Earnings Release • Feb 15, 2019
Earnings Release
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RBS reported an operating profit before tax of £3,359 million and an attributable profit of £1,622 million for 2018 and proposes a final ordinary dividend of 3.5 pence per share and a 7.5 pence special dividend.
● Q4 2018 operating profit before tax of £572 million and an attributable profit of £286 million.
Income resilient in a competitive market:
Lower costs through continued transformation and increased digitisation:
RBS, like all companies, continues to deal with a range of significant risks and uncertainties in the external economic, political and regulatory environment. Our central economic forecast, which supports our corporate plan, is in line with consensus as at the end of December 2018 and shows average UK GDP growth of around 1.0-2.0% from 2019 to 2023 and continued low interest rates. Given the current uncertainties we will continue to actively monitor and react to market conditions.
As part of our continued cost savings plans, we expect to incur aggregate strategic costs of around £2.5 billion across 2018 and 2019, with £1.0 billion of this having been incurred during 2018. We plan to reduce operating expenses, excluding strategic costs and conduct and litigation costs, by £300 million in 2019 compared with 2018, excluding one-off items.
2018 saw a continuation of the period of benign economic conditions with low defaults and strong cash recoveries. However, the potential impact on the real economy of ongoing political uncertainties and geopolitical tensions could affect our credit loss outcome. As a result, impairments are expected to increase in 2019 but remain below our through-the-cycle loss rate assumption of 30-40 basis points. The threat from single name and sector driven events remains.
We expect to end 2019 with risk weighted assets (RWAs) of around £185 – 190 billion as the RWAs associated with Alawwal Bank are expected to reduce by around £5 billion, subject to regulatory approvals relating to the merger and our shareholding.
RBS Group (RBSG) capital and funding plans focus on issuing £3-5 billion of MREL-compliant instruments and around £1 billion of Tier 2 instruments. We do not plan to issue AT1 in 2019. As in prior years, we will continue to target other funding sources to diversify our funding structure, including senior secured issuance of £2-3 billion from NatWest Bank. NatWest Markets Plc, as a standalone bank, plans to issue £3-5 billion of term senior unsecured instruments.
While we remain comfortable with our 2020 target of a return on tangible equity of more than 12%, we recognise our 2020 target of a cost:income ratio of less than 50% is increasingly challenging for the business to achieve with the risk being to the downside. This reflects the ongoing economic and political uncertainty and the additional ongoing costs associated with ringfencing and Brexit.
Our previous guidance on RWAs beyond 2020 was an estimated 10% increase in 2021 relating to Basel 3 amendments, in addition to RWA inflation as a result of IFRS 16, which requires lease obligations to be brought on balance sheet, of £1.3 billion in 2019 and Bank of England mortgage floors of £10.5 billion in 2020. We now expect the overall impact of Basel 3 amendments to be in the range of 5-10% and phased across 2021 to 2023, with the details still subject to significant regulatory uncertainty.
We propose a 3.5 pence final ordinary dividend and a 7.5 pence special dividend for the 2018 financial year, while maintaining a CET1 ratio of 16.2% as at 31 December 2018.
Pro-forma for the introduction of IFRS16 - Leases, the CET1 ratio was 16.0%, with the c.20 basis points reduction reflecting a £1.3 billion increase in RWAs and £0.3 billion charge against reserves.
We expect to maintain ordinary dividends of around 40% of attributable profit. We have updated our medium term guidance of CET1 to be approximately 14% at the end of 2021. We have shareholder and regulatory approval to carry out directed buybacks of the UK government stake in RBS, but recognise that any exercise of this authority would be dependant upon HMT's intentions and is limited to 4.99% of issued share capital in any 12 month period. As a reminder, we have also committed to make further pre tax contributions to the pension scheme of up to £1.5 billion in aggregate from 1 January 2020 linked to future distributions to RBS shareholders.
The NWM franchise includes NWM Plc and NWM N.V., both of which are currently direct subsidiaries of RBSG. RBS has previously announced its intention for NWM N.V. to become a subsidiary of NWM Plc following the completion of the sale of the consortium holding in Alawwal. As such, NWM Plc's financial reporting does not currently include NWM N.V.
NWM Plc is regulated and discloses capital ratios and RWAs on a standalone bank basis and is targeting by 2020 a CET1 ratio of circa 15%, MREL ratio of at least 30% and a leverage ratio of at least 4%.
We plan to transfer our Western Europe corporate business into NWM N.V. from the ring-fenced bank, in addition to the NWM business that is expected to be part of a FSMA Part VII Transfer Scheme from NWM Plc to NWM N.V., subject to court approval and as announced on 6 December 2018. NWM Plc legal entity RWAs are expected to be around £35 billion, NWM N.V. RWAs are expected to be around £8billion with the consolidated NWM franchise position, excluding RWAs related to intercompany positions, expected to be around £39 billion by 2020.
Note:
(1) The targets, expectations and trends discussed in this section represent RBSG and NWM's management's current expectations and are subject to change, including as a result of the factors described in the "Risk Factors" section on pages 253 to 263 of the RBSG 2018 Annual Report and Accounts and pages 124 to 133 of the NWM 2018 Annual Report and Accounts. These statements constitute forward-looking statements; refer to Forward-looking statements in this document.
| Year ended | Quarter ended | ||||
|---|---|---|---|---|---|
| 31 December | 31 December | 31 December | 30 September | 31 December | |
| Performance key metrics and ratios | 2018 | 2017 | 2018 | 2018 | 2017 |
| Operating profit/(loss) before tax | £3,359m | £2,239m | £572m | £961m | (£583m) |
| Profit/(loss) attributable to ordinary shareholders | £1,622m | £752m | £286m | £448m | (£579m) |
| Net interest margin | 1.98% | 2.13% | 1.95% | 1.93% | 2.04% |
| Average interest earning assets | £437bn | £422bn | £442bn | £443bn | £431bn |
| Cost:income ratio (1) | 71.7% | 79.0% | 80.5% | 66.7% | 111.5% |
| Earnings per share | |||||
| - basic | 13.5p | 6.3p | 2.4p | 3.7p | (4.9p) |
| - basic fully diluted | 13.4p | 6.3p | 2.3p | 3.7p | (4.9p) |
| Return on tangible equity | 4.8% | 2.2% | 3.5% | 5.4% | (6.7%) |
| Average tangible equity | £33bn | £34bn | £33bn | £33bn | £34bn |
| Average number of ordinary shares | |||||
| outstanding during the period (millions) | |||||
| - basic | 12,009 | 11,867 | 12,040 | 12,034 | 11,944 |
| - fully diluted (2) | 12,061 | 11,936 | 12,081 | 12,083 | 12,003 |
| 31 December | 30 September | 31 December | |
|---|---|---|---|
| Balance sheet related key metrics and ratios | 2018 | 2018 | 2017 |
| Total assets | £694.2bn | £719.9bn | £738.1bn |
| Funded assets | £560.9bn | £587.3bn | £577.2bn |
| Loans to customers - amortised cost | £305.1bn | £305.8bn | £310.1bn |
| Impairment provisions (3) | £3.3bn | £3.9bn | £3.8bn |
| Customer deposits | £360.9bn | £360.6bn | £361.3bn |
| Liquidity coverage ratio (LCR) | 158% | 158% | 152% |
| Liquidity portfolio | £198bn | £195bn | £186bn |
| Net stable funding ratio (NSFR) (4) | 141% | 139% | 132% |
| Loan:deposit ratio (5) | 85% | 85% | 86% |
| Total wholesale funding | £74bn | £78bn | £70bn |
| Short-term wholesale funding | £15bn | £14bn | £18bn |
| Common Equity Tier (CET1) ratio | 16.2% | 16.7% | 15.9% |
| Total capital ratio | 21.8% | 22.1% | 21.3% |
| Pro forma CET 1 ratio, pre 2018 dividend accrual (6) | 16.9% | 16.8% | 15.9% |
| Risk-weighted assets (RWAs) | £188.7bn | £194.5bn | £200.9bn |
| CRR leverage ratio | 5.4% | 5.4% | 5.3% |
| UK leverage ratio | 6.2% | 6.3% | 6.1% |
| Tangible net asset value (TNAV) per ordinary share | 287p | 288p | 294p |
| Tangible net asset value (TNAV) per ordinary share - fully diluted | 286p | 287p | 292p |
| Tangible equity | £34,566m | £34,672m | £35,164m |
| Number of ordinary shares in issue (millions) | 12,049 | 12,048 | 11,965 |
| Number of ordinary shares in issue (millions) - fully diluted (2,7) | 12,088 | 12,091 | 12,031 |
Notes:
(1) Operating lease depreciation included in income for the year ended 31 December 2018 - £121 million; Q4 2018 - £32 million (year ended 31 December 2017 - £142 million; Q3 2018 - £32 million; Q4 2017 - £35 million).
(2) Includes the effect of dilutive share options and convertible securities. Dilutive shares on an average basis for Q4 2018 were 41 million shares and for the year ended 31 December 2018 were 52 million shares; (year ended 31 December 2017 - 69 million shares, Q3 2018 – 49 million shares, Q4 2017 – 59 million shares), and as at 31 December 2018 were 39 million shares (30 September 2018 - 43 million shares; 31 December 2017 - 66 million shares).
(3) 31 December and 30 September 2018 prepared under IFRS 9, 31 December 2017 prepared under IAS 39.
(4) In November 2016, the European Commission published its proposal for NSFR rules within the EU as part of its CRR2 package of regulatory reforms. CRR2 NSFR is expected to become the regulatory requirement in future within the EU and the UK. RBS has changed its policy on the NSFR to align with its interpretation of the CRR2 proposals with effect from 1 January 2018. The pro forma CRR2 NSFR at 31 December 2017 under CRR2 proposals is estimated to be 139%.
(5) The loan:deposit ratio has been updated following the adoption of IFRS 9 to be based on customer loans and deposits held at amortised cost. Comparatives have been re-presented.
(6) The pro forma CET 1 ratio at 31 December 2018 excludes a charge of £422 million (3.5p per share) for the final dividend and £904 million (7.5p per share) for the special dividend (30 September 2018 - £120 million (1p per share)) that are reasonably foreseeable dividends.
(7) Includes 8 million treasury shares (30 September 2018 - 9 million shares; 31 December 2017 - 16 million shares).
Today we are reporting a pre-tax operating profit of £3.4 billion and a bottom line attributable profit of £1.6 billion for 2018. In addition, we are pleased to propose a full year ordinary dividend of 3.5 pence per share, and a special dividend of 7.5 pence per share. These are in addition to the ordinary dividend we paid at our interim results. Together, we will have returned £1.6 billion to shareholders, and around £1 billion to the UK taxpayer in dividends. We also have shareholder approval to participate in a directed buyback should the government seek to dispose of a portion of its shares.
The UK economy faces a heightened level of uncertainty related to the ongoing Brexit negotiations. We have continued to support our customers, providing £30.4 billion in gross new UK mortgage lending in 2018, and Commercial Banking made or renewed commitments of around £30 billion of term lending facilities to mainly UK businesses. Our Commercial and Business Banking businesses supported total lending of more than £100 billion in 2018.
We have also committed an additional £2 billion to our Growth Fund to support British business, taking the total fund to £3 billion. This fund is helping businesses manage their supply chains in what is a very uncertain time. These actions help maintain our position as the largest supporter of UK business.
Our financial performance is good, given the uncertain economic outlook. In 2018, we continued to take costs out of the business and reduced operating expenses by £278 million. This means that we have now reduced operating costs by more than £4 billion in five years.
Our long-term target remains to reach a cost to income ratio of below 50%, however we note that as an industry we are required to carry additional costs to deal with Brexit and the ongoing operational obligations of ring-fencing. Given the continued low rate environment and highly competitive mortgage market, coupled with the uncertainty in the economy, income remains under pressure. We continue to focus on cost reduction to ensure we are preparing our business for the future and to meet our customers and shareholders needs.
In 2019, we are committing to reducing our operating costs by c.£300 million. Our consistent delivery on cost targets in recent years gives me the confidence we will achieve this.
Our strategic plan has served us well and we will continue to focus on our five key priorities, as set out below, as we strive to become the UK and Republic of Ireland's best bank for customers.
The bank's financial strength is much improved. Our Common Equity Tier 1 ratio has increased from 8.6% at the end of 2013 to 16.2% at the end of 2018. This progress helped us to obtain a clear pass in the 2018 Bank of England stress test - a very important milestone. Alongside our financial strength we have continued to build greater resilience into our systems, helping to protect our customers who are at greater risk of fraud and scams more than ever before. We are the first and only UK bank to partner with National Trading Standards on their Friends Against Scams initiative. More than 31,000 colleagues completed the training in 2018 and we have committed to training a million customers by 2020.
While our financial performance is more assured, we know that a significant gap remains to achieving our ambition to be the best bank for customers. We are very aware that we need to deliver better service, more consistently. The Competition and Markets Authority (CMA) results, which now provide the public with a ranking of banks' performance for customers, bring this into sharp focus. With the large major legacy issues behind us, we are putting all of our focus into improving our customer experience.
We are investing in innovation, with £1 billion committed to invest in 2019 aimed at improving legacy systems and delivering better solutions for customers. We continue to develop our mobile app which for NatWest now scores +41 for customer advocacy. Our Commercial Bank, the UK's largest supporter of business, remains ahead of the rest of the market for customer advocacy and in Coutts we have a market leading private banking brand.
Customers want and need to do their banking quickly and safely. When we help them to do this, and combine it with expert advice, we see advocacy scores increase. That is how we are focusing the business, and we are confident the changes we are making will deliver a consistently higher quality of service.
We are a simpler bank, but we can't yet call ourselves simple to deal with. While we are now more efficient with a lower cost base, as we have shrunk in size, many of our processes are still too difficult for our customers to deal with, and are frustrating for our colleagues as they try to serve our customers. Whether it is booking travel, watching a film or shopping online, customers now expect a fast and reliable service. Banking is no different from any other customer focused industry, and we are responding to those changes in customer behaviour.
Our first digital lending journey for Commercial Banking customers is now live. The new platform allows existing customers to apply digitally for secured and unsecured loans up to £750,000, subject to eligibility criteria. Customers are able to complete their loan application in a matter of minutes, and usually get a decision in principle within 24 hours. We have simplified and streamlined the customer experience, giving our customers a rapid response, all the while supported by the vast industry knowledge and insight of our Relationship Managers.
We are also embracing artificial intelligence (AI), which is helping us lower our cost base and deliver a 24/7 customer experience . Take Cora for instance –our AI Chat Bot which we launched in partnership with IBM Watson - she now handles an average of 83,000 queries a week. Given the success in the personal business, we have recently rolled out Cora to Commercial Banking.
Supporting our customers' ambitions is a key part of our role in society. We have focused on growing lending in our target markets. Gross mortgage lending in UK Personal and Business Banking increased £1.5 billion in 2018, and we helped around 45,000 customers buy their first home. Our support doesn't only extend to lending, we now have 12 NatWest accelerators. These hubs make up the UK's largest fully-funded business accelerator network, capable of supporting up to 1,000 entrepreneurs.
NatWest Markets continued to support large corporate customers with a range of financing needs in 2018. Our FX team was voted number one for customer satisfaction in the 2017 Greenwich Associates FX Survey and we helped clients raise £312 billion on the debt capital markets.
The turnaround of the bank would not have been possible without the hard work and determination of our colleagues. Over the last four years we have seen a significant reduction in the number of roles across the bank, as a result of divestment and restructuring aligned to our strategy. Despite this activity, colleague engagement is at its highest level since we started measuring in 2002. The independent Banking Standards Board report on culture also showed improvements in every category. Of course, there is always more we can do, and we have set stretching targets as we strive to become a more diverse and inclusive organisation.
We have taken a dual approach to innovation by transforming our core banking services and delivering new products and services outside of traditional banking. In 2018, we continued to invest in our existing infrastructure, improving system resilience and migrating to latest in cloud technologies. Last year we experienced 19 Criticality 1 Incidents, compared to 318 four years ago.
Our customers continued to migrate to our mobile app during 2018. In UK PBB we now have 6.4 million regular mobile customers, 16% higher than 2017. Today close to three quarters of active current account customers in UK PBB are regular digital users. Sales through our digital channels in UK PBB are up 19% on last year and now represent almost half of all product sales. Four years ago this figure would have been 26%.
At the same time we are trying new things outside our core banking services. We are piloting Bó and Mettle as two standalone digital banks. Bó is our digital personal bank targeted at helping people to manage their money better. Mettle is our digital bank for business customers.
We are learning a lot from these innovations and applying our findings back into the core bank.
These innovations complement the wider eco-systems that we want to build around key customer experiences – be it buying a home, or running a business. Building or acquiring complementary services to the core banking services we already offer in these areas will allow us to deepen our relationships with customers, and ultimately grow revenue.
In 2019, we will focus forward, into a rapidly changing market. We have set annual goals for 2019 based around our five priorities in order to keep up momentum on the delivery of our strategic plan. There are two areas in particular that we need to focus on – customer experience and simplifying the bank. This year we aim to spend £1 billion on upgrading legacy infrastructure, improving systems, processes and delivering new innovations which will improve our customers' experience. We will simplify the bank further in 2019, given this we have set a operating cost reduction target of c.£300 million for 2019, and continue to strive for a sub 50% cost to income ratio.
We have made good progress on making RBS a much simpler, safer and more customer focused bank. From a position of capital strength, we will aim to improve returns for you, our shareholders.
Our brands are our main connection with customers. Each takes a clear and differentiated position with the aim of helping us strengthen our relationship with them. For this reason we track customer advocacy for our key brands using the net-promoter score (NPS) – a commonly-used metric in banking and other industries across the world.
We know that we still have much to do. Our recent programme of branch closures has had a detrimental impact on NPS. But we are determined to make a difference with the things that matter most to our customers. We are listening hard. In 2018, we called a total of over 113,000 customers; either to learn more about feedback that they had already given us, or to respond to issues that they identified. Through fixing our core processes we will get our core service right first time more consistently while at the same time innovating to deliver better solutions.
The tables below show NPS and Trust scores for our key brands.
| Q4 2017 | Q1 2018 | Q2 2018 | Q3 2018 | Q4 2018 | |
|---|---|---|---|---|---|
| NatWest | 12 | 12 | 13 | 12 | 11 |
| Royal Bank of Scotland | -6 | -14 | -21 | -22 | -17 |
| Ulster Bank Northern Ireland | -5 | -6 | -11 | -9 | -10 |
| Ulster Bank Republic of Ireland | -7 | -5 | -7 | -6 | -6 |
Source: Ipsos MORI FRS 6 month rolling data. Latest base sizes: 3,111 for NatWest (England & Wales); 421 for Royal Bank of Scotland (Scotland). Based on the question: "How likely is it that you would recommend (brand) to a relative, friend or colleague in the next 12 months for current account banking?" Base: Claimed main banked current account customers.
Source: Coyne Research 12 month rolling data. Question: "Please indicate to what extent you would be likely to recommend (brand) to your friends or family using a scale of 0 to 10 where 0 is not at all likely and 10 is extremely likely". Latest base sizes: 274 Northern Ireland; 297 Republic of Ireland.
| Q4 2017 | Q1 2018 | Q2 2018 | Q3 2018 | Q4 2018 | |
|---|---|---|---|---|---|
| NatWest | -7 | -10 | -6 | -5 | -9 |
| Royal Bank of Scotland | -15 | -22 | -23 | -29 | -36 |
Source: Charterhouse Research Business Banking Survey, YE Q4 2018. Based on interviews with businesses with an annual turnover up to £2 million. Latest base sizes: 1134 for NatWest (England & Wales), 455 for Royal Bank of Scotland (Scotland). Question: "How likely would you be to recommend (bank)". Base: Claimed main bank. Data weighted by region and turnover to be representative of businesses in Great Britain.
| Q4 2017 | Q1 2018 | Q2 2018 | Q3 2018 | Q4 2018 | |
|---|---|---|---|---|---|
| NatWest | 25 | 23 | 22 | 21 | 21 |
| Royal Bank of Scotland | 21 | 10 | 17 | 21 | 20 |
Source: Charterhouse Research Business Banking Survey, YE Q4 2018. Based on interviews with businesses with an annual turnover over £2 million. Latest base sizes: 558 for NatWest (England & Wales), 103 for Royal Bank of Scotland (Scotland). Question: "How likely would you be to recommend (bank)". Base: Claimed main bank. Data weighted by region and turnover to be representative of businesses in Great Britain.
We also use independent experts to measure our customers' trust in the bank. Each quarter we ask customers to what extent they trust or distrust their bank to do the right thing. The score is a net measure of those customers that trust their bank (a lot or somewhat) minus those that distrust their bank (a lot or somewhat).
| Q4 2017 | Q1 2018 | Q2 1208 | Q3 2018 | Q4 2018 | |
|---|---|---|---|---|---|
| NatWest | 57 | 59 | 58 | 64 | 56 |
| Royal Bank of Scotland | 27 | 15 | 27 | 25 | 27 |
Source: Populus. Latest quarter's data. Measured as a net % of those that trust RBS/NatWest to do the right thing, less those that do not. Latest base sizes: 891 for NatWest (England & Wales), 215 for Royal Bank of Scotland (Scotland).
| Year ended | Quarter ended | ||||
|---|---|---|---|---|---|
| 31 December | 31 December | 31 December | 30 September | 31 December | |
| 2018 | 2017 | 2018 | 2018 | 2017 | |
| £m | £m | £m | £m | £m | |
| Net interest income | 8,656 | 8,987 | 2,176 | 2,154 | 2,211 |
| Own credit adjustments | 92 | (69) | 33 | 20 | 9 |
| Loss on redemption of own debt | - | (7) | - | - | - |
| Strategic disposals | - | 347 | - | - | 191 |
| Other non-interest income | 4,654 | 3,875 | 849 | 1,468 | 646 |
| Non-interest income | 4,746 | 4,146 | 882 | 1,488 | 846 |
| Total income | 13,402 | 13,133 | 3,058 | 3,642 | 3,057 |
| Litigation and conduct costs | (1,282) | (1,285) | (92) | (389) | (764) |
| Strategic costs | (1,004) | (1,565) | (355) | (299) | (531) |
| Other expenses | (7,359) | (7,551) | (2,022) | (1,753) | (2,111) |
| Operating expenses | (9,645) | (10,401) | (2,469) | (2,441) | (3,406) |
| Profit/(loss) before impairment losses | 3,757 | 2,732 | 589 | 1,201 | (349) |
| Impairment losses(1) | (398) | (493) | (17) | (240) | (234) |
| Operating profit/(loss) before tax | 3,359 | 2,239 | 572 | 961 | (583) |
| Tax (charge)/credit | (1,275) | (824) | (136) | (398) | 168 |
| Profit/(loss) for the period | 2,084 | 1,415 | 436 | 563 | (415) |
| Attributable to: | |||||
| Ordinary shareholders | 1,622 | 752 | 286 | 448 | (579) |
| Other owners | 470 | 628 | 164 | 93 | 150 |
| Non-controlling interests | (8) | 35 | (14) | 22 | 14 |
| Notable items within total income | |||||
| IFRS volatility in Central items & other (2) | (59) | 2 | (25) | 77 | (173) |
| Insurance indemnity | 357 | - | 85 | 272 | - |
| of which: | |||||
| NatWest Markets | 165 | - | - | 165 | - |
| Central items & other | 192 | - | 85 | 107 | - |
| UK PBB debt sale gain | 61 | 185 | 35 | - | 9 |
| FX losses in Central items & other | (46) | (183) | (39) | (11) | (8) |
| Commercial Banking fair value and disposal gain/(loss) | 169 | 6 | (10) | (13) | (46) |
| NatWest Markets legacy business disposal (losses)/gains | (86) | (43) | 14 | (163) | |
| (712) | |||||
| Notable items within expenses | |||||
| Litigation and conduct costs | (1,282) | (1,285) | (92) | (389) | (764) |
| of which: US RMBS | (823) | (664) | - | (21) | (442) |
| of which: DoJ | (1,040) | - | - | - | - |
| Nomura | 241 | - | - | - | - |
| of which: PPI | (200) | (175) | - | (200) | (175) |
| of which: Ulster Bank RoI | (71) | (169) | (17) | (37) | (135) |
| VAT recovery in Central items & other | - | 86 | - | - | 6 |
Notes:
(1) 31 December 2018 and 30 September 2018 prepared under IFRS 9, 31 December 2017 prepared under IAS 39. Refer to Note 2 in this document and Note 34 in the 2018 Annual Report and Accounts for further information on the impact of IFRS 9 on basis of preparation.
(2) IFRS volatility relates to loans which are economically hedged but for which hedge accounting is not permitted under IFRS.
● A net impairment loss of £398 million, 13 basis points of gross customer loans, decreased by £95 million, or 19.3%, compared with 2017 primarily reflecting lower single name charges in Commercial Banking, partially offset by fewer provision releases in UK PBB and NatWest Markets. In addition, we took an additional £101 million charge in Q3 2018 reflecting the more uncertain economic outlook and a net £60 million impairment charge in Ulster Bank RoI principally in relation to ongoing sales from our loan book to further reduce the level of non performing loans. Underlying credit conditions remained benign during 2018.
| Year ended Quarter ended and as at |
|||||
|---|---|---|---|---|---|
| 31 December | 31 December | 31 December | 30 September | 31 December | |
| 2018 | 2017 | 2018 | 2018 | 2017 | |
| £m | £m | £m | £m | £m | |
| Total income | 6,282 | 6,477 | 1,557 | 1,564 | 1,548 |
| Operating expenses | (3,482) | (3,829) | (941) | (959) | (1,266) |
| Impairment losses | (342) | (235) | (125) | (70) | (60) |
| Operating profit | 2,458 | 2,413 | 491 | 535 | 222 |
| Return on equity | 24.3% | 23.7% | 18.6% | 20.9% | 7.8% |
| Net interest margin | 2.78% | 2.86% | 2.73% | 2.76% | 2.76% |
| £bn | £bn | £bn | |||
| Net loans to customers (amortised cost) | 162.3 | 163.2 | 161.7 | ||
| Customer deposits | 184.1 | 183.4 | 180.4 | ||
| RWAs | 45.1 | 45.4 | 43.0 |
| Year ended Quarter ended and as at |
|||||
|---|---|---|---|---|---|
| 31 December | 31 December | 31 December | 30 September | 31 December | |
| 2018 | 2017 | 2018 | 2018 | 2017 | |
| €m | €m | €m | €m | €m | |
| Total income | 689 | 689 | 165 | 169 | 182 |
| Operating expenses | (657) | (772) | (184) | (188) | (289) |
| Impairment (losses)/releases | (17) | (68) | 21 | (68) | (92) |
| Operating profit/(loss) | 15 | (151) | 2 | (87) | (199) |
| Return on equity | 0.5% | (5.0%) | 0.4% | (12.7%) | (26.5%) |
| Net interest margin | 1.79% | 1.67% | 1.73% | 1.72% | 1.76% |
| €bn | €bn | €bn | |||
| Net loans to customers (amortised cost) | 21.0 | 21.6 | 22.0 | ||
| Customer deposits | 20.1 | 20.1 | 19.1 | ||
| RWAs | 16.4 | 18.6 | 20.2 |
2018 compared with 2017
| Year ended | Quarter ended | |||||
|---|---|---|---|---|---|---|
| 31 December | 31 December | 31 December | 30 September | 31 December | ||
| 2018 | 2017 | 2018 | 2018 | 2017 | ||
| £m | £m | £m | £m | £m | ||
| Total income | 3,374 | 3,484 | 805 | 789 | 806 | |
| Operating expenses | (1,872) | (2,014) | (580) | (443) | (575) | |
| Impairment losses | (144) | (362) | (22) | (103) | (117) | |
| Operating profit | 1,358 | 1,108 | 203 | 243 | 114 | |
| Return on equity | 10.2% | 6.6% | 5.5% | 6.6% | 1.3% | |
| Net interest margin | 1.67% | 1.74% | 1.66% | 1.71% | 1.75% | |
| £bn | £bn | £bn | ||||
| Net loans to customer (amortised cost) | 88.0 | 88.3 | 96.9 | |||
| Customer deposits | 95.6 | 96.4 | 98.0 | |||
| RWAs | 67.6 | 69.0 | 71.8 |
Comparisons with prior periods are impacted by preparations for ring-fencing, including the transfer of shipping and other activities from NatWest Markets, the transfer of whole business securitisations and Relevant Financial Institutions and other activities to NatWest Markets and the transfer of the funds and trustee depositary business to RBS International. The net impact of transfers on 2017 would have been to reduce income by £246 million, operating expenses by £10 million, impairments by £72 million, net loans to customers by £5.3 billion, customer deposits by £1.2 billion and RWAs by £2.2 billion. There is an additional £1.4 billion reduction in 2017 net loans to customers as a result of 2018 asset reclassifications under IFRS9. The net impact of transfers on Q4 2017 would have been to reduce income by £39 million and operating expenses by £4 million. The net impact of transfers on Q3 2018 would have been to reduce income by £2 million, operating expenses by £1 million, net loans to customers by £0.6 billion, customer deposits by £0.7 billion and RWAs by £0.1 billion. The variances in the commentary below have been adjusted for the impact of these items excluding net interest margin.
| Year ended | Quarter ended | ||||
|---|---|---|---|---|---|
| 31 December | 31 December | 31 December | 30 September | 31 December | |
| 2018 | 2017 | 2018 | 2018 | 2017 | |
| £m | £m | £m | £m | £m | |
| Total income | 775 | 678 | 198 | 195 | 191 |
| Operating expenses | (478) | (529) | (143) | (110) | (194) |
| Impairment releases/(losses) | 6 | (6) | 8 | (1) | (2) |
| Operating profit/(loss) | 303 | 143 | 63 | 84 | (5) |
| Return on equity | 15.4% | 6.4% | 12.3% | 17.3% | (2.9%) |
| Net interest margin | 2.52% | 2.47% | 2.49% | 2.54% | 2.44% |
| £bn | £bn | £bn | |||
| Net loans to customers (amortised cost) | 14.3 | 14.2 | 13.5 | ||
| Customer deposits | 28.4 | 27.2 | 26.9 | ||
| RWAs | 9.4 | 9.5 | 9.1 | ||
| AUM | 19.8 | 21.8 | 21.5 |
Comparisons with prior periods are impacted by the transfer of the Collective Investment Fund business from UK PBB and by the transfers of Coutts Crown Dependency and the International Client Group Jersey to RBS International. The net impact of the transfers on 2017 would have been to increase income by £24 million and operating expenses by £15 million and reduce net loans to customers by £0.1 billion, customer deposits by £0.5 billion and assets under management by £0.7 billion. The variances in the commentary below have been adjusted for the impact of these transfers excluding net interest margin.
| Year ended | Quarter ended | |||||
|---|---|---|---|---|---|---|
| 31 December 2018 £m |
31 December 2017 £m |
31 December 2018 £m |
30 September 2018 £m |
31 December 2017 £m |
||
| Total income | 594 | 389 | 155 | 155 | 97 | |
| Operating expenses | (260) | (219) | (86) | (60) | (66) | |
| Impairment releases/(losses) | 2 | (3) | 2 | (3) | -- | |
| Operating profit | 336 | 167 | 71 | 92 | 31 | |
| Return on equity | 24.4% | 11.2% | 20.0% | 26.9% | 9.2% | |
| Net interest margin | 1.71% | 1.36% | 1.81% | 1.73% | 1.34% | |
| £bn | £bn | £bn | ||||
| Net loans to customers (amortised costs) | 13.3 | 13.0 | 8.7 | |||
| Customer deposits | 27.5 | 26.9 | 28.9 | |||
| RWAs | 6.9 | 6.9 | 5.1 |
Comparisons with prior periods are impacted by the transfer of the funds and trustee depositary business from Commercial Banking and by the transfers of Coutts Crown Dependency and the International Client Group from Private Banking. The net impact of the transfers on 2017 would have been to increase income by £151 million, operating expenses by £14 million, net loans to customers by £4.5 billion, customer deposits by £1.7 billion and RWAs by £1.9 billion. The net impact of transfers on Q3 2018 would have been to increase deposits by £0.7 billion. The net impact of the transfers on Q4 2017 would have been to increase income by £37 million and operating expenses by £4 million. The variances in the commentary below have been adjusted for the impact of these transfers excluding net interest margin.
| Year ended | Quarter ended and as at | |||||
|---|---|---|---|---|---|---|
| 31 December 2018 £m |
31 December 2017 £m |
31 December 2018 £m |
30 September 2018 £m |
31 December 2017 £m |
||
| Total income | 1,442 | 1,050 | 152 | 569 | 200 | |
| Operating expenses | (1,604) | (2,201) | (455) | (478) | (583) | |
| Impairment releases/(losses) | 92 | 174 | 100 | (4) | 26 | |
| Operating (loss)/profit | (70) | (977) | (203) | 87 | (357) | |
| Return on equity | (2.0%) | (9.0%) | (9.2%) | 1.8% | (14.0%) | |
| £bn | £bn | £bn | ||||
| Funded assets | 111.4 | 120.9 | 118.7 | |||
| RWAs | 44.9 | 46.5 | 52.9 |
Note:
(1) The NatWest Markets operating segment should not be assumed to be the same as the NatWest Markets Plc legal entity or group. Refer to page 2 for further details on the outlook for NatWest Markets Plc.
Comparisons with prior periods are impacted by the transfer of shipping and other activities to Commercial Banking and the transfer of whole business securitisations and Relevant Financial Institutions from Commercial Banking in preparation for ring-fencing. The net impact of the transfers on 2017 would have been to increase income by £104 million, reduce operating expenses by £2 million, reduce the net release of impairments by £72 million and increase funded assets by £1.3 billion and RWAs by £0.4 billion. The variances in the full year commentary below have been adjusted for the impact of these transfers.
● Central items not allocated represented a charge of £1,038 million in 2018, largely comprises the £1,040 million charge relating to the civil settlement with the US Department of Justice and £333m of strategic costs, partially offset by a £241 million provision release relating to an RMBS litigation indemnity and indemnity insurance recoveries of £192 million.
| End-point CRR basis | |||||
|---|---|---|---|---|---|
| 31 December | 30 September | 31 December | |||
| 2018 | 2018 | 2017 | |||
| Risk asset ratios | % | % | % | ||
| CET1 | 16.2 | 16.7 | 15.9 | ||
| Tier 1 | 18.4 | 18.8 | 17.9 | ||
| Total | 21.8 | 22.1 | 21.3 | ||
| Capital | £m | £m | £m | ||
| Tangible equity | 34,566 | 34,672 | 35,164 | ||
| Expected loss less impairment provisions | (654) | (606) | (1,286) | ||
| Prudential valuation adjustment | (494) | (574) | (496) | ||
| Deferred tax assets | (740) | (731) | (849) | ||
| Own credit adjustments | (405) | (264) | (90) | ||
| Pension fund assets | (394) | (283) | (287) | ||
| Cash flow hedging reserve | 191 | 370 | (227) | ||
| Foreseeable ordinary and special dividends | (1,326) | (120) | - | ||
| Other adjustments for regulatory purposes | (105) | (9) | 28 | ||
| Total deductions | (3,927) | (2,217) | (3,207) | ||
| CET1 capital | 30,639 | 32,455 | 31,957 | ||
| AT1 capital | 4,051 | 4,051 | 4,041 | ||
| Tier 1 capital | 34,690 | 36,506 | 35,998 | ||
| Tier 2 capital | 6,483 | 6,455 | 6,765 | ||
| Total regulatory capital | 41,173 | 42,961 | 42,763 | ||
| Risk-weighted assets | |||||
| Credit risk | 137,900 | 142,500 | 144,700 | ||
| Counterparty credit risk | 13,600 | 14,100 | 15,400 | ||
| Market risk | 14,800 | 15,500 | 17,000 | ||
| Operational risk | 22,400 | 22,400 | 23,800 | ||
| Total RWAs | 188,700 | 194,500 | 200,900 | ||
| Leverage (1) | |||||
| Cash and balances at central banks | 88,900 | 106,500 | 98,300 | ||
| Trading assets | 75,100 | 82,500 | 86,000 | ||
| Derivatives | 133,300 | 132,600 | 160,800 | ||
| Net loans to customers | 318,000 | 317,700 | 321,600 | ||
| Other assets | 78,900 | 80,600 | 71,400 | ||
| Total assets | 694,200 | 719,900 | 738,100 | ||
| Derivatives | |||||
| - netting and variation margin | (141,300) | (136,900) | (161,700) | ||
| - potential future exposures | 42,100 | 42,700 | 49,400 | ||
| Securities financing transactions gross up | 2,100 | 1,700 | 2,300 | ||
| Undrawn commitments | 50,300 | 49,500 | 53,100 | ||
| Regulatory deductions and other adjustments | (2,900) | (700) | (2,100) | ||
| CRR Leverage exposure | 644,500 | 676,200 | 679,100 | ||
| CRR leverage ratio% | 5.4 | 5.4 | 5.3 | ||
| UK leverage exposure (2) | 559,500 | 580,300 | 587,100 | ||
| UK leverage ratio% (2) | 6.2 | 6.3 | 6.1 |
Notes:
(1) Based on end-point CRR Tier 1 capital and leverage exposure under the CRR Delegated Act.
(2) Based on end-point CRR Tier 1 capital and UK leverage exposures reflecting the post EU referendum measures announced by the Bank of England in the third quarter of 2016.
| Ye | de d 3 1 D ar en |
be r 2 01 8 ec em |
||||||
|---|---|---|---|---|---|---|---|---|
| PB | B | CP B |
Ce ntr al |
|||||
| Uls ter |
Co ial mm erc |
Pr iva te |
RB S |
Na tW t es |
ite & ms |
To tal |
||
| UK PB B |
Ba nk Ro I |
Ba nk ing |
Ba nk ing |
Int ati al ern on |
Ma rke ts |
oth er (1) |
RB S |
|
| £m | £m | £m | £m | £m | £m | £m | £m | |
| Inc tat t om e s em en |
||||||||
| Ne t in in ter est co me |
5, 09 8 |
44 4 |
2, 04 0 |
51 8 |
46 6 |
11 2 |
( 22 ) |
8, 65 6 |
| Ot he -in ter est in r n on co me |
1, 184 |
16 6 |
1, 33 4 |
25 7 |
12 8 |
1, 23 8 |
34 7 |
4, 65 4 |
| Ow red it a dju stm ts n c en |
- | - | - | - | - | 92 | - | 92 |
| To tal inc om e |
6, 28 2 |
61 0 |
3, 37 4 |
77 5 |
59 4 |
1, 44 2 |
32 5 |
13 40 2 , |
| aff Dir ect st sts ex pe nse s - co |
( 0) 89 |
( 2) 20 |
( 7) 54 |
( 1) 16 |
( 2) 10 |
( 7) 55 |
( 0) 1, 19 |
( 9) 3, 64 |
| the ost - o r c s |
( 30 0) |
( 10 3) |
( 22 1) |
( 66 ) |
( 67 ) |
( 24 1) |
( 2, 71 2) |
( 3, 71 0) |
| Ind ire ct ex pe nse s |
( 1, 80 1) |
( 18 5) |
( 95 7) |
( 22 9) |
( 91 ) |
( 41 5) |
3, 67 8 |
- |
| Str ate ic c ost - d ire ct g s |
( 54 ) |
( 2) |
( 20 ) |
- | ( 3) |
( 19 5) |
( 73 0) |
( 1, 00 4) |
| - in dir ect |
( 1) 22 |
( ) 20 |
( ) 86 |
( ) 21 |
( 6) |
( ) 43 |
39 7 |
- |
| Liti tio nd nd uct sts ga n a co co |
( 21 6) |
( 71 ) |
( 41 ) |
( 1) |
9 | ( 15 3) |
( 80 9) |
( 1, 28 2) |
| Op tin era g e xp en se s |
( 3, 48 2) |
( 58 3) |
( 1, 87 2) |
( 47 8) |
( 26 0) |
( 1, 60 4) |
( 1, 36 6) |
( 9, 64 5) |
| Op tin rof it/( los s) be for e i air ( los s) /re lea nt era g p mp me se se s |
2, 80 0 |
27 | 1, 50 2 |
29 7 |
33 4 |
( 16 2) |
( 1, 04 1) |
3, 75 7 |
| Im irm t ( los s) /re lea pa en se se s |
( 34 2) |
( 15 ) |
( 144 ) |
6 | 2 | 92 | 3 | ( 39 8) |
| Op tin rof it/( los s) era g p |
2, 45 8 |
12 | 1, 35 8 |
30 3 |
33 6 |
( 70 ) |
( 1, 03 8) |
3, 35 9 |
| Ad dit ion al inf ati orm on |
||||||||
| Re tur ity n o n e qu (2) |
.3% 24 |
% 0.5 |
.2% 10 |
.4% 15 |
.4% 24 |
( % ) 2.0 |
nm | % 4.8 |
| Co inc ati st: o (3 ) om e r |
.4% 55 |
95 .6% |
53 .8% |
61 .7% |
43 .8% |
11 1.2 % |
nm | 71 .7% |
| Lo im irm t ra te an pa en |
0.2 1% |
0.0 8% |
0.1 6% |
nm | nm | nm | nm | 0.1 3% |
| Ne t in ter est in m arg |
2.7 8% |
1.7 9% |
1.6 7% |
2.5 2% |
1.7 1% |
0.4 0% |
nm | 1.9 8% |
| Th ird rty tom et rat pa cus er ass e ( 4) |
3.4 0% |
2.4 1% |
2.8 7% |
2.8 9% |
2.1 5% |
nm | nm | nm |
| Th ird fun din rty tom ate pa cus er g r |
( 0.3 0% ) |
( 0.2 0% ) |
( 0.3 6% ) |
( 0.2 5% ) |
( 0.0 9% ) |
nm | nm | nm |
| Av in rni ( £b n) ter est ets era ge ea ng ass |
18 3.6 |
24 .8 |
12 2.4 |
20 .5 |
27 .3 |
27 .9 |
30 .4 |
43 6.9 |
| To tal ets ( £b n) ass |
194 .2 |
25 .2 |
14 3.2 |
22 .0 |
28 .4 |
24 4.5 |
36 .7 |
69 4.2 |
| Fu nd ed set s ( £b n) as |
194 .2 |
25 .2 |
14 3.2 |
22 .0 |
28 .4 |
11 1.4 |
36 .5 |
56 0.9 |
| ( £b n) Ne t lo s t ust rtis ed st an o c om ers - a mo co |
16 2.3 |
18 .8 |
88 .0 |
14 .3 |
13 .3 |
8.4 | - | 30 5.1 |
| Im irm isio ( £b n) t p (5) pa en rov ns |
( 1.4 ) |
( 0.8 ) |
( 1.0 ) |
nm | nm | ( 0.1 ) |
- | ( 3.3 ) |
| Cu sto r d its ( £b n) me ep os |
184 .1 |
18 .0 |
95 .6 |
28 .4 |
27 .5 |
2.6 | 4.7 | 36 0.9 |
| Ris k-w eig hte d a ts ( RW As ) ( £b n) sse |
45 .1 |
14 .7 |
67 .6 |
9.4 | 6.9 | 44 .9 |
0.1 | 18 8.7 |
| RW A e iva len t ( RW Ae s) ( £b n) qu |
46 .6 |
14 .7 |
68 .6 |
9.5 | 6.9 | 50 .0 |
0.2 | 19 6.5 |
| ( s) Em loy mb FT Es - t ho nd (6) p ee nu ers usa |
24 .1 |
3.1 | 7.9 | 1.9 | 1.7 | 4.8 | 23 .6 |
67 .1 |
For the notes to this table, refer to page 21. nm = not meaningful
| Ye de d 3 1 D be r 2 01 7 ar en ec em |
||||||||
|---|---|---|---|---|---|---|---|---|
| PB B |
CP B |
Ce ntr al |
||||||
| UK PB B |
Uls ter Ba nk Ro I |
Co ial mm erc Ba nk ing |
Pri te va Ba nk ing |
RB S Int atio l ern na |
Na tW est Ma rke ts |
ite & ms oth er (1) |
To tal RB S |
|
| £m | £m | £m | £m | £m | £m | £m | £m | |
| Inc tat t om e s em en |
||||||||
| Ne t in ter est in co me Ot he -in in ter est |
5, 130 34 7 |
42 1 186 |
2, 28 6 198 |
46 4 21 4 |
32 5 64 |
20 3 88 7 |
158 21 |
8, 98 7 87 |
| r n on co me Ow red it a stm ts |
1, | 1, | 66 | ( ) |
3, 5 69 |
|||
| dju n c en Lo de tio f o de bt |
- | ( 3) |
- | - | - | ( ) |
- | ( ) |
| ss on re mp n o wn Str ate ic d als |
- | - | - | - | - | - 26 |
( 7) 32 1 |
( 7) 34 7 |
| isp g os To tal inc |
- 47 7 |
- 60 4 |
- 48 4 |
- 67 8 |
- 38 9 |
05 0 |
45 1 |
13 133 |
| om e |
6, | 3, | 1, | , | ||||
| Dir aff ect st sts ex pe nse s - co |
( 3) 77 |
( 19 1) |
( 46 7) |
( 145 ) |
( 61 ) |
( 67 7) |
( 1, 60 9) |
( 3, 92 3) |
| the ost - o r c s |
( 25 9) |
( 66 ) |
( 23 2) |
( 32 ) |
( 25 ) |
( 28 7) |
( 2, 72 7) |
( 3, 62 8) |
| Ind ire ct ex pe nse s |
( 2, 126 ) |
( 194 ) |
( 1, 115 ) |
( 26 8) |
( 116 ) |
( 56 4) |
4, 38 3 |
- |
| Str ate ic c ost - d ire ct g s - in dir |
( 79 ) 38 |
( 27 ) 29 |
( 48 ) 119 |
( 20 ) 25 |
( 5) |
( 31 9) 117 |
( 1, 06 7) 67 6 |
( 1, 56 5) |
| ect Liti tio nd nd uct sts |
( 2) 21 |
( ) 169 |
( ) 33 |
( ) 39 |
( 4) |
( ) 23 |
58 | - 28 |
| ga n a co co |
( 0) |
( ) |
( ) |
( ) |
( 8) |
( 7) |
( 9) |
( 1, 5) |
| Op tin era g e xp en se s |
( 3, 82 9) |
( 67 6) |
( 2, 01 4) |
( 52 9) |
( 21 9) |
( 2, 20 1) |
( 93 3) |
( 10 40 1) , |
| Op tin rof it/( los s) be for e i air nt ( los s) /re lea era g p mp me se se s |
2, 64 8 |
( 72 ) |
1, 47 0 |
149 | 170 | ( 1, 15 1) |
( 48 2) |
2, 73 2 |
| Im irm t ( los s) /re lea pa en se se s |
( 23 5) |
( 60 ) |
( 36 2) |
( 6) |
( 3) |
174 | ( 1) |
( 49 3) |
| Op tin rof it/( los s) era g p |
2, 41 3 |
( 132 ) |
1, 108 |
143 | 167 | ( 97 7) |
( 48 3) |
2, 23 9 |
| info Ad dit ion al ati rm on |
||||||||
| Re ity tur (2) n o n e qu |
23 .7% |
( 5.0 % ) |
6.6 % |
6.4 % |
11 .2% |
( 9.0 % ) |
nm | 2.2 % |
| Co inc ati st: om e r o (3 ) |
59 .1% |
11 1.9 % |
56 .0% |
78 .0% |
56 .3% |
nm | nm | 79 .0% |
| Lo im irm t ra te an pa en |
0.1 4% |
0.2 9% |
0.3 7% |
nm | nm | nm | nm | 0.1 6% |
| Ne t in ter est in m arg |
2.8 6% |
1.6 7% |
1.7 4% |
2.4 7% |
1.3 6% |
0.6 5% |
nm | 2.1 3% |
| Th ird rty tom et rat e ( 4) pa cus er ass |
3.4 7% |
2.3 8% |
2.7 3% |
2.7 1% |
2.7 1% |
nm | nm | nm |
| Th ird fun din rty tom ate pa cus er g r |
( 0.1 6% ) |
( 0.3 1% ) |
( 0.1 5% ) |
( 0.0 9% ) |
( 0.0 2% ) |
nm | nm | nm |
| Av in ter est rni ets ( £b n) era ge ea ng ass |
179 .5 |
25 .2 |
13 1.2 |
18 .8 |
23 .9 |
31 .2 |
12 .5 |
42 2.3 |
| To tal ets ( £b n) ass |
190 .6 |
24 .6 |
149 .5 |
20 .3 |
25 .9 |
27 7.9 |
49 .3 |
73 8.1 |
| s ( £b n) Fu nd ed set as |
190 .6 |
24 .5 |
149 .5 |
20 .3 |
25 .9 |
118 .7 |
47 .7 |
57 7.2 |
| ( £b n) Ne t lo s t ust rtis ed st an o c om ers - a mo co |
16 1.7 |
19 .5 |
96 .9 |
13 .5 |
8.7 | 9.7 | 0.1 | 31 0.1 |
| Im irm isio ( £b n) t p pa en rov ns (5) |
( 1.3 ) |
( 1.1 ) |
( 1.2 ) |
- | - | ( 0.2 ) |
- | ( 3.8 ) |
| Cu sto r d its ( £b n) me ep os |
180 .4 |
16 .9 |
98 .0 |
26 .9 |
28 .9 |
3.3 | 6.9 | 36 1.3 |
| Ris k-w eig hte d a ts ( RW As ) ( £b n) sse |
43 .0 |
18 .0 |
71 .8 |
9.1 | 5.1 | 52 .9 |
1.0 | 20 0.9 |
| t ( s) ( £b n) RW A e iva len RW Ae qu |
46 .7 |
18 .9 |
76 .8 |
9.1 | 5.2 | 56 .4 |
1.1 | 21 4.2 |
| Em loy mb ( FT Es ho nd s) - t (6) p ee nu ers usa |
19 .8 |
2.7 | 4.6 | 1.5 | 1.6 | 5.7 | 35 .3 |
71 .2 |
For the notes to this table, refer to page 21. nm = not meaningful
| Qu art de d 3 1 D be r 2 01 8 er en ec em |
||||||||
|---|---|---|---|---|---|---|---|---|
| PB B |
CP B |
Ce al ntr |
||||||
| Uls ter |
Co ial mm erc |
Pr iva te |
S RB |
Na tW t es |
& ite ms |
To tal |
||
| UK PB B |
Ba nk Ro I |
Ba nk ing |
Ba nk ing |
Int ati al ern on |
Ma rke ts |
oth (1) er |
S RB |
|
| £m | £m | £m | £m | £m | £m | £m | £m | |
| Inc tat t om e s em en |
||||||||
| Ne t in in ter est co me |
1, 26 7 |
11 0 |
51 8 |
13 3 |
12 3 |
30 | ( 5) |
2, 17 6 |
| Ot he -in ter est in r n on co me |
29 0 |
37 | 28 7 |
65 | 32 | 89 | 49 | 84 9 |
| Ow red it a dju stm ts n c en |
- | - | - | - | - | 33 | - | 33 |
| To tal inc om e |
1, 55 7 |
14 7 |
80 5 |
19 8 |
15 5 |
15 2 |
44 | 3, 05 8 |
| Dir ect st aff sts ex pe nse s - co |
( 20 8) |
( 53 ) |
( 14 3) |
( 39 ) |
( 25 ) |
( 12 8) |
( 26 3) |
( 85 9) |
| the ost - o r c s |
( 93 ) |
( 27 ) |
( 64 ) |
( 22 ) |
( 22 ) |
( 65 ) |
( 87 0) |
( 1, 16 3) |
| Ind ire ct ex pe nse s |
( 52 2) |
( 52 ) |
( 29 5) |
( 72 ) |
( 35 ) |
( 12 3) |
1, 09 9 |
- |
| Str ate ic c ost di t g s - rec |
( 28 ) |
( 3) |
( 4) |
- | ( 1) |
( 89 ) |
( 23 0) |
( 35 5) |
| - in dir ect |
( 84 ) |
( 12 ) |
( 36 ) |
( 10 ) |
( 2) |
( 22 ) |
16 6 |
- |
| Liti tio nd nd uct sts ga n a co co |
( 6) |
( ) 17 |
( ) 38 |
- | ( 1) |
( ) 28 |
( 2) |
( ) 92 |
| Op tin era g e xp en se s |
( 94 1) |
( 164 ) |
( 58 0) |
( 14 3) |
( 86 ) |
( 45 5) |
( 10 0) |
( 2, 46 9) |
| Op tin rof it/( los s) be for e i air ( los s) /re lea nt era g p mp me se se s |
61 6 |
( 17 ) |
22 5 |
55 | 69 | ( 30 3) |
( 56 ) |
58 9 |
| Im irm t ( los s) /re lea pa en se se s |
( 12 5) |
19 | ( 22 ) |
8 | 2 | 10 0 |
1 | ( 17 ) |
| Op rof it/( s) tin los era g p |
49 1 |
2 | 20 3 |
63 | 71 | ( 3) 20 |
( ) 55 |
57 2 |
| Ad dit ion al inf ati orm on |
||||||||
| Re tur ity n o n e qu (2) |
18 .6% |
0.4 % |
5.5 % |
12 .3% |
20 .0% |
( 9.2 % ) |
nm | 3.5 % |
| Co st: inc ati o (3 ) om e r |
.4% 60 |
% 11 1.6 |
.9% 70 |
.2% 72 |
.5% 55 |
nm | nm | .5% 80 |
| Lo im irm t ra te an pa en |
0.3 1% |
( 0.3 9% ) |
0.1 0% |
nm | nm | nm | nm | 0.0 2% |
| Ne t in ter est in m arg |
2.7 3% |
1.7 3% |
1.6 6% |
2.4 9% |
1.8 1% |
0.3 9% |
nm | 1.9 5% |
| Th ird rty tom et rat pa cus er ass e ( 4) |
3.3 9% |
2.4 3% |
3.0 6% |
2.9 4% |
1.7 3% |
nm | nm | nm |
| Th ird rty tom fun din ate pa cus er g r |
( 0.3 5% ) |
( 0.1 8% ) |
( 0.5 0% ) |
( 0.3 8% ) |
( 0.0 8% ) |
nm | nm | nm |
| Av in rni ( £b n) ter est ets era ge ea ng ass |
184 .2 |
25 .2 |
124 .2 |
21 .2 |
26 .9 |
30 .4 |
30 .0 |
44 2.1 |
| To tal ( £b n) ets ass |
194 .2 |
25 .2 |
14 3.2 |
22 .0 |
28 .4 |
24 4.5 |
36 .7 |
69 4.2 |
| Fu nd ed set s ( £b n) as |
194 .2 |
25 .2 |
14 3.2 |
22 .0 |
28 .4 |
11 1.4 |
36 .5 |
56 0.9 |
| Ne t lo s t ust rtis ed st ( £b n) an o c om ers - a mo co |
16 2.3 |
18 .8 |
88 .0 |
14 .3 |
13 .3 |
8.4 | - | 30 5.1 |
| ( £b n) Im irm t p isio (5) pa en rov ns |
( ) 1.4 |
( ) 0.8 |
( ) 1.0 |
- | nm | ( ) 0.1 |
- | ( ) 3.3 |
| Cu r d its ( £b n) sto me ep os |
184 .1 |
18 .0 |
95 .6 |
28 .4 |
27 .5 |
2.6 | 4.7 | 36 0.9 |
| Ris k-w eig hte d a ts ( RW As ) ( £b n) sse |
45 .1 |
14 .7 |
67 .6 |
9.4 | 6.9 | 44 .9 |
0.1 | 18 8.7 |
| RW A e iva len t ( RW Ae s) ( £b n) qu |
46 .6 |
14 .7 |
68 .6 |
9.5 | 6.9 | 50 .0 |
0.2 | 19 6.5 |
| ( s) Em loy mb FT Es - t ho nd p ee nu ers usa (6) |
24 .1 |
3.1 | 7.9 | 1.9 | 1.7 | 4.8 | 23 .6 |
67 .1 |
For the notes to this table refer to page 21. nm = not meaningful.
| Qu art |
0 S de d 3 er en |
tem be r 2 01 8 ep |
||||||
|---|---|---|---|---|---|---|---|---|
| PB | B | CP B |
Ce ntr al |
|||||
| Uls ter |
Co ial mm erc |
Pri te va |
RB S |
Na tW est |
ite & ms |
To tal |
||
| UK PB B |
Ba nk Ro I |
Ba nk ing |
Ba nk ing |
Int atio l ern na |
Ma rke ts |
oth (1) er |
RB S |
|
| £m | £m | £m | £m | £m | £m | £m | £m | |
| Inc tat t om e s em en |
||||||||
| Ne t in in ter est co me |
1, 28 9 |
110 | 52 5 |
133 | 124 | 15 | ( 42 ) |
2, 154 |
| Ot he -in ter est in r n on co me |
27 5 |
41 | 26 4 |
62 | 31 | 53 4 |
26 1 |
1, 46 8 |
| Ow red it a dju stm ts n c en |
- | - | - | - | - | 20 | - | 20 |
| To tal inc om e |
1, 56 4 |
15 1 |
78 9 |
195 | 155 | 56 9 |
21 9 |
3, 64 2 |
| aff Dir ect st sts ex pe nse s - co |
( 1) 22 |
( ) 51 |
( 1) 13 |
( ) 39 |
( ) 26 |
( ) 120 |
( 9) 29 |
( 7) 88 |
| the ost - o r c s |
( 76 ) |
( 31 ) |
( ) 57 |
( 16 ) |
( 12 ) |
( 61 ) |
( 61 3) |
( 86 6) |
| Ind ire ct ex pe nse s |
( 41 5) |
( 45 ) |
( 22 1) |
( 52 ) |
( 19 ) |
( 91 ) |
84 3 |
- |
| Str ate ic c ost - d ire ct g s |
- | ( 1) |
( 8) |
1 | ( 2) |
( 78 ) |
( 21 1) |
( 29 9) |
| - in dir ect |
( 41 ) |
( 2) |
( 17 ) |
( 4) |
( 1) |
( 15 ) |
80 | - |
| Liti tio nd nd uct sts ga n a co co |
( 6) 20 |
( ) 37 |
( 9) |
- | - | ( ) 113 |
( ) 24 |
( 9) 38 |
| Op tin era g e xp en se s |
( 95 9) |
( 167 ) |
( 44 3) |
( 110 ) |
( 60 ) |
( 47 8) |
( 22 4) |
( 2, 44 1) |
| Op tin rof it/( los s) be for e i air ( los s) /re lea nt era g p mp me se se s |
60 5 |
( 16 ) |
34 6 |
85 | 95 | 91 | ( 5) |
1, 20 1 |
| Im irm t ( los s) /re lea pa en se se s |
( 70 ) |
( 60 ) |
( 103 ) |
( 1) |
( 3) |
( 4) |
1 | ( 24 0) |
| Op tin rof it/( los s) era g p |
53 5 |
( 76 ) |
24 3 |
84 | 92 | 87 | ( 4) |
96 1 |
| Ad dit ion al inf ati orm on |
||||||||
| Re tur ity n o n e qu (2) |
.9% 20 |
( .7% ) 12 |
% 6.6 |
.3% 17 |
.9% 26 |
% 1.8 |
nm | % 5.4 |
| Co inc ati st: o (3 ) om e r |
61 .3% |
110 .6% |
54 .3% |
56 .4% |
38 .7% |
84 .0% |
nm | 66 .7% |
| Lo im irm t ra te an pa en |
0.1 7% |
1.1 8% |
0.4 6% |
nm | nm | nm | nm | 0.3 1% |
| Ne t in ter est in m arg |
2.7 6% |
1.7 2% |
1.7 1% |
2.5 4% |
1.7 3% |
0.2 2% |
nm | 1.9 3% |
| Th ird rty tom et rat pa cus er ass e ( 4) |
3.3 9% |
2.4 2% |
2.8 9% |
2.9 1% |
2.2 9% |
nm | nm | nm |
| fun Th ird rty tom din ate pa cus er g r |
( 0.2 9% ) |
( 0.2 0% ) |
( 0.3 3% ) |
( 0.2 6% ) |
( 0.1 1% ) |
nm | nm | nm |
| Av in rni ( £b n) ter est ets era ge ea ng ass |
185 .2 |
25 .4 |
122 .0 |
20 .8 |
28 .4 |
26 .7 |
34 .6 |
44 3.1 |
| To tal ets ( £b n) ass |
195 .6 |
25 .3 |
144 .0 |
21 .4 |
29 .0 |
25 3.3 |
51 .3 |
71 9.9 |
| Fu nd ed set s ( £b n) as |
195 .6 |
25 .3 |
144 .0 |
21 .4 |
29 .0 |
120 .9 |
51 .1 |
58 7.3 |
| ( £b n) Ne t lo s t ust rtis ed st an o c om ers - a mo co |
163 .2 |
19 .2 |
88 .3 |
14 .2 |
13 .0 |
8.0 | ( ) 0.1 |
30 5.8 |
| ( £b n) Im irm t p isio (5) pa en rov ns |
( 1.4 ) |
( 1.2 ) |
( 1.0 ) |
( 0.1 ) |
- | ( 0.2 ) |
- | ( 3.9 ) |
| Cu r d its ( £b n) sto me ep os |
183 .4 |
17 .9 |
96 .4 |
27 .2 |
26 .9 |
2.6 | 6.2 | 36 0.6 |
| Ris k-w eig hte d a ts ( RW As ) ( £b n) sse |
45 .4 |
16 .5 |
69 .0 |
9.5 | 6.9 | 46 .5 |
0.7 | 194 .5 |
| RW A e iva len t ( RW Ae s) ( £b n) qu |
47 .1 |
16 .6 |
72 .5 |
9.5 | 6.9 | 49 .9 |
0.7 | 20 3.2 |
| ( s) Em loy mb FT Es - t ho nd p ee nu ers usa (6) |
24 .8 |
3.1 | 8.1 | 1.9 | 1.7 | 4.9 | 24 .1 |
68 .6 |
For the notes to this table, refer to page 21. nm = not meaningful
| Qu art |
de d 3 1 D er en |
be r 2 01 7 ec em |
||||||
|---|---|---|---|---|---|---|---|---|
| PB B |
CP B |
Ce al ntr |
||||||
| Uls ter |
Co ial mm erc |
Pri te va |
S RB |
Na tW est |
& ite ms |
To tal |
||
| UK PB B |
Ba nk Ro I |
Ba nk ing |
Ba nk ing |
Int atio l ern na |
Ma rke ts |
oth (1) er |
S RB |
|
| £m | £m | £m | £m | £m | £m | £m | £m | |
| Inc tat t om e s em en |
||||||||
| Ne t in in ter est co me |
1, 27 2 |
11 1 |
57 5 |
122 | 81 | 38 | 12 | 2, 21 1 |
| Ot he -in ter est in r n on co me |
27 6 |
50 | 23 1 |
69 | 16 | 127 | ( 123 ) |
64 6 |
| Ow red it a dju stm ts n c en |
- | - | - | - | - | 9 | - | 9 |
| Str ate ic d isp als g os |
- | - | - | - | - | 26 | 165 | 19 1 |
| To tal inc om e |
1, 54 8 |
16 1 |
80 6 |
19 1 |
97 | 20 0 |
54 | 3, 05 7 |
| aff Dir ect st sts ex pe nse s - co |
( 189 ) |
( ) 45 |
( 109 ) |
( 35 ) |
( 25 ) |
( 153 ) |
( 37 2) |
( 92 8) |
| the ost - o r c s |
( 73 ) |
( 25 ) |
( 66 ) |
( 14 ) |
( 15 ) |
( 83 ) |
( 90 7) |
( 1, 183 ) |
| Ind ire ct ex pe nse s |
( 55 4) |
( 45 ) |
( 34 4) |
( 78 ) |
( 23 ) |
( 154 ) |
1, 198 |
- |
| Str ate ic c ost di t g s - rec |
( ) 55 |
( 2) |
( 6) |
( 19 ) |
( 3) |
( 129 ) |
( 31 7) |
( 53 1) |
| - in dir ect |
( 198 ) |
( 2) |
( 23 ) |
( 9) |
- | ( 13 ) |
24 5 |
- |
| Liti tio nd nd uct sts ga n a co co |
( 197 ) |
( 135 ) |
( 27 ) |
( 39 ) |
- | ( 51 ) |
( 31 5) |
( 76 4) |
| Op tin era g e xp en se s |
( 1, 26 6) |
( 25 4) |
( 57 5) |
( 194 ) |
( 66 ) |
( 58 3) |
( 46 8) |
( 3, 40 6) |
| Op tin rof it/( los s) be for e i air nt ( los s) /re lea era g p mp me se se s |
28 2 |
( 93 ) |
23 1 |
( 3) |
31 | ( 38 3) |
( 41 4) |
( 34 9) |
| Im irm t ( los s) /re lea pa en se se s |
( 60 ) |
( 81 ) |
( 117 ) |
( 2) |
- | 26 | - | ( 23 4) |
| Op tin rof it/( los s) era g p |
22 2 |
( 174 ) |
114 | ( 5) |
31 | ( 35 7) |
( 41 4) |
( 58 3) |
| Ad dit ion al inf ati orm on |
||||||||
| Re ity tur n o n e qu (2) |
7.8 % |
( 26 .5% ) |
1.3 % |
( 2.9 % ) |
9.2 % |
( 14 .0% ) |
nm | ( 6.7 % ) |
| Co st: inc ati om e r o (3 ) |
.8% 81 |
.8% 157 |
.0% 70 |
% 10 1.6 |
.0% 68 |
nm | nm | % 11 1.5 |
| Lo im irm t ra te an pa en |
0.1 5% |
1.5 7% |
0.4 8% |
nm | nm | nm | nm | 0.3 0% |
| Ne t in in ter est m arg |
2.7 6% |
1.7 6% |
1.7 5% |
2.4 4% |
1.3 4% |
0.5 5% |
nm | 2.0 4% |
| Th ird rty tom et rat pa cus er ass e ( 4) |
3.3 8% |
2.4 7% |
2.7 7% |
2.7 6% |
2.5 9% |
nm | nm | nm |
| Th ird rty tom fun din ate pa cus er g r |
( 0.2 1% ) |
( 0.2 4% ) |
( 0.2 0% ) |
( 0.1 1% ) |
( 0.0 3% ) |
nm | nm | nm |
| ( £b n) Av in ter est rni ets era ge ea ng ass |
182 .6 |
25 .1 |
130 .1 |
19 .8 |
24 .1 |
27 .4 |
21 .8 |
43 0.9 |
| To tal ets ( £b n) ass |
190 .6 |
24 .6 |
149 .5 |
20 .3 |
25 .9 |
27 7.9 |
49 .3 |
73 8.1 |
| Fu nd ed s ( £b n) set as |
190 .6 |
24 .5 |
149 .5 |
20 .3 |
25 .9 |
118 .7 |
47 .7 |
57 7.2 |
| Ne t lo s t ust rtis ed st ( £b n) an o c om ers - a mo co |
16 1.7 |
19 .5 |
96 .9 |
13 .5 |
8.7 | 9.7 | 0.1 | 31 0.1 |
| Im irm t p isio ( £b n) pa en rov ns (5) |
( 1.3 ) |
( 1.1 ) |
( 1.2 ) |
- | - | ( 0.2 ) |
- | ( 3.8 ) |
| Cu r d its ( £b n) sto me ep os |
180 .4 |
16 .9 |
98 .0 |
26 .9 |
28 .9 |
3.3 | 6.9 | 36 1.3 |
| Ris k-w eig hte d a ts ( RW As ) ( £b n) sse |
43 .0 |
18 .0 |
71 .8 |
9.1 | 5.1 | 52 .9 |
1.0 | 20 0.9 |
| RW A e iva len t ( RW Ae s) ( £b n) qu |
46 .7 |
18 .9 |
76 .8 |
9.1 | 5.2 | 56 .4 |
1.1 | 21 4.2 |
| ( s) Em loy mb FT Es - t ho nd (6) p ee nu ers usa |
19 .8 |
2.7 | 4.6 | 1.5 | 1.6 | 5.7 | 35 .3 |
71 .2 |
For the notes to this table refer to the following page. nm = not meaningful.
| Year ended | Quarter ended | |||||
|---|---|---|---|---|---|---|
| 31 December 2018 |
31 December 2017 |
31 December 2018 |
30 September 2018 |
31 December 2017 |
||
| £m | £m | £m | £m | £m | ||
| Interest receivable | 11,049 | 11,034 | 2,825 | 2,780 | 2,754 | |
| Interest payable | (2,393) | (2,047) | (649) | (626) | (543) | |
| Net interest income (1) | 8,656 | 8,987 | 2,176 | 2,154 | 2,211 | |
| Fees and commissions receivable | 3,218 | 3,338 | 785 | 787 | 846 | |
| Fees and commissions payable | (861) | (883) | (190) | (220) | (231) | |
| Income from trading activities | 1,507 | 634 | 161 | 499 | (198) | |
| Loss on redemption of own debt | - | (7) | - | - | - | |
| Other operating income | 882 | 1,064 | 126 | 422 | 429 | |
| Non-interest income | 4,746 | 4,146 | 882 | 1,488 | 846 | |
| Total income | 13,402 | 13,133 | 3,058 | 3,642 | 3,057 | |
| Staff costs | (4,122) | (4,676) | (1,014) | (1,022) | (1,100) | |
| Premises and equipment | (1,383) | (1,565) | (411) | (328) | (524) | |
| Other administrative expenses | (3,372) | (3,323) | (851) | (885) | (1,587) | |
| Depreciation and amortisation | (731) | (808) | (187) | (206) | (178) | |
| Write down of other intangible assets | (37) | (29) | (6) | - | (17) | |
| Operating expenses | (9,645) | (10,401) | (2,469) | (2,441) | (3,406) | |
| Profit/(loss) before impairment losses | 3,757 | 2,732 | 589 | 1,201 | (349) | |
| Impairment losses | (398) | (493) | (17) | (240) | (234) | |
| Operating profit/(loss) before tax | 3,359 | 2,239 | 572 | 961 | (583) | |
| Tax charge/(credit) | (1,275) | (824) | (136) | (398) | 168 | |
| Profit/(loss) for the period | 2,084 | 1,415 | 436 | 563 | (415) | |
| Attributable to: | ||||||
| Ordinary shareholders | 1,622 | 752 | 286 | 448 | (579) | |
| Other owners | 470 | 628 | 164 | 93 | 150 | |
| Non-controlling interests | (8) | 35 | (14) | 22 | 14 | |
| Earnings/(loss) per ordinary share | 13.5p | 6.3p | 2.4p | 3.7p | (4.9p) | |
| Earnings/(loss) per ordinary share - fully diluted | 13.4p | 6.3p | 2.3p | 3.7p | (4.9p) |
Notes: (1) Negative interest on loans is reported as interest payable. Negative interest on customer deposits is reported as interest receivable.
Notes:
| Year ended | Quarter ended | ||||
|---|---|---|---|---|---|
| 31 December | 31 December | 31 December 30 September | 31 December | ||
| 2018 | 2017 | 2018 | 2018 | 2017 | |
| £m | £m | £m | £m | £m | |
| Profit/(loss) for the period | 2,084 | 1,415 | 436 | 563 | (415) |
| Items that do not qualify for reclassification | |||||
| Remeasurement of retirement benefit schemes | |||||
| - contributions in preparation for ring-fencing (1) | (2,053) | - | (53) | - | - |
| - other movements | 86 | 90 | 14 | 72 | 116 |
| Profit/(loss) on fair value of credit in financial liabilities | |||||
| designated at FVTPL due to own credit risk | 200 | (126) | 91 | 14 | (19) |
| Fair value through other comprehensive income (FVOCI) | |||||
| financial assets (2) | 48 | - | (13) | 58 | - |
| Tax | 502 | (10) | 15 | (13) | (5) |
| (1,217) | (46) | 54 | 131 | 92 | |
| Items that do qualify for reclassification | |||||
| Fair value through other comprehensive income (FVOCI) | |||||
| financial assets (2) | 7 | 26 | (24) | (168) | (11) |
| Cash flow hedges | (581) | (1,069) | 241 | (301) | (86) |
| Currency translation | 310 | 100 | 190 | 102 | 18 |
| Tax | 189 | 256 | (35) | 127 | 19 |
| (75) | (687) | 372 | (240) | (60) | |
| Other comprehensive (loss)/income after tax | (1,292) | (733) | 426 | (109) | 32 |
| Total comprehensive income/(loss) for the period | 792 | 682 | 862 | 454 | (383) |
| Total comprehensive income/(loss) is attributable to: | |||||
| Ordinary shareholders | 305 | 2 | 709 | 304 | (555) |
| Preference shareholders | 182 | 234 | 88 | 20 | 79 |
| Dividend access share | - | - | - | - | - |
| Paid-in equity holders | 288 | 394 | 76 | 73 | 71 |
| Non-controlling interests | 17 | 52 | (11) | 57 | 22 |
| 792 | 682 | 862 | 454 | (383) |
Notes:
(1) On 17 April 2018 RBS agreed a Memorandum of Understanding (MoU) with the Trustees of the RBS Group Pension Fund in connection with the requirements of ring-fencing. NatWest Markets Plc cannot continue to be a participant in the Main section and separate arrangements are required for its employees. Under the MoU, NatWest Plc made a contribution of £2 billion to strengthen funding of the Main section in recognition of the changes in covenant. The contribution was paid on 9 October 2018. Also under the MoU, NatWest Markets Plc is required to make a £53 million contribution to the NWM section in Q1 2019.
(2) Refer to Note 2 in this document and Note 34 in the 2018 Annual Report and Accounts for further information on the impact of IFRS 9 on classification and basis of preparation. Periods ended 31 December 2018 and 30 September 2018 prepared under IFRS 9 and 31 December 2017 under IAS 39.
| 31 December | 30 September | 31 December | |
|---|---|---|---|
| 2018 | 2018 | 2017 | |
| £m | £m | £m | |
| Assets | |||
| Cash and balances at central banks | 88,897 | 106,503 | 98,337 |
| Trading assets | 75,119 | 82,492 | 85,991 |
| Derivatives | 133,349 | 132,574 | 160,843 |
| Settlement balances | 2,928 | 11,213 | 2,517 |
| Loans to banks - amortised costs | 12,947 | 11,852 | 11,517 |
| Loans to customers - amortised cost | 305,089 | 305,823 | 310,116 |
| Other financial assets | 59,485 | 53,108 | 51,929 |
| Intangible assets | 6,616 | 6,581 | 6,543 |
| Other assets | 9,805 | 9,742 | 10,263 |
| Total assets | 694,235 | 719,888 | 738,056 |
| Liabilities | |||
| Bank deposits | 23,297 | 29,604 | 30,396 |
| Customer deposits | 360,914 | 360,617 | 361,316 |
| Settlement balances | 3,066 | 10,625 | 2,844 |
| Trading liabilities | 72,350 | 84,883 | 81,982 |
| Derivatives | 128,897 | 125,333 | 154,506 |
| Other financial liabilities | 39,732 | 38,364 | 30,326 |
| Subordinated liabilities | 10,535 | 10,341 | 12,722 |
| Other liabilities | 8,954 | 11,454 | 14,871 |
| Total liabilities | 647,745 | 671,221 | 688,963 |
| Equity | |||
| Ordinary shareholders' interests | 41,182 | 41,253 | 41,707 |
| Other owners' interests | 4,554 | 6,623 | 6,623 |
| Owners' equity | 45,736 | 47,876 | 48,330 |
| Non-controlling interests | 754 | 791 | 763 |
| Total equity | 46,490 | 48,667 | 49,093 |
| Total liabilities and equity | 694,235 | 719,888 | 738,056 |
| Year ended | Quarter ended | ||||
|---|---|---|---|---|---|
| 31 December 31 December 31 December 30 September 31 December | |||||
| 2018 | 2017 | 2018 | 2018 | 2017 | |
| £m | £m | £m | £m | £m | |
| Called-up share capital - at 1 January | 11,965 | 11,823 | 12,048 | 12,028 | 11,906 |
| Ordinary shares issued | 84 | 142 | 1 | 20 | 59 |
| At 31 December | 12,049 | 11,965 | 12,049 | 12,048 | 11,965 |
| Paid-in equity - at 1 January | 4,058 | 4,582 | 4,058 | 4,058 | 4,058 |
| Redeemed/reclassified (1) | - | (524) | - | - | - |
| At 31 December | 4,058 | 4,058 | 4,058 | 4,058 | 4,058 |
| Share premium account - at 1 January | 887 | 25,693 | 1,026 | 995 | 739 |
| Ordinary shares issued | 140 | 235 | 1 | 31 | 92 |
| Redemption of debt preference shares (2) | - | 748 | - | - | 56 |
| Capital reduction (3) | - | (25,789) | - | - | - |
| At 31 December | 1,027 | 887 | 1,027 | 1,026 | 887 |
| Merger reserve - at 1 January and 31 December | 10,881 | 10,881 | 10,881 | 10,881 | 10,881 |
| FVOCI reserve - at 1 January (4) | 255 | 238 | 361 | 442 | 260 |
| Implementation of IFRS 9 on 1 January 2018 | 34 | - | - | - | - |
| Unrealised gains | 97 | 202 | (11) | (95) | 53 |
| Realised gains | (42) | (176) | (20) | (19) | (64) |
| Tax | (1) | (9) | 13 | 33 | 6 |
| At 31 December | 343 | 255 | 343 | 361 | 255 |
| Cash flow hedging reserve - at 1 January | 227 | 1,030 | (370) | (151) | 298 |
| Amount recognised in equity | (63) | (277) | 231 | (138) | 141 |
| Amount transferred from equity to earnings | (518) | (792) | 10 | (163) | (227) |
| Tax | 163 | 266 | (62) | 82 | 15 |
| At 31 December | (191) | 227 | (191) | (370) | 227 |
| Foreign exchange reserve - at 1 January | 2,970 | 2,888 | 3,073 | 3,001 | 2,962 |
| Retranslation of net assets | 195 | 111 | 196 | 57 | 13 |
| Foreign currency losses on hedges of net assets | (33) | (6) | (43) | (4) | (2) |
| Tax | 23 | (1) | 19 | 3 | (2) |
| Recycled to profit or loss on disposal of businesses (5) | 123 | (22) | 33 | 16 | (1) |
| At 31 December | 3,278 | 2,970 | 3,278 | 3,073 | 2,970 |
| Capital redemption reserve - at 1 January | - | 4,542 | - | - | - |
| Capital reduction (3) | - | (4,542) | - | - | - |
| At 31 December | - | - | - | - | - |
| Retained earnings - at 1 January | 17,130 | (12,936) | 16,823 | 16,527 | 17,669 |
| Implementation of IFRS 9 on 1 January 2018 (4) | (105) | - | - | - | - |
| Profit/(loss) attributable to ordinary shareholders and | |||||
| other equity owners | 2,092 | 1,380 | 450 | 541 | (429) |
| Equity preference dividends paid | (182) | (234) | (88) | (20) | (79) |
| Paid-in equity dividends paid, net of tax | (288) | (394) | (76) | (73) | (71) |
| Ordinary dividend paid | (241) | - | - | (241) | - |
| Capital reduction (3) | - | 30,331 | - | - | - |
| Redemption of debt preference shares (2) | - | (748) | - | - | (56) |
| Redemption of equity preference shares (6) | (2,805) | - | (2,805) | - | - |
| Redemption/reclassification of paid-in equity | - | (196) | - | - | - |
| Realised gains in period on FVOCI equity shares, net of tax | 6 | - | 1 | 2 | - |
| Remeasurement of the retirement benefit schemes | |||||
| - contributions in preparation for ring-fencing (7) | (2,053) | - | (53) | - | - |
| - other movements | 86 | 90 | 14 | 72 | 116 |
| - tax | 539 | (28) | 23 | - | (8) |
| Changes in fair value of credit in financial liabilities designated at | |||||
| fair value through profit or loss | |||||
| - gross | 200 | (126) | 91 | 14 | (19) |
| - tax | (33) | 18 | (13) | (4) | 3 |
| Shares issued under employee share schemes | (2) | (5) | - | - | - |
| Share-based payments | (32) | (22) | (55) | 5 | 4 |
| At 31 December | 14,312 | 17,130 | 14,312 | 16,823 | 17,130 |
| Year ended | Quarter ended | |||||
|---|---|---|---|---|---|---|
| 31 December 31 December | 31 December 30 September 31 December | |||||
| 2018 | 2017 | 2018 | 2018 | 2017 | ||
| £m | £m | £m | £m | £m | ||
| Own shares held - at 1 January | (43) | (132) | (24) | (24) | (45) | |
| Shares issued under employee share schemes | 87 | 161 | 5 | — | 5 | |
| Own shares acquired | (65) | (72) | (2) | — | (3) | |
| At 31 December | (21) | (43) | (21) | (24) | (43) | |
| Owners' equity at 31 December | 45,736 | 48,330 | 45,736 | 47,876 | 48,330 | |
| Non-controlling interests - at 1 January | 763 | 795 | 791 | 734 | 746 | |
| Currency translation adjustments and other movements | 25 | 17 | 3 | 35 | 8 | |
| (Loss)/profit attributable to non-controlling interests | (8) | 35 | (14) | 22 | 14 | |
| Dividends paid | (5) | (25) | (5) | — | (5) | |
| Equity withdrawn and disposals | (21) | (59) | (21) | — | — | |
| At 31 December | 754 | 763 | 754 | 791 | 763 | |
| Total equity at 31 December | 46,490 | 49,093 | 46,490 | 48,667 | 49,093 | |
| Total equity is attributable to: | ||||||
| Ordinary shareholders | 41,182 | 41,707 | 41,182 | 41,253 | 41,707 | |
| Preference shareholders | 496 | 2,565 | 496 | 2,565 | 2,565 | |
| Paid-in equity holders | 4,058 | 4,058 | 4,058 | 4,058 | 4,058 | |
| Non-controlling interests | 754 | 763 | 754 | 791 | 763 | |
| 46,490 | 49,093 | 46,490 | 48,667 | 49,093 |
Notes:
(1) Paid-in equity reclassified to liabilities as a result of the call of US\$564 million and CAD321 million EMTN notes in August 2017 (redeemed in October 2017), the call of RBS Capital Trust D in March 2017 (redeemed in June 2017), the call of RBS Capital Trust C in May 2016 (redeemed in July 2016).
(2) During 2017, non-cumulative US dollar preference shares were redeemed at their original issue price of US\$1.1 billion. The nominal value of £0.3 million was credited to the capital redemption reserve; share premium increased by £0.7 billion in respect of the premium received on issue, with a corresponding decrease in retained earnings. During 2016, non-cumulative US dollar preference shares were redeemed at their original issue price of US\$1.5 billion. The nominal value of £0.3 million was transferred from share capital to capital redemption reserve and ordinary owners equity was reduced by £0.4 billion in respect of the movement in exchange rates since issue.
(3) On 15 June 2017, the Court of Session approved a reduction of RBSG plc capital so that the amounts which stood to the credit of share premium, account and capital redemption reserve were transferred to retained earnings.
(4) Refer to Note 2 of this document and Note 34 in the 2018 Annual Report and Accounts for further information.
(5) No tax impact.
(6) During 2018, non-cumulative US dollar, Euro and Sterling preference shares were redeemed.
(7) On 17 April 2018 RBS agreed a Memorandum of Understanding (MoU) with the Trustees of the RBS Group Pension Fund in connection with the requirements of ring-fencing. NatWest Markets Plc cannot continue to be a participant in the Main section and separate arrangements are required for its employees. Under the MoU, NatWest Bank Plc made a contribution of £2 billion to strengthen funding of the Main section in recognition of the changes in covenant. The contribution was paid on 9 October 2018. Also under the MoU, NatWest Markets Plc is required to make a £53 million contribution to the NWM section in Q1 2019.
| Year ended | ||
|---|---|---|
| 31 December | 31 December | |
| 2018 | 2017 | |
| £m | £m | |
| Operating activities | ||
| Operating profit before tax | 3,359 | 2,239 |
| Adjustments for non-cash items | (6,516) | (5,125) |
| Net cash outflow from trading activities | (3,157) | (2,886) |
| Changes in operating assets and liabilities | 3,395 | 42,147 |
| Net cash flows from operating activities before tax | 238 | 39,261 |
| Income taxes paid | (466) | (520) |
| Net cash flows from operating activities | (228) | 38,741 |
| Net cash flows from investing activities | (7,955) | (6,482) |
| Net cash flows from financing activities | (6,287) | (8,208) |
| Effects of exchange rate changes on cash and cash equivalents | 676 | (16) |
| Net (decrease)/increase in cash and cash equivalents | (13,794) | 24,035 |
| Cash and cash equivalents at beginning of year | 122,605 | 98,570 |
| Cash and cash equivalents at end of year | 108,811 | 122,605 |
The condensed consolidated financial statements should be read in conjunction with RBS's 2018 Annual Report and Accounts which were prepared in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board (IASB) and interpretations issued by the IFRS Interpretations Committee of the IASB as adopted by the European Union (EU) (together IFRS).
The Group's principal accounting policies are as set out on pages 182 to 186 of the Group's 2018 Annual Report and Accounts. From 1 January 2018 the accounting policies have been updated to reflect the adoption of IFRS 9. For further details see Note 34 of the Group's 2018 Annual Report and Accounts. There has been no restatement of accounts prior to 2018. Other than in relation to IFRS 9 other amendments to IFRS effective for 2018, including IFRS 15 'Revenue from contracts with customers', IFRS 2 'Share-based payments' and IAS 40 'Investment Property' have not had a material effect on the Group's 2018 results. Critical accounting policies and key sources of estimation uncertainty
The judgements and assumptions that are considered to be the most important to the portrayal of the Group's financial condition are those relating to goodwill, provisions for liabilities, deferred tax, loan impairment provisions and fair value of financial instruments. These critical accounting policies and judgements are described in the relevant note on the accounts in the Group's 2018 Annual Report and Accounts. From 1 January 2018, the previous critical accounting policy relating to loan impairment provisions has been superseded on the adoption of IFRS 9. For further details refer to Note 34 in the Annual Report and Accounts.
Due to significant accounting policy changes on the adoption of IFRS 9, the balance sheet has been re-presented. For further details refer to Note 14 in the Annual Report and Accounts. There has been no restatement of prior year data. Going concern
Having reviewed RBS's forecasts, projections and other relevant evidence, the directors have a reasonable expectation that RBS will continue in operational existence for the foreseeable future. Accordingly, the results for the period ended 31 December 2018 have been prepared on a going concern basis.
| Payment protection |
Other customer |
Litigation and other regulatory |
|||||
|---|---|---|---|---|---|---|---|
| insurance | redress | DoJ (1) | (incl. RMBS) | Other (2) | Total | ||
| £m | £m | £m | £m | £m | £m | ||
| At 1 January 2018 | 1,053 | 870 | 3,243 | 641 | 1,950 | 7,757 | |
| Implementation of IFRS 9 on 1 January 2018 (3) | - | - | - | - | 85 | 85 | |
| Currency translation and other movements | - | (5) | (119) | (4) | (1) | (129) | |
| Charge to income statement | - | 19 | - | 3 | 111 | 133 | |
| Releases to income statement | - | (10) | (1) | (5) | (15) | (31) | |
| Provisions utilised | (152) | (115) | (90) | (52) | (100) | (509) | |
| At 31 March 2018 | 901 | 759 | 3,033 | 583 | 2,030 | 7,306 | |
| RMBS transfers (1) | - | - | (567) | 567 | - | - | |
| Currency translation and other movements | - | - | 209 | 32 | (24) | 217 | |
| Charge to income statement | - | 46 | 1,040 | 23 | 93 | 1,202 | |
| Releases to income statement | - | (51) | - | (305) | (119) | (475) | |
| Provisions utilised | (156) | (104) | - | (189) | (806) | (1,255) | |
| At 30 June 2018 | 745 | 650 | 3,715 | 711 | 1,174 | 6,995 | |
| Transfer from accruals and other liabilities | - | 3 | - | - | - | 3 | |
| Currency translation and other movements | - | 1 | 46 | 12 | 11 | 70 | |
| Charge to income statement | 200 | 55 | - | 133 | 33 | 421 | |
| Releases to income statement | - | (6) | - | (10) | (48) | (64) | |
| Provisions utilised | (142) | (112) | (3,761) | (35) | (128) | (4,178) | |
| At 30 September 2018 | 803 | 591 | - | 811 | 1,042 | 3,247 | |
| Transfer from accruals and other liabilities | - | (3) | - | (1) | 14 | 10 | |
| Currency translation and other movements | - | 8 | - | 3 | (4) | 7 | |
| Charge to income statement | - | 125 | - | 22 | 192 | 339 | |
| Releases to income statement | - | (67) | - | (3) | (122) | (192) | |
| Provisions utilised | (108) | (118) | - | (49) | (132) | (407) | |
| At 31 December 2018 | 695 | 536 | - | 783 | 990 | 3,004 |
Notes:
(1) RMBS provision has been redesignated 'DoJ' and the remaining RMBS litigation matters transferred to Litigation and other regulatory as of 1 April 2018 to reflect progress on resolution.
(2) Refer to Note 34 in the 2018 Annual Report and Accounts for further details.
(3) Materially comprises provisions relating to property closures and restructuring costs.
There are uncertainties as to the eventual cost of redress in relation to certain of the provisions contained in the table above. Assumptions relating to these are inherently uncertain and the ultimate financial impact may be different from the amount provided.
RBS and certain members of the Group are party to legal proceedings and the subject of investigation and other regulatory and governmental action ("Matters") in the United Kingdom (UK), the United States (US), the European Union (EU) and other jurisdictions. Note 27 in the 2018 Annual Report and Accounts, issued on 15 February 2018 and available at RBS.com ("Note 27"), discusses the Matters in which RBS is currently involved and developments to those matters. Other than the Matters discussed in Note 27, no member of the Group is or has been involved in governmental, legal, or regulatory proceedings (including those which are pending or threatened) that are expected to be material, individually or in aggregate. Recent developments in the Matters identified in Note 27 that have occurred since the Q3 2018 results were issued on 26 October 2018, include, but are not limited to, those set out below.
RBS companies are defendants in a number of class action complaints filed in the United States District Court for the Southern District of New York (SDNY), each relating to a different reference rate. In the case relating to Pound Sterling LIBOR, the court dismissed all claims against RBS companies, for various reasons, on 21 December 2018, and plaintiffs are seeking reconsideration of that decision. In the case relating to the Australian Bank Bill Swap Reference Rate, the court dismissed all claims against RBS companies for lack of personal jurisdiction on 26 November 2018, but plaintiffs have filed an amended complaint, which will be the subject of a further motion to dismiss.
In January 2019, a class action antitrust complaint was filed in the SDNY alleging that the defendants (USD ICE LIBOR panel banks including RBS companies) have conspired to suppress USD ICE LIBOR from 2014 to the present by submitting incorrect information to ICE about their borrowing costs.
On 7 November 2018, a number of claimants filed a complaint in the SDNY against a number of financial institutions, including certain RBS companies, alleging an antitrust conspiracy in the FX spot market. The claimants are "opt-outs" from the FX-related class action that RBS companies and others previously settled and which received final court approval in August 2018. On 31 December 2018, some of the same claimants, as well as others, filed proceedings in the High Court in London, asserting competition claims against NatWest Markets Plc and several other FX dealers.
In December 2018, the FCA commenced a Systematic Anti-Money Laundering Programme assessment of RBS. RBS is responding to requests for information from the FCA.
The UK Government and bodies controlled or jointly controlled by the UK Government and bodies over which it has significant influence are related parties of the Group. The Group enters into transactions with many of these bodies on an arm's length basis.
In the ordinary course of business, the Group may from time to time access market-wide facilities provided by the Bank of England. The Group's other transactions with the UK Government include the payment of taxes, principally UK corporation tax and value added tax; national insurance contributions; local authority rates; and regulatory fees and levies (including the bank levy and FSCS levies).
(a) In their roles as providers of finance, Group companies provide development and other types of capital support to businesses. These investments are made in the normal course of business and on arm's length terms. In some instances, the investment may extend to ownership or control over 20% or more of the voting rights of the investee company. However, these investments are not considered to give rise to transactions of a materiality requiring disclosure under IAS 24.
(b) The Group recharges The Royal Bank of Scotland Group Pension Fund with the cost of administration services incurred by it. The amounts involved are not material to the Group.
Full details of the Group's related party transactions for the year ended 31 December 2018 are included in the 2018 Annual Report and Accounts.
In 2018 RBS paid an interim dividend of £241 million, or 2.0p per ordinary share. In addition, the company proposes a final dividend of 3.5p per ordinary share and a further special dividend of 7.5p per ordinary share.
The final and special dividends recommended by directors are subject to shareholders' approval at the Annual General Meeting on 25 April 2019. If approved, payment will be made on 30 April 2019 to shareholders on the register at the close of business on 22 March 2019. The ex-dividend date will be 21 March 2019. No dividend was paid in 2017.
On 6 February 2019, a General Meeting of shareholders authorised the directors to agree buy-backs by the company of ordinary shares from HM Treasury. The authority is subject to renewal at the company's forthcoming Annual General Meeting.
Other than this there have been no other significant events between 31 December 2018 and the date of approval of these accounts which would require a change to or additional disclosure in the accounts.
The responsibility statement below has been prepared in connection with the Group's full Annual Report and Accounts for the year ended 31 December 2018.
We, the directors listed below, confirm that to the best of our knowledge:
By order of the Board
Howard Davies Ross McEwan Katie Murray
Chairman Chief executive Chief financial officer
14 February 2019
Board of directors
Howard Davies Ross McEwan
Katie Murray
Chairman Executive directors Non-executive directors
Frank Dangeard Alison Davis Patrick Flynn Morten Friis Robert Gillespie Brendan Nelson Baroness Noakes Mike Rogers Mark Seligman Dr Lena Wilson
In this document, 'RBSG plc' or the 'parent company' refers to The Royal Bank of Scotland Group plc, and 'RBS' or the 'Group' refers to RBSG plc and its subsidiaries.
Financial information contained in this document does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006 ('the Act'). The statutory accounts for the year ended 31 December 2017 have been filed with the Registrar of Companies and those for the year ended 31 December 2018 will be filed with the register of companies following the Annual General Meeting. The report of the auditor on those statutory accounts was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Act.
MAR Inside Information - this announcement Includes Inside information which is a disclosure required by the European Union Market Abuse Regulation EU 596/2014 of 16 April 2014. "Inside Information" is used as defined in that Regulation.
As described in Note 1 on page 26, RBS prepares its financial statements in accordance with IFRS as issued by the IASB which constitutes a body of generally accepted accounting principles (GAAP). This document contains a number of adjusted or alternative performance measures, also known as non-GAAP financial measures. These measures exclude certain items which management believe are not representative of the underlying performance of the business and which distort period-on-period comparison. These measures include:
Q1 2019 segmental re-organisation. In Q1 2019 RBS is planning to transfer the Business Banking business from UK PBB to Commercial Banking.
| Analyst enquiries: | Matt Waymark | Investor Relations | +44 (0) 207 672 1758 |
|---|---|---|---|
| Media enquiries: | RBS Press Office | +44 (0) 131 523 4205 | |
| Analyst and investor call | Fixed income call | Webcast and dial in details | |
|---|---|---|---|
| Date: | Friday 15 February 2019 | Friday 15 February 2019 | www.rbs.com/results |
| Time: | 9:30 am UK time | 1:30 pm UK time | International: +44 (0) 203 057 6566 |
| Conference ID: | 4088105 | 2228769 | UK Free Call: 0800 279 5995 |
| US Local Dial-In, New York: +1 646 741 2115 |
Available on www.rbs.com/results
Certain sections in this document contain 'forward-looking statements' as that term is defined in the United States Private Securities Litigation Reform Act of 1995, such as statements that include the words 'expect', 'estimate', 'project', 'anticipate', 'commit', 'believe', 'should', 'intend', 'plan', 'could', 'probability', 'risk', 'Value-at-Risk (VaR)', 'target', 'goal', 'objective', 'may', 'endeavour', 'outlook', 'optimistic', 'prospects' and similar expressions or variations on these expressions.
In particular, this document includes forward-looking statements relating, but not limited to: future profitability and performance, including financial performance targets such as return on tangible equity; cost savings and targets, including cost:income ratios; litigation and government and regulatory investigations, including the timing and financial and other impacts thereof; the implementation of the Alternative Remedies Package; the continuation of the Group's balance sheet reduction programme, including the reduction of risk-weighted assets (RWAs) and the timing thereof; capital and strategic plans and targets; capital, liquidity and leverage ratios and requirements, including CET1 Ratio, RWA equivalents (RWAe), Pillar 2 and other regulatory buffer requirements, minimum requirement for own funds and eligible liabilities, and other funding plans; funding and credit risk profile; capitalisation; portfolios; net interest margin; customer loan and income growth; the level and extent of future impairments and write-downs, including with respect to goodwill; restructuring and remediation costs and charges; the Group's exposure to political risk, economic risk, climate change risk, operational risk, conduct risk, cyber and IT risk and credit rating risk and to various types of market risks, including interest rate risk, foreign exchange rate risk and commodity and equity price risk; customer experience including our Net Promotor Score (NPS); employee engagement and gender balance in leadership positions.
These statements are based on current plans, estimates, targets and projections, and are subject to significant inherent risks, uncertainties and other factors, both external and relating to the Group's strategy or operations, which may result in the Group being unable to achieve the current targets, predictions, expectations and other anticipated outcomes expressed or implied by such forward-looking statements. In addition, certain of these disclosures are dependent on choices relying on key model characteristics and assumptions and are subject to various limitations, including assumptions and estimates made by management. By their nature, certain of these disclosures are only estimates and, as a result, actual future gains and losses could differ materially from those that have been estimated. Accordingly, undue reliance should not be placed on these statements. Forward-looking statements speak only as of the date we make them and we expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Group's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
We caution you that a large number of important factors could adversely affect our results or our ability to implement our strategy, cause us to fail to meet our targets, predictions, expectations and other anticipated outcomes or affect the accuracy of forward-looking statements we describe in this document, including in the risk factors and other uncertainties set out in the Group's 2018 Annual Report and Accounts and other risk factors and uncertainties discussed in this document. These include the significant risks for the Group presented by: operational and IT resilience risk (including in respect of: the Group's susceptibility to increasing cyberattacks; operational risks inherent in the Group's business; the Group's operations being highly dependent on its IT systems; the Group relying on attracting, retaining, developing and remunerating senior management and skilled personnel and maintaining good employee relations; the Group's risk management framework; and reputational risk), economic and political risk (including in respect of: the UK's withdrawal from the European Union; increased political and economic risks and uncertainty in the UK and key global markets; credit, market, operational and regulatory risks in connection with climate change and the transition to a low carbon economy; continued low interest rates; changes in foreign currency exchange rates; and HM Treasury's ownership of RBSG and the possibility that it may exert a significant degree of influence over the Group), financial resilience risk (including in respect of: the Group's ability to meet targets and generate sustainable returns; the highly competitive markets in which the Group operates; the ability of the Group to meet prudential regulatory requirements for capital, manage its capital effectively, or access sources of liquidity and funding; changes in the credit ratings of RBSG, any of its subsidiaries or any of its respective debt securities; the Group's ability to meet requirements of regulatory stress tests; deteriorations in borrower and counterparty credit quality; possible losses or the requirement to hold additional capital as a result of limitations or failure of various models; sensitivity of the Group's financial statements to underlying accounting policies, assumptions and estimates; changes in applicable accounting policies or rules; the value or effectiveness of any credit protection purchased by the Group; and the level and extent of future impairments and write-downs, including with respect to goodwill) and legal, regulatory and conduct risk (including in respect of: the Group's businesses being subject to substantial regulation and oversight, which are constantly evolving; legal, regulatory and governmental actions and investigations, the outcomes of which are inherently difficult to predict; the replacement of LIBOR, EURIBOR and other benchmark rates; heightened regulatory and governmental scrutiny (including by competition authorities); implementation of the Alternative Remedies Package and the costs related thereto; and changes in tax legislation).
The forward-looking statements contained in this document speak only as at the date hereof, and the Group does not assume or undertake any obligation or responsibility to update any forward-looking statement to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
The information, statements and opinions contained in this document do not constitute a public offer under any applicable legislation or an offer to sell or solicit of any offer to buy any securities or financial instruments or any advice or recommendation with respect to such securities or other financial instruments.
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