expects the recovery rate to be greater than zero and the change in exposure to be less than this amount.
Other eurozone - comprises Austria, Cyprus, Estonia, Finland, Malta, Slovakia and Slovenia.
| 31 M h 2 01 arc |
2 | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Le nd ing |
||||||||||||||
| Ce al ntr d l al an oc nt g ov ern me £m |
Ce al ntr ba nk s £m |
Ot he r ba nk s £m |
Ot he r fin cia l an ins titu tio ns £m |
Co te rp ora £m |
Pe l rso na £m |
To tal len din g £m |
Of hic h w No n-C ore £m |
De bt riti se cu es £m |
De riv ati ve s ( f g ros s o llat l) co era d r an ep os £m |
Ba lan ce sh t ee ex p os ure s £m |
Co nti t ng en lia bil itie nd s a itm ts co mm en £m |
To tal £m |
CD S tio l no na les s f air lue va £m |
|
| Eu roz on e |
||||||||||||||
| Ire lan d |
45 | 1, 06 8 |
41 | 43 5 |
18 69 0 , |
18 63 1 , |
38 91 0 , |
10 11 3 , |
77 3 |
2, 57 7 |
42 26 0 , |
3, 04 8 |
45 30 8 , |
( ) 13 8 |
| Sp ain |
9 | - | 27 7 |
12 2 |
5, 34 0 |
35 3 |
6, 10 1 |
3, 50 2 |
6, 36 3 |
2, 14 8 |
14 61 2 , |
2, 00 8 |
16 62 0 , |
( 87 5 ) |
| Ita ly |
- | 40 | 20 0 |
34 4 |
1, 70 9 |
22 | 2, 31 5 |
1, 12 7 |
1, 06 5 |
2, 17 4 |
5, 55 4 |
2, 75 7 |
8, 31 1 |
( ) 42 5 |
| Po al rtu g |
- | - | 1 | - | 42 2 |
4 | 42 7 |
26 2 |
20 4 |
54 4 |
1, 17 5 |
22 8 |
1, 40 3 |
1 |
| Gr ee ce |
3 | 5 | 1 | 31 | 39 5 |
14 | 44 9 |
90 | 38 | 32 2 |
80 9 |
75 | 88 4 |
( 7) |
| Ge rm an y |
10 | 20 47 1 , |
47 3 |
5 32 |
5, 93 9 |
14 8 |
27 36 6 , |
4, 81 9 |
5 17 39 , |
15 49 6 , |
25 60 7 , |
8, 28 7 |
54 68 4 , |
( ) 2, 77 9 |
| Ne the rla nd s |
2, 58 2 |
9, 84 2 |
96 7 |
1, 55 6 |
4, 69 1 |
22 | 19 66 0 , |
2, 44 0 |
10 28 7 , |
10 06 3 , |
40 01 0 , |
13 01 9 , |
53 02 9 , |
( 1, 38 9 ) |
| Fra nce |
51 7 |
4 | 1, 25 4 |
34 6 |
3, 26 6 |
74 | 5, 46 1 |
2, 26 8 |
5, 48 6 |
8, 72 9 |
19 67 6 , |
10 21 8 , |
29 89 4 , |
( ) 2, 66 9 |
| Lux bo em urg |
- | - | 20 | 1, 41 6 |
2, 22 2 |
3 | 3, 66 1 |
1, 37 9 |
12 5 |
2, 26 0 |
6, 04 6 |
1, 88 0 |
7, 92 6 |
( 38 2) |
| Be lg ium |
28 6 |
55 | 17 7 |
27 1 |
74 1 |
21 | 1, 55 1 |
40 9 |
1, 12 5 |
2, 84 4 |
5, 52 0 |
1, 30 8 |
6, 82 8 |
( ) 12 0 |
| Ot he r e uro zo ne |
11 7 |
- | 22 | 11 1 |
1, 46 5 |
26 | 1, 74 1 |
32 2 |
83 5 |
1, 86 0 |
4, 43 6 |
1, 30 6 |
5, 74 2 |
( 15 7) |
| To tal eu roz on e |
56 3, 9 |
5 31 48 , |
3, 43 3 |
95 4, 7 |
44 88 0 , |
19 31 8 , |
10 7, 64 2 |
26 73 1 , |
43 69 6 , |
49 01 7 , |
35 5 20 0, |
44 13 4 , |
24 4, 48 9 |
( ) 8, 94 0 |
| Oth trie er co un s |
||||||||||||||
| Ind ia |
- | 14 2 |
73 9 |
42 | 3, 13 2 |
11 4 |
4, 16 9 |
32 8 |
1, 40 3 |
10 0 |
5, 67 2 |
1, 28 0 |
6, 95 2 |
( 76 ) |
| Ch ina |
23 9 |
17 2 |
1, 50 3 |
34 | 76 4 |
28 | 2, 74 0 |
23 4 |
47 9 |
38 3 |
3, 60 2 |
1, 46 4 |
5, 06 6 |
53 |
| So uth Ko rea |
- | 20 | 71 6 |
1 | 54 3 |
1 | 1, 28 1 |
3 | 79 2 |
42 3 |
2, 49 6 |
64 2 |
3, 13 8 |
( ) 11 9 |
| Tu rke y |
15 2 |
56 | 26 3 |
45 | 1, 05 9 |
23 | 1, 59 8 |
34 2 |
27 8 |
98 | 1, 97 4 |
47 4 |
2, 44 8 |
17 |
| Bra zil |
- | - | 77 5 |
- | 20 0 |
3 | 97 8 |
64 | 79 0 |
90 | 1, 85 8 |
27 0 |
2, 12 8 |
40 3 |
| Ru ssi a |
- | 24 | 90 0 |
7 | 58 0 |
59 | 1, 57 0 |
74 | 22 3 |
23 | 1, 81 6 |
72 5 |
2, 54 1 |
( 34 9 ) |
| Ro nia ma |
25 | 13 6 |
14 | 4 | 44 6 |
38 1 |
1, 00 6 |
1, 00 5 |
31 1 |
5 | 1, 32 2 |
11 8 |
1, 44 0 |
( ) 23 |
| 31 | De mb 20 ce er |
11 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Le nd ing |
||||||||||||||
| Ce al ntr d l al an oc nt g ov ern me £m |
Ce al ntr ba nks £m |
Ot he r ba nks £m |
Ot he r fin cia l an ins titu tio ns £m |
Co rat rpo e £m |
Pe l rso na £m |
To tal len din g £m |
O f w hic h No n-C ore £m |
De bt ritie se cu s £m |
De riva tive s (g f ros s o llat l) co era d r an ep os £m |
Ba lan ce sh t ee ex po su res £m |
Co nti t ng en liab iliti d es an itm ts co mm en £m |
To tal £m |
CD S tio l no na les s f air lue va £m |
|
| Eu roz on e |
||||||||||||||
| Ire lan d ain |
45 9 |
1, 46 7 3 |
136 20 6 |
33 6 154 |
18 99 4 , 77 5 |
18 85 8 , 36 2 |
39 83 6 , 6, 50 9 |
10 156 , 3, 73 5 |
88 6 6, 155 |
2, 82 4 2, 39 3 |
43 54 6 , 15 05 7 |
2, 92 8 2, 63 0 |
46 47 4 , 17 68 7 |
53 1, 01 3 |
| Sp Ita ly |
- | 73 | 23 3 |
29 9 |
5, 2, 44 4 |
23 | 3, 07 2 |
1, 155 |
1, 25 8 |
2, 31 4 |
, 6, 64 4 |
3, 150 |
, 9, 79 4 |
( ) ( 2) 45 |
| Po al rtu g |
- | - | 10 | - | 49 5 |
5 | 51 0 |
34 1 |
113 | 51 9 |
1, 142 |
26 8 |
1, 41 0 |
55 |
| Gr ee ce |
7 | 6 | - | 31 | 42 7 |
14 | 48 5 |
94 | 40 9 |
35 5 |
1, 24 9 |
52 | 1, 30 1 |
1 |
| Ge rm an y |
- | 18 06 8 , |
65 3 |
30 5 |
6, 60 8 |
155 | 25 78 9 , |
5, 40 2 |
15 76 7 , |
16 03 7 , |
57 59 3 , |
7, 52 7 |
65 120 , |
( 1) 2, 40 |
| Ne the rla nd s |
2, 56 7 |
7, 65 4 |
62 3 |
1, 57 5 |
4, 82 7 |
20 | 17 26 6 , |
2, 49 8 |
9, 89 3 |
10 28 5 , |
37 44 4 , |
13 56 1 , |
51 00 5 , |
( 1, 29 5 ) |
| Fra nce |
48 1 |
3 | 1, 27 3 |
43 7 |
3, 76 1 |
79 | 6, 03 4 |
2, 31 7 |
7, 79 4 |
9, 05 8 |
22 88 6 , |
10 21 7 , |
33 103 , |
( ) 2, 84 6 |
| Lux bo em urg |
- | - | 10 1 |
1, 9 77 |
2, 22 8 |
2 | 4, 110 |
1, 49 7 |
130 | 3, 68 9 |
92 9 7, |
2, 00 7 |
9, 93 6 |
( 40 4) |
| Be lg ium |
21 3 |
8 | 28 7 |
35 4 |
58 8 |
20 | 1, 47 0 |
48 0 |
65 2 |
3, 01 0 |
5, 132 |
1, 35 9 |
6, 49 1 |
( ) 99 |
| Ot he r e uro zo ne |
12 1 |
- | 28 | 115 | 1, 37 5 |
26 | 1, 66 5 |
32 4 |
71 0 |
1, 97 1 |
4, 34 6 |
1, 36 5 |
71 1 5, |
( 25 ) |
| To tal eu roz on e |
3, 44 3 |
27 28 2 , |
3, 55 0 |
5, 38 5 |
47 52 2 , |
19 56 4 , |
106 74 6 , |
27 99 9 , |
43 76 7 , |
52 45 5 , |
20 2, 96 8 |
45 06 4 , |
24 8, 03 2 |
( ) 8, 42 6 |
| Oth trie er co un s |
||||||||||||||
| Ind ia |
- | 27 5 |
61 0 |
35 | 2, 94 9 |
127 | 3, 99 6 |
35 0 |
1, 53 0 |
21 8 |
5, 74 4 |
1, 28 0 |
7, 02 4 |
( ) 105 |
| Ch ina |
74 | 178 | 1, 23 7 |
17 | 65 4 |
30 | 2, 190 |
50 | 59 7 |
41 3 |
3, 20 0 |
1, 55 9 |
4, 75 9 |
( 62 ) |
| So uth Ko rea |
- | 5 | 81 2 |
3 | 57 6 |
1 | 1, 39 7 |
3 | 84 5 |
40 4 |
2, 64 6 |
62 7 |
3, 27 3 |
( ) 22 |
| Tu rke y |
21 5 |
193 | 25 3 |
66 | 1, 07 2 |
16 | 1, 81 5 |
42 3 |
36 1 |
94 | 2, 27 0 |
43 7 |
2, 70 7 |
10 |
| Bra zil |
- | - | 93 6 |
- | 22 7 |
4 | 1, 167 |
70 | 79 0 |
24 | 1, 98 1 |
31 9 |
2, 30 0 |
164 |
| Ru ssi a |
- | 36 | 97 0 |
8 | 65 9 |
62 | 1, 73 5 |
76 | 186 | 66 | 1, 98 7 |
35 6 |
2, 34 3 |
( 34 3 ) |
| Ro nia ma |
66 | 145 | 30 | 8 | 41 3 |
39 2 |
1, 05 4 |
1, 05 4 |
22 0 |
6 | 1, 28 0 |
160 | 1, 44 0 |
8 |
Exposures are affected by currency movements. Over the first quarter of 2012, sterling appreciated 3.4% against the US dollar and 0.4% against the euro.
Exposure to the central bank declined by £0.3 billion; this reduction was driven by a change in CBI regulatory requirements. Commercial real estate lending amounted to £10.8 billion at 31 March 2012, only slightly down from the 31 December 2011 level as adverse market conditions hampered asset disposals and refinancing. The commercial real estate lending exposure is largely in Ulster Bank Non-Core and includes REIL of £7.9 billion and loan provisions of £4.2 billion. In personal lending, residential mortgage loans amounted to £17.6 billion, including REIL of £2.4 billion and loan provisions of £1.1 billion. The residential housing market continues to suffer from weak domestic demand, with house prices now approximately 50% below their 2007 peak.
• Spain - The Group maintains strong relationships with selected banks, other financial institutions and large corporate clients. The exposure to Spain is driven by corporate lending and a sizeable ABS portfolio of £6.5 billion, including £6.1 billion of residential mortgage-backed securities covered bonds. The latter portfolio, which is the Group's largest exposure to the financial sector, continues to perform satisfactorily. The Group continues to monitor the situation closely, including undertaking stress analyses of this AFS portfolio.
Corporate lending decreased by £0.4 billion, due to reductions mostly in the natural resources and property sectors. Commercial real estate lending amounted to £2.3 billion at 31 March 2012, nearly all in Non-Core, and includes REIL of £1.0 billion and loan provisions of £0.3 billion.
• Italy - The Group maintains strong relationships with Italian government entities, banks, other financial institutions and large corporate clients. In addition, the Group is an active marketmaker in Italian government bonds, resulting in large gross long and short positions in held-fortrading securities.
Corporate lending declined by £0.7 billion largely to manufacturing companies. AFS government and private sector bond exposure was significantly reduced through sales.
Remaining exposure to Greece at the end of the first quarter was £0.8 billion. This largely comprised corporate lending (part of this being exposure to local subsidiaries of international companies) and also included some partly collateralised derivative and repo exposure to banks.
• CDS protection bought and sold - The Group uses CDS contracts to manage both country and counterparty exposures.
During the first quarter of 2012, gross notional CDS contracts, bought and sold, decreased significantly. This was caused by maturing of contracts and by efforts to reduce counterparty credit exposures and risk-weighted assets through derivative compression trades and other means. In addition, the decrease in gross notional CDS positions contributed to a decrease in the fair value of bought and sold CDS contracts, which also declined due to a general narrowing of eurozone CDS spreads. However, spreads generally widened in April, reflecting renewed eurozone concerns.
Greek sovereign CDS positions were minimal at 31 March 2012 and were fully closed out in April, as the use of the collective action clause in the Greek debt swap resulted in a credit event occurring, which triggered Greek sovereign CDS contracts.
The Group primarily transacts these CDS contracts with investment-grade global financial institutions that are active participants in the CDS market. These transactions are subject to regular margining. For European peripheral sovereigns, credit protection has been purchased from a number of major European banks, predominantly outside the country of the reference entity. In a few cases where protection was bought from banks in the country of the reference entity, giving rise to wrong-way risk, the risk is mitigated through specific collateralisation.
Due to their bespoke nature, exposures relating to CDPCs and associated hedges have not been included as they cannot be meaningfully attributed to a particular country or reference entity. Nth-to-default basket swaps have also been excluded as they cannot be meaningfully attributed to a particular reference entity.
| HF | T | De riv ati ve s |
CD S b ref y ere |
nti ty nc e e |
||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| S a AF nd |
de bt se |
riti cu es |
( f g ros s o |
Ba lan ce |
No tio |
l na |
Fa ir v |
alu e |
||||||
| LA R d eb t |
AF S |
To tal de bt |
llat l) co era |
sh t ee |
||||||||||
| Le nd ing |
RE IL |
Pro vis ion s |
riti se cu es |
re se rve s |
Lo ng |
Sh ort |
riti se cu es |
d r an ep os |
ex p os ure s |
Bo ht ug |
So ld |
Bo ht ug |
So ld |
|
| 31 M h 2 01 2 arc |
£m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m |
| Ce al d l al ntr an oc |
||||||||||||||
| nt g ov ern me |
3, 56 9 |
- | - | 14 71 0 , |
21 2 |
21 22 1 , |
13 39 1 , |
22 54 0 , |
1, 73 9 |
27 84 8 , |
36 12 7 , |
34 97 9 , |
3, 76 5 |
( 4) 3, 48 |
| Ce al ba nks ntr |
31 48 5 , |
- | - | - | - | 7 | - | 7 | 5, 66 4 |
37 15 6 , |
- | - | - | - |
| Ot he r b ks an |
3, 43 3 |
- | - | 8, 12 6 |
( 2) 54 |
1, 17 5 |
1, 18 9 |
8, 11 2 |
29 33 8 , |
40 88 3 , |
16 33 3 , |
15 94 4 , |
1, 04 7 |
( ) 97 5 |
| Ot he r fi ial na nc |
||||||||||||||
| in stit utio ns |
4, 95 7 |
- | - | 10 28 3 , |
( 1, 00 7) |
1, 96 7 |
53 3 |
11 71 7 , |
8, 62 1 |
25 29 5 , |
13 12 2 , |
11 63 4 , |
32 6 |
( 25 5 ) |
| Co rat rpo e |
44 88 0 , |
14 46 8 , |
7, 39 4 |
85 9 |
27 | 64 3 |
18 2 |
1, 32 0 |
65 5 3, |
85 5 49 , |
59 56 8 , |
52 86 9 , |
54 0 |
( ) 18 0 |
| Pe l rso na |
19 31 8 , |
2, 54 8 |
1, 27 2 |
- | - | - | - | - | - | 19 31 8 , |
- | - | - | - |
| 10 7, 64 2 |
17 01 6 , |
8, 66 6 |
33 97 8 , |
( ) 1, 31 0 |
25 01 3 , |
15 29 5 , |
43 69 6 , |
49 01 7 , |
20 0, 35 5 |
12 5, 15 0 |
11 5, 42 6 |
5, 67 8 |
( 4) 4, 89 |
|
| De mb 31 20 11 ce er |
||||||||||||||
| Ce al d l al ntr an oc |
||||||||||||||
| nt g ov ern me |
3, 44 3 |
- | - | 18 40 6 , |
81 | 19 59 7 , |
15 04 9 , |
22 95 4 , |
1, 92 5 |
28 32 2 , |
37 08 0 , |
36 75 9 , |
6, 48 8 |
( ) 6, 37 6 |
| Ce al ba nks ntr |
27 28 2 , |
- | - | 20 | - | 6 | - | 26 | 5, 77 0 |
33 07 8 , |
- | - | - | - |
| Ot he r b ks an |
3, 55 0 |
- | - | 8, 42 3 |
( 2) 75 |
1, 27 2 |
1, 50 2 |
8, 193 |
29 68 5 , |
41 42 8 , |
19 73 6 , |
19 23 2 , |
2, 30 3 |
( ) 2, 22 5 |
| Ot he r fi ial na nc |
||||||||||||||
| in stit utio ns |
5, 38 5 |
- | - | 10 49 4 , |
( ) 1, 129 |
1, 138 |
47 1 |
11 16 1 , |
10 95 6 , |
27 50 2 , |
17 94 9 , |
16 60 8 , |
69 3 |
( ) 62 0 |
| Co rat rpo e |
47 52 2 , |
14 152 , |
26 7, 7 |
96 4 |
23 | 52 8 |
59 | 1, 43 3 |
4, 118 |
53 07 3 , |
76 96 6 , |
70 119 , |
2, 24 1 |
( 1, 91 7) |
| Pe l rso na |
19 56 4 , |
2, 28 0 |
1, 06 9 |
- | - | - | - | - | 1 | 19 56 5 , |
- | - | - | - |
| 106 74 6 , |
16 43 2 , |
8, 33 6 |
38 30 7 , |
( 7) 1, 77 |
22 54 1 , |
17 08 1 , |
43 76 7 , |
52 45 5 , |
20 2, 96 8 |
15 1, 73 1 |
142 71 8 , |
11 72 5 , |
( ) 11 138 , |
| AQ | 1 | AQ 2-A |
Q 3 |
AQ 4-A |
Q 9 |
AQ | 10 | To | tal | |
|---|---|---|---|---|---|---|---|---|---|---|
| No tio l na |
Fa ir v alu e |
No tio l na |
Fa ir v alu e |
No tio l na |
Fa ir v alu e |
No tio l na |
Fa ir v alu e |
No tio l na |
Fa ir v alu e |
|
| 31 M h 2 01 2 arc |
£m | £m | £m | £m | £m | £m | £m | £m | £m | £m |
| Ba nks |
62 32 7 , |
2, 94 9 |
1, 47 5 |
12 0 |
19 8 |
18 | - | - | 64 00 0 , |
3, 08 7 |
| Ot he r fi ial Ins titu tio na nc ns |
57 67 0 , |
2, 21 0 |
59 6 |
85 | 2, 67 4 |
22 3 |
21 0 |
73 | 15 61 0 , |
59 2, 1 |
| To tal |
11 9, 99 7 |
5, 15 9 |
2, 07 1 |
20 5 |
2, 87 2 |
24 1 |
21 0 |
73 | 12 5, 15 0 |
5, 67 8 |
| 31 De mb 20 11 ce er |
147 44 8 , |
11 190 , |
1, 84 4 |
22 0 |
2, 29 2 |
30 1 |
147 | 14 | 15 1, 73 1 |
11 72 5 , |
| HF | T | De riv ati ve s |
CD | S b ref y ere |
nti ty nc e e |
|||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| AF S a nd |
de bt se |
riti cu es |
( f g ros s o |
Ba lan ce |
No tio |
l na |
Fa ir v |
alu e |
||||||
| LA R d eb t |
S AF |
To tal de bt |
l) llat co era |
sh t ee |
||||||||||
| Le nd ing |
RE IL |
Pro vis ion s |
riti se cu es |
re se rve s |
Lo ng |
Sh ort |
riti se cu es |
d r an ep os |
ex p os ure s |
Bo ht ug |
So ld |
Bo ht ug |
So ld |
|
| 31 M h 2 01 2 arc |
£m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m |
| Ce al d l al ntr an oc |
||||||||||||||
| nt g ov ern me |
57 | - | - | 56 2 |
( 17 7) |
4, 97 7 |
5, 28 5 |
25 4 |
13 5 |
44 6 |
23 85 8 , |
23 86 9 , |
3, 42 8 |
( 3, 18 0 ) |
| Ce ntr al ba nks |
1, 11 3 |
- | - | - | - | - | - | - | 10 1 |
1, 21 4 |
- | - | - | - |
| Ot he r b ks an |
52 0 |
- | - | 5, 27 0 |
( 75 5 ) |
27 6 |
22 7 |
5, 31 9 |
4, 71 3 |
10 55 2 , |
7, 61 0 |
7, 43 6 |
72 1 |
( 68 4) |
| Ot he r fi ial na nc |
||||||||||||||
| in stit utio ns |
93 2 |
- | - | 2, 27 6 |
( 59 3 ) |
31 2 |
13 9 |
2, 44 9 |
1, 35 4 |
4, 73 5 |
3, 10 2 |
2, 72 3 |
18 6 |
( 15 1) |
| Co rat rpo e |
26 55 6 , |
12 29 6 , |
6, 58 1 |
17 6 |
- | 27 6 |
31 | 42 1 |
1, 46 2 |
28 43 9 , |
8, 81 1 |
7, 46 4 |
48 0 |
( 35 5 ) |
| Pe l rso na |
19 02 4 , |
2, 52 2 |
1, 24 7 |
- | - | - | - | - | - | 19 02 4 , |
- | - | - | - |
| 48 20 2 , |
14 81 8 , |
7, 82 8 |
8, 28 4 |
( 1, 52 5 ) |
5, 84 1 |
5, 68 2 |
8, 44 3 |
7, 76 5 |
64 41 0 , |
43 38 1 , |
41 49 2 , |
4, 81 5 |
( 4, 37 0 ) |
|
| 31 De mb 20 11 ce er |
||||||||||||||
| Ce al d l al ntr an oc |
||||||||||||||
| nt g ov ern me |
61 | - | - | 1, 20 7 |
( 33 9 ) |
4, 85 4 |
5, 65 2 |
40 9 |
23 6 |
70 6 |
25 88 3 , |
26 174 , |
5, 97 9 |
( 5, 92 6 ) |
| Ce al ba nks ntr |
1, 54 9 |
- | - | - | - | - | - | - | - | 1, 54 9 |
- | - | - | - |
| Ot he r b ks an |
58 5 |
- | - | 5, 27 9 |
( 95 6 ) |
43 6 |
31 8 |
5, 39 7 |
4, 82 4 |
10 80 6 , |
9, 37 2 |
9, 159 |
1, 65 7 |
( 1, 62 3 ) |
| Ot he r fi ial na nc |
||||||||||||||
| in stit utio ns |
82 0 |
- | - | 2, 33 1 |
( 65 4) |
22 8 |
56 | 2, 50 3 |
1, 85 5 |
178 5, |
3, 85 4 |
3, 63 5 |
29 0 |
( 26 2) |
| Co rat rpo e |
28 135 , |
12 103 , |
6, 52 7 |
27 4 |
4 | 23 8 |
- | 51 2 |
1, 48 9 |
30 136 , |
10 79 8 , |
9, 32 9 |
99 9 |
( ) 86 0 |
| Pe l rso na |
19 26 2 , |
2, 25 8 |
1, 04 8 |
- | - | - | - | - | 1 | 19 26 3 , |
- | - | - | - |
| 50 41 2 , |
14 36 1 , |
7, 57 5 |
9, 09 1 |
( ) 1, 94 5 |
5, 75 6 |
6, 02 6 |
8, 82 1 |
8, 40 5 |
67 63 8 , |
49 90 7 , |
48 29 7 , |
8, 92 5 |
( 1) 8, 67 |
| AQ | 1 | AQ 2-A |
Q 3 |
AQ 4-A |
Q 9 |
AQ | 10 | To | tal | |
|---|---|---|---|---|---|---|---|---|---|---|
| No tio l na |
Fa ir v alu e |
No tio l na |
Fa ir v alu e |
No tio l na |
Fa ir v alu e |
No tio l na |
Fa ir v alu e |
No tio l na |
Fa ir v alu e |
|
| 31 M h 2 01 2 arc |
£m | £m | £m | £m | £m | £m | £m | £m | £m | £m |
| Ba nks |
23 82 3 , |
2, 59 8 |
97 8 |
11 1 |
93 | 11 | - | - | 24 89 4 , |
2, 72 0 |
| Ot r fi he ial Ins titu tio na nc ns |
17 42 3 , |
1, 85 9 |
23 6 |
50 | 76 5 |
12 3 |
63 | 63 | 18 48 7 , |
2, 09 5 |
| To tal |
41 24 6 , |
4, 45 7 |
1, 21 4 |
16 1 |
85 8 |
13 4 |
63 | 63 | 43 38 1 , |
4, 81 5 |
| 31 De mb 20 11 ce er |
48 09 0 , |
8, 58 6 |
99 8 |
163 | 81 9 |
176 | - | - | 49 90 7 , |
8, 92 5 |
| HF | T | De riv ati ve s |
CD | S b ref ere y |
nti ty nc e e |
|||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| AF S a nd |
de bt se |
riti cu es |
( f g ros s o |
Ba lan ce |
No tio |
l na |
Fa ir v alu |
e | ||||||
| LA R d eb t |
AF S |
To tal de bt |
llat l) co era |
sh t ee |
||||||||||
| Le nd ing |
RE IL |
Pro vis ion s |
riti se cu es |
res erv es |
Lo ng |
Sh ort |
riti se cu es |
d r an ep os |
ex p os ure s |
Bo ht ug |
So ld |
Bo ht ug |
So ld |
|
| 31 M h 2 01 2 arc |
£m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m |
| Ce al d l al ntr an oc |
||||||||||||||
| nt g ov ern me |
45 | - | - | 11 5 |
( 34 ) |
7 | 13 | 10 9 |
11 | 16 5 |
2, 27 6 |
2, 28 1 |
36 4 |
( 35 7) |
| Ce al ba nks ntr |
1, 06 8 |
- | - | - | - | - | - | - | 10 1 |
1, 16 9 |
- | - | - | - |
| Ot he r b ks an |
41 | - | - | 18 3 |
( ) 24 |
15 6 |
- | 33 9 |
1, 22 0 |
1, 60 0 |
12 8 |
5 12 |
11 | ( ) 11 |
| Ot he r fi ial na nc |
||||||||||||||
| in stit utio ns |
43 5 |
- | - | 54 | - | 14 2 |
63 | 13 3 |
80 9 |
1, 37 7 |
74 2 |
67 7 |
54 | ( ) 54 |
| Co rat rpo e |
18 69 0 , |
10 62 4 , |
5, 78 4 |
60 | - | 13 3 |
1 | 19 2 |
43 6 |
19 31 8 , |
36 9 |
28 6 |
( 21 ) |
22 |
| Pe l rso na |
18 63 1 , |
2, 52 2 |
1, 24 7 |
- | - | - | - | - | - | 18 63 1 , |
- | - | - | - |
| 38 91 0 , |
13 14 6 , |
7, 03 1 |
41 2 |
( 58 ) |
43 8 |
77 | 77 3 |
57 2, 7 |
42 26 0 , |
51 5 3, |
3, 36 9 |
40 8 |
( ) 40 0 |
|
| 31 De mb 20 11 ce er |
||||||||||||||
| Ce ntr al d l al an oc |
||||||||||||||
| nt g ov ern me |
45 | - | - | 102 | ( 46 ) |
20 | 19 | 103 | 92 | 24 0 |
2, 145 |
2, 22 3 |
46 6 |
( 48 1) |
| Ce al ba nks ntr |
1, 46 7 |
- | - | - | - | - | - | - | - | 1, 46 7 |
- | - | - | - |
| Ot he r b ks an |
136 | - | - | 177 | ( 39 ) |
19 5 |
14 | 35 8 |
1, 45 9 |
1, 95 3 |
110 | 107 | 21 | ( 21 ) |
| Ot he r fi ial na nc |
||||||||||||||
| in stit utio ns |
33 6 |
- | - | 61 | - | 116 | 35 | 142 | 85 5 |
1, 33 3 |
52 3 |
63 0 |
64 | ( ) 74 |
| Co rat rpo e |
18 99 4 , |
10 26 9 , |
5, 68 9 |
148 | 3 | 135 | - | 28 3 |
41 7 |
19 69 4 , |
42 5 |
32 2 |
( 11) |
10 |
| Pe l rso na |
18 85 8 , |
2, 25 8 |
1, 04 8 |
- | - | - | - | - | 1 | 18 85 9 , |
- | - | - | - |
| 39 83 6 , |
12 52 7 , |
6, 73 7 |
48 8 |
( 82 ) |
46 6 |
68 | 88 6 |
2, 82 4 |
43 54 6 , |
3, 20 3 |
3, 28 2 |
54 0 |
( 56 6 ) |
| AQ | 1 | AQ 2-A |
Q 3 |
AQ 4-A |
Q 9 |
AQ | 10 | To | tal | |
|---|---|---|---|---|---|---|---|---|---|---|
| No tio l na |
Fa ir v alu e |
No tio l na |
Fa ir v alu e |
No tio l na |
Fa ir v alu e |
No tio l na |
Fa ir v alu e |
No tio l na |
Fa ir v alu e |
|
| 31 M h 2 01 2 arc |
£m | £m | £m | £m | £m | £m | £m | £m | £m | £m |
| Ba nks |
1, 69 2 |
23 3 |
9 | 1 | - | - | - | - | 1, 70 1 |
23 4 |
| Ot he r fi ial Ins titu tio na nc ns |
1, 44 3 |
16 5 |
16 1 |
- | 21 0 |
9 | - | - | 1, 81 4 |
17 4 |
| To tal |
5 3, 13 |
39 8 |
17 0 |
1 | 21 0 |
9 | - | - | 51 5 3, |
40 8 |
| De mb 31 20 11 ce er |
2, 91 1 |
53 2 |
163 | 1 | 129 | 7 | - | - | 3, 20 3 |
54 0 |
| HF | T | De riv ati ve s |
CD | S b ref y ere |
nti ty nc e e |
|||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| AF S a nd |
de bt se |
riti cu es |
( f g ros s o |
Ba lan ce |
No tio |
l na |
Fa ir v |
alu e |
||||||
| LA R d eb t |
S AF |
To tal de bt |
l) llat co era |
sh t ee |
||||||||||
| Le nd ing |
RE IL |
Pro vis ion s |
riti se cu es |
res erv es |
Lo ng |
Sh ort |
riti se cu es |
d r an ep os |
ex p os ure s |
Bo ht ug |
So ld |
Bo ht ug |
So ld |
|
| 31 M h 2 01 2 arc |
£m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m |
| Ce al d l al ntr an oc |
||||||||||||||
| nt g ov ern me |
9 | - | - | 35 | ( 13 ) |
67 7 |
89 9 |
( 18 7) |
29 | ( 14 9 ) |
5, 83 9 |
5, 87 6 |
68 7 |
( 66 9 ) |
| Ce ntr al ba nks |
- | - | - | - | - | - | - | - | - | - | - | - | - | - |
| Ot he r b ks an |
27 7 |
- | - | 4, 86 0 |
( 69 8 ) |
10 4 |
15 6 |
4, 80 8 |
1, 31 7 |
6, 40 2 |
1, 97 4 |
1, 97 3 |
12 8 |
( 11 9 ) |
| Ot he r fi ial na nc |
||||||||||||||
| in stit utio ns |
12 2 |
- | - | 1, 63 2 |
( 58 3 ) |
11 2 |
45 | 1, 69 9 |
36 6 |
2, 18 7 |
1, 42 7 |
1, 21 4 |
95 | ( 66 ) |
| Co rat rpo e |
5, 34 0 |
1, 04 0 |
35 7 |
- | - | 59 | 16 | 43 | 43 6 |
5, 81 9 |
3, 88 6 |
3, 08 4 |
19 6 |
( 14 8 ) |
| Pe l rso na |
35 3 |
- | - | - | - | - | - | - | - | 35 3 |
- | - | - | - |
| 6, 10 1 |
1, 04 0 |
35 7 |
6, 52 7 |
( 1, 29 4) |
95 2 |
1, 11 6 |
6, 36 3 |
2, 14 8 |
14 61 2 , |
13 12 6 , |
12 14 7 , |
1, 10 6 |
( 1, 00 2) |
|
| 31 De mb 20 11 ce er |
||||||||||||||
| Ce al d l al ntr an oc |
||||||||||||||
| nt g ov ern me |
9 | - | - | 33 | ( 15 ) |
36 0 |
75 1 |
( 35 8 ) |
35 | ( 31 4) |
5, 15 1 |
5, 155 |
53 8 |
( 52 2) |
| Ce al ba nks ntr |
3 | - | - | - | - | - | - | - | - | 3 | - | - | - | - |
| Ot he r b ks an |
20 6 |
- | - | 4, 89 2 |
( 86 7) |
16 2 |
21 4 |
4, 84 0 |
1, 62 2 |
6, 66 8 |
1, 96 5 |
1, 93 7 |
154 | ( 152 ) |
| Ot he r fi ial na nc |
||||||||||||||
| in stit utio ns |
154 | - | - | 1, 58 0 |
( 63 9 ) |
65 | 8 | 1, 63 7 |
28 2 |
2, 07 3 |
2, 41 7 |
2, 20 4 |
157 | ( 128 ) |
| Co rat rpo e |
5, 77 5 |
1, 190 |
44 2 |
9 | - | 27 | - | 36 | 45 4 |
6, 26 5 |
4, 83 1 |
3, 95 9 |
44 8 |
( ) 39 9 |
| Pe l rso na |
36 2 |
- | - | - | - | - | - | - | - | 36 2 |
- | - | - | - |
| 6, 50 9 |
1, 190 |
44 2 |
6, 51 4 |
( 1) 1, 52 |
61 4 |
97 3 |
6, 155 |
2, 39 3 |
15 05 7 , |
14 36 4 , |
13 22 5 , |
1, 29 7 |
( 1) 1, 20 |
| AQ | 1 | AQ 2-A |
Q 3 |
AQ 4-A |
Q 9 |
AQ | 10 | To | tal | |
|---|---|---|---|---|---|---|---|---|---|---|
| No tio l na |
Fa ir v alu e |
No tio l na |
Fa ir v alu e |
No tio l na |
Fa ir v alu e |
No tio l na |
Fa ir v alu e |
No tio l na |
Fa ir v alu e |
|
| 31 M h 2 01 2 arc |
£m | £m | £m | £m | £m | £m | £m | £m | £m | £m |
| Ba nks |
6, 74 8 |
53 2 |
67 | 5 | 32 | 3 | - | - | 6, 84 7 |
54 0 |
| Ot r fi he ial Ins titu tio na nc ns |
6, 04 5 |
51 0 |
21 | 3 | 21 3 |
53 | - | - | 6, 27 9 |
56 6 |
| To tal |
12 79 3 , |
1, 04 2 |
88 | 8 | 24 5 |
56 | - | - | 13 12 6 , |
1, 10 6 |
| 31 De mb 20 11 ce er |
13 83 3 , |
1, 23 5 |
23 0 |
8 | 30 1 |
54 | - | - | 14 36 4 , |
1, 29 7 |
| HF | T | De riv ati ve s |
CD | S b ref y ere |
nti ty nc e e |
|||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| AF S a nd |
de bt se |
riti cu es |
( f g ros s o |
Ba lan ce |
No tio |
l na |
Fa ir v |
alu e |
||||||
| LA R d eb t |
AF S |
To tal de bt |
llat l) co era |
sh t ee |
||||||||||
| ing Le nd |
RE IL |
vis ion Pro s |
riti se cu es |
re se rve s |
Lo ng |
Sh ort |
riti se cu es |
d r an ep os |
ex p os ure s |
Bo ht ug |
So ld |
Bo ht ug |
So ld |
|
| 31 M h 2 01 2 arc |
£m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m |
| Ce ntr al d l al an oc |
||||||||||||||
| nt g ov ern me |
- | - | - | 34 8 |
( 87 ) |
4, 24 7 |
4, 34 1 |
25 4 |
77 | 33 1 |
12 34 1 , |
12 38 5 , |
1, 33 0 |
( 1, 21 0 ) |
| Ce al ba nks ntr |
40 | - | - | - | - | - | - | - | - | 40 | - | - | - | - |
| Ot he r b ks an |
20 0 |
- | - | 11 9 |
( 14 ) |
15 | 69 | 65 | 1, 50 9 |
1, 4 77 |
4, 35 7 |
4, 19 9 |
42 9 |
( 40 3 ) |
| Ot he r fi ial na nc |
||||||||||||||
| in stit utio ns |
34 4 |
- | - | 58 5 |
( ) 10 |
39 | 18 | 60 6 |
13 3 |
1, 08 3 |
89 1 |
79 3 |
29 | ( ) 23 |
| Co rat rpo e |
1, 70 9 |
28 1 |
98 | 74 | - | 80 | 14 | 14 0 |
45 5 |
2, 30 4 |
3, 80 9 |
3, 38 7 |
16 0 |
( 10 3 ) |
| Pe l rso na |
22 | - | - | - | - | - | - | - | - | 22 | - | - | - | - |
| 2, 31 5 |
28 1 |
98 | 1, 12 6 |
( 11 1) |
4, 38 1 |
4, 44 2 |
1, 06 5 |
2, 17 4 |
5, 55 4 |
21 39 8 , |
20 76 4 , |
1, 94 8 |
( 1, 73 9 ) |
|
| 31 De mb 20 11 ce er |
||||||||||||||
| Ce al d l al ntr an oc |
||||||||||||||
| nt g ov ern me |
- | - | - | 70 4 |
( 22 0 ) |
4, 33 6 |
4, 72 5 |
31 5 |
90 | 40 5 |
12 125 , |
12 21 8 , |
1, 75 0 |
( 1, 70 8 ) |
| Ce ntr al ba nks |
73 | - | - | - | - | - | - | - | - | 73 | - | - | - | - |
| Ot he r b ks an |
23 3 |
- | - | 119 | ( 14) |
67 | 88 | 98 | 1, 06 4 |
1, 39 5 |
6, 07 8 |
93 8 5, |
1, 21 5 |
( 1, 187 ) |
| Ot r fi he ial na nc |
||||||||||||||
| in stit utio ns |
29 9 |
- | - | 68 5 |
( 15 ) |
40 | 13 | 71 2 |
68 6 |
1, 69 7 |
87 2 |
76 2 |
60 | ( 51 ) |
| Co rat rpo e |
2, 44 4 |
36 1 |
113 | 75 | - | 58 | - | 133 | 47 4 |
3, 05 1 |
4, 74 2 |
4, 29 9 |
35 0 |
( 1) 28 |
| Pe l rso na |
23 | - | - | - | - | - | - | - | - | 23 | - | - | - | - |
| 3, 07 2 |
36 1 |
113 | 1, 58 3 |
( 24 9 ) |
4, 50 1 |
4, 82 6 |
1, 25 8 |
2, 31 4 |
6, 64 4 |
23 81 7 , |
23 21 7 , |
3, 37 5 |
( 3, 22 7) |
| AQ | 1 | AQ 2-A |
Q 3 |
AQ 4-A |
Q 9 |
AQ | 10 | To | tal | |
|---|---|---|---|---|---|---|---|---|---|---|
| No tio l na |
Fa ir v alu e |
No tio l na |
Fa ir v alu e |
No tio l na |
Fa ir v alu e |
No tio l na |
Fa ir v alu e |
No tio l na |
Fa ir v alu e |
|
| 31 M h 2 01 2 arc |
£m | £m | £m | £m | £m | £m | £m | £m | £m | £m |
| Ba nks |
12 44 8 , |
1, 09 6 |
85 7 |
97 | 61 | 8 | - | - | 13 36 6 , |
1, 20 1 |
| Ot he r fi ial Ins titu tio na nc ns |
7, 70 3 |
65 8 |
54 | 47 | 27 5 |
42 | - | - | 8, 03 2 |
74 7 |
| To tal |
20 15 1 , |
1, 75 4 |
91 1 |
14 4 |
33 6 |
50 | - | - | 21 39 8 , |
1, 94 8 |
| 31 De mb 20 11 ce er |
23 04 2 , |
3, 22 6 |
49 5 |
96 | 28 0 |
53 | - | - | 23 81 7 , |
3, 37 5 |
| HF | T | De riv ati ve s |
CD | S b ref y ere |
nti ty nc e e |
|||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| AF S a nd |
de bt se |
riti cu es |
( f g ros s o |
Ba lan ce |
No tio |
l na |
Fa ir v |
alu e |
||||||
| LA R d eb t |
S AF |
To tal de bt |
l) llat co era |
sh t ee |
||||||||||
| Le nd ing |
RE IL |
Pro vis ion s |
riti se cu es |
res erv es |
Lo ng |
Sh ort |
riti se cu es |
d r an ep os |
ex p os ure s |
Bo ht ug |
So ld |
Bo ht ug |
So ld |
|
| 31 M h 2 01 2 arc |
£m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m |
| Ce al d l al ntr an oc |
||||||||||||||
| nt g ov ern me |
- | - | - | 51 | ( 43 ) |
21 | 32 | 40 | 18 | 58 | 3, 27 7 |
3, 26 4 |
92 2 |
( 88 1) |
| Ot he r b ks an |
1 | - | - | 10 8 |
( ) 19 |
1 | 2 | 10 7 |
40 2 |
51 0 |
1, 14 6 |
1, 13 4 |
15 2 |
( ) 14 9 |
| Ot he r fi ial na nc |
||||||||||||||
| in stit utio ns |
- | - | - | 5 | - | 19 | 13 | 11 | 44 | 55 | 8 | 5 | 1 | ( 1) |
| Co rat rpo e |
42 2 |
42 | 34 | 42 | - | 4 | - | 46 | 80 | 54 8 |
35 0 |
31 6 |
56 | ( 37 ) |
| Pe l rso na |
4 | - | - | - | - | - | - | - | - | 4 | - | - | - | - |
| 42 7 |
42 | 34 | 20 6 |
( 62 ) |
45 | 47 | 20 4 |
54 4 |
1, 17 5 |
4, 78 1 |
4, 71 9 |
1, 13 1 |
( 1, 06 8 ) |
|
| 31 De mb 20 11 ce er |
||||||||||||||
| Ce al d l al ntr an oc |
||||||||||||||
| nt g ov ern me |
- | - | - | 56 | ( ) 58 |
36 | 152 | ( ) 60 |
19 | ( ) 41 |
3, 30 4 |
3, 41 3 |
99 7 |
( ) 98 5 |
| Ot he r b ks an |
10 | - | - | 91 | ( 36 ) |
12 | 2 | 10 1 |
38 9 |
50 0 |
1, 197 |
1, 155 |
26 4 |
( 26 0 ) |
| Ot he r fi ial na nc |
||||||||||||||
| in stit utio ns |
- | - | - | 5 | - | 7 | - | 12 | 30 | 42 | 8 | 5 | 1 | ( 1) |
| Co rat rpo e |
49 5 |
27 | 27 | 42 | - | 18 | - | 60 | 81 | 63 6 |
36 6 |
32 1 |
68 | ( 48 ) |
| Pe l rso na |
5 | - | - | - | - | - | - | - | - | 5 | - | - | - | - |
| 51 0 |
27 | 27 | 194 | ( 94 ) |
73 | 154 | 113 | 51 9 |
1, 142 |
4, 87 5 |
4, 89 4 |
1, 33 0 |
( 1, 29 4) |
| AQ | 1 | AQ 2-A |
Q 3 |
AQ 4-A |
Q 9 |
AQ | 10 | To | tal | |
|---|---|---|---|---|---|---|---|---|---|---|
| No tio l na |
Fa ir v alu e |
No tio l na |
Fa ir v alu e |
No tio l na |
Fa ir v alu e |
No tio l na |
Fa ir v alu e |
No tio l na |
Fa ir v alu e |
|
| 31 M h 2 01 2 arc |
£m | £m | £m | £m | £m | £m | £m | £m | £m | £m |
| Ba nks |
2, 74 7 |
64 4 |
45 | 8 | - | - | - | - | 2, 79 2 |
65 2 |
| Ot he r fi ial Ins titu tio na nc ns |
1, 95 6 |
46 6 |
- | - | 33 | 13 | - | - | 1, 98 9 |
47 9 |
| To tal |
4, 70 3 |
1, 11 0 |
45 | 8 | 33 | 13 | - | - | 4, 78 1 |
1, 13 1 |
| 31 De mb 20 11 ce er |
4, 79 6 |
1, 30 3 |
46 | 12 | 33 | 15 | - | - | 4, 87 5 |
1, 33 0 |
| HF | T | De riv ati ve s |
CD | S b ref y ere |
nti ty nc e e |
|||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| AF S a nd |
de bt se |
riti cu es |
( f g ros s o |
Ba lan ce |
No tio |
l na |
Fa ir v |
alu e |
||||||
| LA R d eb t |
S AF |
To tal de bt |
l) llat co era |
sh t ee |
||||||||||
| Le nd ing |
RE IL |
Pro vis ion s |
riti se cu es |
re se rve s |
Lo ng |
Sh ort |
riti se cu es |
d r an ep os |
ex p os ure s |
Bo ht ug |
So ld |
Bo ht ug |
So ld |
|
| 31 M h 2 01 2 arc |
£m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m |
| Ce al d l al ntr an oc |
||||||||||||||
| nt g ov ern me |
3 | - | - | 13 | - | 25 | - | 38 | - | 41 | 12 5 |
63 | 12 5 |
( 63 ) |
| Ce al ba nks ntr |
5 | - | - | - | - | - | - | - | - | 5 | - | - | - | - |
| Ot he r b ks an |
1 | - | - | - | - | - | - | - | 26 5 |
26 6 |
5 | 5 | 1 | ( 2) |
| Ot r fi he ial na nc |
||||||||||||||
| in stit utio ns |
31 | - | - | - | - | - | - | - | 2 | 33 | 34 | 34 | 7 | ( 7) |
| Co rat rpo e |
39 5 |
30 9 |
30 8 |
- | - | - | - | - | 55 | 45 0 |
39 7 |
39 1 |
89 | ( ) 89 |
| Pe l rso na |
14 | - | - | - | - | - | - | - | - | 14 | - | - | - | - |
| 44 9 |
30 9 |
30 8 |
13 | - | 25 | - | 38 | 32 2 |
80 9 |
56 1 |
49 3 |
22 2 |
( 16 1) |
|
| De mb 31 20 11 ce er |
||||||||||||||
| Ce al d l al ntr an oc |
||||||||||||||
| nt g ov ern me |
7 | - | - | 31 2 |
- | 102 | 5 | 40 9 |
- | 41 6 |
3, 158 |
3, 165 |
2, 22 8 |
( ) 2, 23 0 |
| Ce al ba nks ntr |
6 | - | - | - | - | - | - | - | - | 6 | - | - | - | - |
| Ot he r b ks an |
- | - | - | - | - | - | - | - | 29 0 |
29 0 |
22 | 22 | 3 | ( ) 3 |
| Ot he r fi ial na nc |
||||||||||||||
| in stit utio ns |
31 | - | - | - | - | - | - | - | 2 | 33 | 34 | 34 | 8 | ( 8 ) |
| Co rat rpo e |
42 7 |
25 6 |
25 6 |
- | - | - | - | - | 63 | 49 0 |
43 4 |
42 8 |
144 | ( ) 142 |
| Pe l rso na |
14 | - | - | - | - | - | - | - | - | 14 | - | - | - | - |
| 48 5 |
25 6 |
25 6 |
31 2 |
- | 102 | 5 | 40 9 |
35 5 |
1, 24 9 |
3, 64 8 |
3, 64 9 |
2, 38 3 |
( ) 2, 38 3 |
| AQ | 1 | AQ 2-A |
Q 3 |
AQ 4-A |
Q 9 |
AQ | 10 | To | tal | |
|---|---|---|---|---|---|---|---|---|---|---|
| No tio l na |
Fa ir v alu e |
No tio l na |
Fa ir v alu e |
No tio l na |
Fa ir v alu e |
No tio l na |
Fa ir v alu e |
No tio l na |
Fa ir v alu e |
|
| 31 M h 2 01 2 arc |
£m | £m | £m | £m | £m | £m | £m | £m | £m | £m |
| Ba nks |
18 8 |
93 | - | - | - | - | - | - | 18 8 |
93 |
| Ot he r fi ial Ins titu tio na nc ns |
27 6 |
60 | - | - | 34 | 6 | 63 | 63 | 37 3 |
12 9 |
| To tal |
46 4 |
15 3 |
- | - | 34 | 6 | 63 | 63 | 56 1 |
22 2 |
| 31 De mb 20 11 ce er |
3, 50 8 |
2, 29 0 |
64 | 46 | 76 | 47 | - | - | 3, 64 8 |
2, 38 3 |
Market risk arises from changes in interest rates, foreign currency, credit spreads, equity prices and risk related factors such as market volatilities. The Group manages market risk centrally within its trading and non-trading portfolios through a comprehensive market risk management framework. This control framework includes qualitative guidance in the form of comprehensive policy statements, dealing authorities, limits based on, but not limited to, value-at-risk (VaR), stress testing, positions and sensitivity analyses.
For a description of the Group's basis of measurement and methodologies, refer to pages 229 to 231 of the Group's 2011 Annual Report and Accounts.
Following the implementation of CRD III at 31 December 2011, the Group is required to calculate: (i) an additional capital charge based on a stressed calibration of the VaR model - Stressed VaR; (ii) an Incremental Risk Charge to capture the default and migration risk for credit risk positions in the trading book; and (iii) an All Price Risk measure for correlation trading positions, subject to a capital floor that is based on standardised securitisation charges. The CRD III capital charges at 31 March 2012 are shown in the table below:
| 31 March 2012 |
31 December 2011 |
|
|---|---|---|
| £m | £m | |
| Stressed VaR | 1,793 | 1,682 |
| Incremental Risk Charge | 659 | 469 |
| All Price Risk | 262 | 297 |
The Group's US trading subsidiary was included in the internal models in March 2012 resulting in an increase in Incremental Risk Charge and Stressed VaR.
Note:
(1) The effect of any month end adjustments, not attributable to a specific daily market move, is spread evenly over the days in the month in question.
Counterparty Exposure Management (CEM) manages the OTC derivative counterparty credit and funding risk on behalf of Markets, by actively controlling risk concentrations and reducing unwanted risk exposures. The hedging transactions CEM enters into are booked in the trading book, and therefore contribute to the market risk VaR exposure of the Group. The counterparty exposures themselves are not captured in VaR for regulatory capital. In the interest of transparency and to more properly represent the exposure, CEM exposure and total VaR excluding CEM are disclosed separately.
The table below details VaR for the Group's trading portfolios, analysed by type of market risk exposure, and between Core, Non-Core, CEM and the Group's total trading VaR excluding CEM.
| Qu art |
de d er en |
|||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 31 M arc |
h 2 01 2 |
31 De mb ce |
20 11 er |
31 M arc |
h 2 01 1 |
|||||||
| Av era g e |
Pe rio d e nd |
Ma xim um |
Mi nim um |
Av era g e |
Pe rio d e nd |
Ma xim um |
Min im um |
Av era g e |
Pe rio d e nd |
Ma xim um |
Min im um |
|
| Tra din Va R g |
£m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m |
| Int st rat ere e |
73 .8 |
68 .3 |
95 .7 |
51 .2 |
62 .5 |
68 .1 |
72 .3 |
50 .8 |
60 .4 |
60 .2 |
79 .2 |
42 .1 |
| Cre dit d sp rea |
84 .2 |
.5 88 |
94 .9 |
72 .6 |
68 .4 |
74 .3 |
78 .5 |
57 .4 |
134 .1 |
97 .7 |
15 1.1 |
97 .7 |
| Cu rre ncy |
12 .5 |
11 .1 |
21 .3 |
8.2 | 10 .9 |
16 .2 |
19 .2 |
5.7 | 12 .2 |
10 .5 |
18 .0 |
8.1 |
| Eq uity |
7.5 | 6.3 | 12 .5 |
4.7 | 8.3 | 8.0 | 12 .5 |
5.0 | 11 .1 |
10 .7 |
14 .5 |
8.0 |
| Co od ity mm |
2.5 | 1.3 | 6.0 | 1.0 | 4.3 | 2.3 | 7.0 | 2.0 | 0.2 | 0.1 | 0.7 | |
| ( 1) Div ific ati ers on |
( ) 69 .0 |
( ) 52 .3 |
( .1) 71 |
|||||||||
| To tal |
11 6.6 |
10 6.5 |
13 7.0 |
97 .2 |
109 .7 |
116 .6 |
132 .2 |
83 .5 |
156 .4 |
108 .1 |
18 1.3 |
108 .1 |
| Co re |
82 .8 |
74 .5 |
11 8.0 |
63 .6 |
.3 77 |
89 .1 |
95 .6 |
57 .7 |
108 .2 |
72 .2 |
133 .9 |
72 .2 |
| n-C No ore |
38 .7 |
39 .3 |
41 .9 |
34 .2 |
35 .2 |
34 .6 |
40 .7 |
30 .0 |
113 .9 |
109 .4 |
128 .6 |
104 .1 |
| CE M ( 2) |
79 .1 |
78 .5 |
84 .2 |
73 .3 |
75 .8 |
43 .9 |
||||||
| To tal (ex clu din CE M) ( 2) g |
53 .5 |
56 .6 |
76 .4 |
41 .0 |
49 .7 |
110 .8 |
Notes:
(1) The Group benefits from diversification, which reflects the risk reduction achieved by allocating investments across various financial instrument types, industry counterparties, currencies and regions. The extent of diversification benefit depends on the correlation between the assets and risk factors in the portfolio at a particular time. Diversification has an inverse relationship with correlation. The diversification factor is the sum of the VaR on individual risk types less the total portfolio VaR.
(2) CEM and total trading VaR excluding CEM for Q1 2012 have been presented on a minimum, maximum, average and period end basis. For comparative purposes, the period end VaR figures have been shown for Q4 2011 and Q1 2011.
The table below details VaR for the Group's non-trading portfolio, excluding the structured credit portfolio (SCP) and loans and receivables (LAR), analysed by type of market risk exposure and between Core, Non-Core CEM, and the Group's total non-trading VaR excluding CEM.
| Qu art |
de d er en |
|||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 31 M arc |
h 2 01 2 |
31 De mb ce |
20 11 er |
31 M arc |
h 2 01 1 |
|||||||
| Av era g e |
Pe rio d e nd |
Ma xim um |
Mi nim um |
Av era g e |
Pe rio d e nd |
Ma xim um |
Min im um |
Av era g e |
Pe rio d e nd |
Ma xim um |
Min im um |
|
| No rad ing Va R n-t |
£m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m |
| Int st rat ere e |
9.6 | 8.7 | 10 .7 |
8.7 | 9.7 | 9.9 | 10 .9 |
8.8 | 7.8 | 7.0 | 10 .8 |
6.5 |
| Cre dit d sp rea |
13 .9 |
15 .2 |
15 .4 |
12 .9 |
13 .9 |
13 .6 |
15 .7 |
12 .1 |
23 .8 |
22 .5 |
39 .3 |
14 .2 |
| Cu rre ncy |
3.7 | 3.3 | 4.5 | 3.2 | 3.5 | 4.0 | 5.1 | 2.4 | 0.6 | 0.6 | 1.8 | 0.1 |
| Eq uity |
1.9 | 1.8 | 1.9 | 1.8 | 1.9 | 1.9 | 2.0 | 1.8 | 2.5 | 2.3 | 3.1 | 2.2 |
| ific ( 1) Div ati ers on |
( ) 10 .8 |
( ) 13 .6 |
( ) 5.4 |
|||||||||
| To tal |
15 .7 |
18 .2 |
18 .3 |
13 .6 |
16 .3 |
15 .8 |
20 .0 |
14 .2 |
26 .5 |
27 .0 |
41 .6 |
13 .4 |
| Co re |
15 .7 |
18 .8 |
19 .0 |
13 .5 |
16 .0 |
15 .1 |
18 .9 |
14 .1 |
25 .5 |
26 .1 |
38 .9 |
13 .5 |
| n-C No ore |
2.5 | 2.4 | 2.6 | 2.4 | 3.4 | 2.5 | 3.9 | 2.5 | 2.6 | 2.4 | 3.4 | 2.2 |
| CE ( 2) M |
1.0 | 0.9 | 1.0 | 0.9 | 0.9 | 0.3 | ||||||
| To tal clu din CE M ( 2) ex g |
15 .7 |
17 .4 |
17 .8 |
13 .5 |
15 .5 |
27 .0 |
(1) The Group benefits from diversification, which reflects the risk reduction achieved by allocating investments across various financial instrument types, industry counterparties, currencies and regions. The extent of diversification benefit depends on the correlation between the assets and risk factors in the portfolio at a particular time. Diversification has an inverse relationship with correlation. The diversification factor is the sum of the VaR on individual risk types less the total portfolio VaR.
(2) CEM and total non-trading VaR excluding CEM for Q1 2012 have been presented on a minimum, maximum, average and period end basis. For comparative purposes, the period end VaR figures have been shown for Q4 2011 and Q1 2011.
| Drawn notional | Fair value | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Other | Other | |||||||||
| CDOs | CLOs MBS (1) | ABS | Total | CDOs | CLOs MBS (1) | ABS | Total | |||
| £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | |
| 31 March 2012 | ||||||||||
| 1-2 years | - | - | - | 54 | 54 | - | - | - | 48 | 48 |
| 2-3 years | - | - | 9 | 153 | 162 | - | - | 9 | 143 | 152 |
| 4-5 years | - | 18 | 30 | 93 | 141 | - | 17 | 23 | 86 | 126 |
| 5-10 years | - | 368 | 254 | 248 | 870 | - | 334 | 167 | 210 | 711 |
| >10 years | 1,115 | 432 | 833 | 557 | 2,937 | 202 | 368 | 569 | 319 | 1,458 |
| 1,115 | 818 | 1,126 | 1,105 | 4,164 | 202 | 719 | 768 | 806 | 2,495 | |
| 31 December 2011 | ||||||||||
| 1-2 years | - | - | - | 27 | 27 | - | - | - | 22 | 22 |
| 2-3 years | - | - | 10 | 196 | 206 | - | - | 9 | 182 | 191 |
| 4-5 years | - | 37 | 37 | 95 | 169 | - | 34 | 30 | 88 | 152 |
| 5-10 years | 32 | 503 | 270 | 268 | 1,073 | 30 | 455 | 184 | 229 | 898 |
| >10 years | 2,180 | 442 | 464 | 593 | 3,679 | 766 | 371 | 291 | 347 | 1,775 |
| 2,212 | 982 | 781 | 1,179 | 5,154 | 796 | 860 | 514 | 868 | 3,038 | |
| 31 March 2011 | ||||||||||
| 1-2 years | - | 19 | - | 38 | 57 | - | 18 | - | 34 | 52 |
| 2-3 years | 12 | 19 | 43 | 70 | 144 | 12 | 17 | 42 | 64 | 135 |
| 3-4 years | - | 5 | 11 | 206 | 222 | - | 5 | 10 | 194 | 209 |
| 4-5 years | 15 | 15 | - | 36 | 66 | 15 | 14 | - | 33 | 62 |
| 5-10 years | 96 | 467 | 313 | 385 | 1,261 | 85 | 435 | 232 | 342 | 1,094 |
| >10 years | 397 | 624 | 561 | 530 | 2,112 | 154 | 500 | 400 | 369 | 1,423 |
| 520 | 1,149 | 928 | 1,265 | 3,862 | 266 | 989 | 684 | 1,036 | 2,975 |
Note:
(1) MBS include sub-prime RMBS with a notional amount of £396 million (31 December 2011 - £401 million; 31 March 2011 - £455 million) and a fair value of £258 million (31 December 2011 - £252 million; 31 March 2011 - £330 million), all with residual maturities of greater than ten years.
The Structured Credit Portfolio is within Non-Core. The risk in this portfolio is not measured or disclosed using VaR, as the Group believes this is not an appropriate tool for the banking book portfolio, which comprises illiquid debt securities. These assets are reported on a drawn notional and fair value basis, and managed on a third party asset and RWA basis.
• The CDO drawn notional was lower at 31 March 2012 than at 31 December 2011 due to the liquidation of legacy commercial real estate CDOs. Following the liquidation, the majority of the underlying assets were sold and the retained MBS assets were added to the MBS portfolio, increasing the drawn notional at 31 March 2012.
| 31 March 2012 |
31 December 2011 |
|
|---|---|---|
| Ordinary share price | £0.276 | £0.202 |
| Number of ordinary shares in issue | 59,546m | 59,228m |
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 2011 will be filed with the Registrar of Companies. 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.
These first quarter 2012 results have not been audited or reviewed by the auditors.
| Financial calendar | |
|---|---|
| 2012 interim results | Friday 3 August 2012 |
| 2012 third quarter interim management statement | Friday 2 November 2012 |
| Qu | de d art er en |
||||||||
|---|---|---|---|---|---|---|---|---|---|
| 31 | M h 2 01 2 arc |
31 De |
mb 20 ce er |
11 | 31 | M h 2 01 1 arc |
|||
| Re allo ion cat |
Re allo ion cat |
Re allo ion cat |
|||||||
| Ma ed |
of ff on e-o ite |
Sta tut |
Ma ed |
of ff on e-o ite |
Sta tut |
Ma ed |
of ff on e-o ite |
Sta tut |
|
| na g £m |
ms £m |
ory £m |
na g £m |
ms £m |
ory £m |
na g £m |
ms £m |
ory £m |
|
| Int st eiv ab le ere rec |
5, 01 7 |
- | 5, 01 7 |
5, 23 4 |
- | 5, 23 4 |
5, 40 2 |
( 1) |
5, 40 1 |
| Int ab le st ere pa y |
( 2, 01 0 ) |
( 8 ) |
( 2, 01 8 ) |
( 2, 15 8 ) |
( 2) |
( 2, 16 0 ) |
( 2, 10 0 ) |
- | ( 2, 10 0 ) |
| Ne t in t in ter es co me |
3, 00 7 |
( ) 8 |
2, 99 9 |
3, 07 6 |
( 2) |
3, 07 4 |
3, 30 2 |
( 1) |
3, 30 1 |
| Fe d c mis sio eiv ab le es an om ns rec |
1, 48 7 |
- | 1, 48 7 |
1, 59 0 |
- | 1, 59 0 |
1, 64 2 |
- | 1, 64 2 |
| Fe d c mis sio ab le es an om ns pa y |
( 29 0 ) |
- | ( 29 0 ) |
( 57 3 ) |
- | ( 57 3 ) |
( 26 0 ) |
- | ( 26 0 ) |
| Inc e f din ivit ies tra act om rom g |
1, 26 4 |
( 1, 05 2) |
21 2 |
24 2 |
( 48 0 ) |
( 23 8 ) |
1, 57 0 |
( 73 5 ) |
83 5 |
| Ga in/ ( los ) o ed tio f o de bt s n r em p n o wn |
- | 57 7 |
57 7 |
- | ( 1) |
( 1) |
- | - | - |
| Ot he ing in (e lud ing in ium in ) rat t p r o pe co me xc su ran ce ne rem co me |
72 5 |
( 1, 47 2) |
( 74 7) |
40 5 |
( 20 0 ) |
20 5 |
71 0 |
( 31 9 ) |
39 1 |
| Ins t p ium in ura nce ne rem co me |
93 8 |
- | 93 8 |
98 1 |
- | 98 1 |
1, 14 9 |
- | 1, 14 9 |
| No n-i t in nte res co me |
4, 12 4 |
( 1, 94 7) |
2, 17 7 |
2, 64 5 |
( 68 1) |
1, 96 4 |
4, 81 1 |
( 1, 05 4) |
3, 75 7 |
| To tal in co me |
13 1 7, |
( ) 1, 95 5 |
5, 17 6 |
5, 72 1 |
( ) 68 3 |
5, 03 8 |
8, 11 3 |
( ) 1, 05 5 |
05 8 7, |
| Sta ff c ost s |
( 1) 2, 22 |
( ) 34 9 |
( ) 2, 57 0 |
( 1) 1, 78 |
( 2) 21 |
( ) 1, 99 3 |
( ) 2, 32 0 |
( ) 79 |
( ) 2, 39 9 |
| Pre mis d e ipm t es an qu en |
( 55 0 ) |
( 13 ) |
( 56 3 ) |
( 57 5 ) |
( 99 ) |
( 67 4) |
( 55 6 ) |
( 15 ) |
( 57 1) |
| Ot he dm inis tive tra r a ex pe nse s |
( ) 81 9 |
( 197 ) |
( ) 1, 01 6 |
( ) 83 8 |
( 45 8 ) |
( ) 1, 29 6 |
( ) 86 5 |
( 56 ) |
( 1) 92 |
| De cia tio nd isa tio ort pre n a am n |
( 39 4) |
( ) 74 |
( 46 8 ) |
( 45 0 ) |
( ) 63 |
( 51 3 ) |
( 38 0 ) |
( ) 44 |
( 42 4) |
| Wr ite do of dw ill a nd oth inta ible set wn g oo er ng as s |
- | - | - | - | ( 91 ) |
( 91 ) |
|||
| Op tin era g ex p en se s |
( 3, 98 4) |
( 63 3 ) |
( 4, 61 7) |
( 3, 64 4) |
( 92 3 ) |
( 4, 56 7) |
( 4, 12 1) |
( 194 ) |
( 4, 31 5 ) |
| fit for tin Pro be the ch e o r o p era g arg es |
3, 14 7 |
( ) 2, 58 8 |
55 9 |
2, 07 7 |
( ) 1, 60 6 |
47 1 |
3, 99 2 |
( ) 1, 24 9 |
2, 74 3 |
| Ins laim t c ura nce ne s |
( 64 9 ) |
- | ( 64 9 ) |
( 52 9 ) |
- | ( 52 9 ) |
( 91 2) |
- | ( 91 2) |
| tin rof it/ ( ) for e i air Op los be nt los era g p s mp me se s |
2, 49 8 |
( ) 2, 58 8 |
( ) 90 |
1, 54 8 |
( ) 1, 60 6 |
( ) 58 |
3, 08 0 |
( ) 1, 24 9 |
1, 83 1 |
| Im irm t lo pa en sse s |
( 1, 31 4) |
- | ( 1, 31 4) |
( 1, 69 2) |
( 22 6 ) |
( 1, 91 8 ) |
( 1, 94 7) |
- | ( 1, 94 7) |
| Op tin rof it/ ( los ) era g p s |
1, 18 4 |
( ) 2, 58 8 |
( 4) 1, 40 |
( 4) 14 |
( 2) 1, 83 |
( ) 1, 97 6 |
1, 13 3 |
( ) 1, 24 9 |
( ) 11 6 |
| Qu | de d art er en |
||||||||
|---|---|---|---|---|---|---|---|---|---|
| 31 | M h 2 01 arc |
2 | De 31 |
mb 20 ce er |
11 | 31 | M h 2 01 1 arc |
||
| Re allo ion cat |
Re allo ion cat |
Re | allo ion cat |
||||||
| Ma ed na |
of ff on e-o ite ms |
Sta tut |
Ma ed na |
of ff on e-o ite ms |
Sta tut |
Ma ed na |
of ff on e-o ite ms |
Sta tut |
|
| g £m |
£m | ory £m |
g £m |
£m | ory £m |
g £m |
£m | ory £m |
|
| Op tin rof it/ ( los ) era g p s |
1, 18 4 |
( ) 2, 58 8 |
( 1, 40 4) |
( 14 4) |
( 2) 1, 83 |
( 1, 97 6 ) |
1, 13 3 |
( ) 1, 24 9 |
( 11 6 ) |
| Ow red it a dju ( 1) stm ts n c en |
( 2, 45 6 ) |
2, 45 6 |
- | ( 47 2) |
47 2 |
- | ( 56 0 ) |
56 0 |
- |
| As Pr ctio n S ch ( 2) set ote em e |
( 43 ) |
43 | - | ( 20 9 ) |
20 9 |
- | ( 46 9 ) |
46 9 |
- |
| Pa tio n I nt tec sts y me pro ns ura nce co |
( 12 5 ) |
125 | - | - | - | - | - | - | - |
| So rei n d eb t im irm t ve g pa en |
- | - | - | ( 4) 22 |
22 4 |
- | - | - | - |
| Am isa tio f p ha d i ible ort nta set n o urc se ng as s |
( 48 ) |
48 | - | ( 53 ) |
53 | - | ( 44 ) |
44 | - |
| Int rat ion d r est tur ing sts eg an ruc co |
( ) 46 0 |
46 0 |
- | ( ) 47 8 |
47 8 |
- | ( ) 14 5 |
145 | - |
| Ga in/ ( los ) o ed tio f o de bt s n r em p n o wn |
57 7 |
( 7) 57 |
- | ( 1) |
1 | - | - | - | - |
| Str ic d isp als ate g os |
( ) 8 |
8 | - | ( ) 82 |
82 | - | ( ) 23 |
23 | - |
| Ba nk lev y |
- | - | - | ( 30 0 ) |
30 0 |
- | - | - | - |
| Bo s t nu ax |
- | - | - | - | - | - | ( 11 ) |
11 | - |
| Wr ite- do of dw ill a nd oth inta ible set wn g oo er ng as s |
- | - | - | ( 11 ) |
11 | - | - | - | - |
| RF S H old ing ino rity in ter est s m |
( 25 ) |
25 | - | ( 2) |
2 | - | 3 | ( 3 ) |
- |
| Lo be for e t ss ax |
( 1, 40 4) |
- | ( 1, 40 4) |
( 1, 97 6 ) |
- | ( 1, 97 6 ) |
( 11 6 ) |
- | ( 11 6 ) |
| /cr Ta x ( cha ) ed it rg e |
( 13 9 ) |
- | ( 13 9 ) |
18 6 |
- | 18 6 |
( 42 3 ) |
- | ( 42 3 ) |
| Lo fro nti ing tio ss m co nu op era ns |
( 1, 54 3 ) |
- | ( 1, 54 3 ) |
( 1, 79 0 ) |
- | ( 1, 79 0 ) |
( 53 9 ) |
- | ( 53 9 ) |
| Pro fit fro dis nti ed tio of et tax m co nu op era ns , n |
5 | - | 5 | 10 | - | 10 | 10 | - | 10 |
| Lo fo r th eri od ss e p |
( 1, 53 8 ) |
- | ( 1, 53 8 ) |
( 1, 78 0 ) |
- | ( 1, 78 0 ) |
( 52 9 ) |
- | ( 52 9 ) |
| No tro llin inte ts n-c on g res |
14 | - | 14 | ( ) 18 |
- | ( ) 18 |
1 | - | 1 |
| Lo tri bu tab le ord ina d B sh ho lde at to ss ry an are rs |
( 1, 52 4) |
- | ( 1, 52 4) |
( 1, 79 8 ) |
- | ( 1, 79 8 ) |
( 52 8 ) |
- | ( 52 8 ) |
Notes:
(1) Reallocation of £1,009 million loss (Q4 2011 - £272 million; Q1 2011 - £266 million) to income from trading activities and £1,447 million loss (Q4 2011 - £200 million; Q1 2011 - £294 million) to other operating income.
(2) Reallocation to income from trading activities.
To comply with EC State Aid requirements the Group agreed to make a series of divestments by the end of 2013: the disposal of Direct Line Group, Global Merchant Services and its interest in RBS Sempra Commodities JV. The Group also agreed to dispose of its RBS England and Wales and NatWest Scotland branch-based businesses, along with certain SME and corporate activities across the UK ('UK branch-based businesses'). The disposals of Global Merchant Services and RBS Sempra Commodities JV businesses have now effectively been completed.
The sale of the Group's UK branch-based businesses to Santander UK plc continues to make good progress.
The disposal of Direct Line Group, the base case plan for which is by way of a public flotation, is targeted to commence in the second half of 2012, subject to market conditions. External advisors have been appointed to assist the Group with the disposal and the process of separation is proceeding to plan. In the meantime, the business continues to be managed and reported as a separate core division.
The table below shows total income and operating profit of Direct Line Group and the UK branchbased businesses.
| Total income | Operating profit before impairments |
Operating profit | ||||
|---|---|---|---|---|---|---|
| Q1 2012 | FY 2011 | Q1 2012 | FY 2011 | Q1 2012 | FY 2011 | |
| £m | £m | £m | £m | £m | £m | |
| Direct Line Group (1) | 966 | 4,286 | 84 | 407 | 84 | 407 |
| UK branch-based businesses (2) | 226 | 959 | 118 | 518 | 79 | 319 |
| Total | 1,192 | 5,245 | 202 | 925 | 163 | 726 |
The table below shows the estimated risk-weighted assets, total assets and capital of the businesses identified for disposal.
| RWAs 31 March 31 December |
Total assets 31 March 31 December |
Capital 31 March 31 December |
||||
|---|---|---|---|---|---|---|
| 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | |
| £bn | £bn | £bn | £bn | £bn | £bn | |
| Direct Line Group (1) | n/m | n/m | 13.3 | 13.9 | 4.1 | 4.4 |
| UK branch-based businesses (2) | 10.5 | 11.1 | 19.1 | 19.3 | 1.0 | 1.0 |
| Total | 10.5 | 11.1 | 32.4 | 33.2 | 5.1 | 5.4 |
Notes:
(1) Total income includes investment income of £90 million (FY 2011 - £302 million). Total assets and estimated capital include approximately £0.9 billion of goodwill, of which £0.7 billion is attributed to Direct Line Group by RBS Group.
(2) Estimated notional equity based on 10% (2011 - 9%) of RWAs.
Further information on the UK branch-based businesses by division is shown in the tables below:
| Division | Total | |||
|---|---|---|---|---|
| UK | UK | |||
| Retail | Corporate | Q1 2012 | FY 2011 | |
| £m | £m | £m | £m | |
| Income statement | ||||
| Net interest income | 79 | 82 | 161 | 689 |
| Non-interest income | 24 | 41 | 65 | 270 |
| Total income | 103 | 123 | 226 | 959 |
| Direct expenses | ||||
| - staff | (18) | (20) | (38) | (158) |
| - other | (26) | (14) | (40) | (166) |
| Indirect expenses | (17) | (13) | (30) | (117) |
| (61) | (47) | (108) | (441) | |
| Operating profit before impairment losses | 42 | 76 | 118 | 518 |
| Impairment losses | (14) | (25) | (39) | (199) |
| Operating profit | 28 | 51 | 79 | 319 |
| Analysis of income by product | ||||
| Loans and advances | 28 | 71 | 99 | 436 |
| Deposits | 22 | 33 | 55 | 245 |
| Mortgages | 33 | - | 33 | 134 |
| Other | 20 | 19 | 39 | 144 |
| Total income | 103 | 123 | 226 | 959 |
| Net interest margin | 4.66% | 2.88% | 3.55% | 3.57% |
| Employee numbers (full time equivalents rounded to the | ||||
| nearest hundred) | 2,800 | 1,600 | 4,400 | 4,400 |
| Division | Total | ||||
|---|---|---|---|---|---|
| UK | UK | 31 March | 31 December | ||
| Retail | Corporate | Markets | 2012 | 2011 | |
| £bn | £bn | £bn | £bn | £bn | |
| Capital and balance sheet | |||||
| Total third party assets (excluding mark-to- | |||||
| market derivatives) | 7.1 | 11.6 | - | 18.7 | 18.9 |
| Loans and advances to customers (gross) | 7.3 | 12.0 | - | 19.3 | 19.5 |
| Customer deposits | 8.7 | 12.7 | - | 21.4 | 21.8 |
| Derivative assets | - | - | 0.4 | 0.4 | 0.4 |
| Derivative liabilities | - | - | - | - | 0.1 |
| Risk elements in lending | 0.5 | 1.0 | - | 1.5 | 1.5 |
| Loan:deposit ratio | 80% | 91% | - | 86% | 86% |
| Risk-weighted assets | 3.6 | 6.9 | - | 10.5 | 11.1 |
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