Form 20-F X

Form 40-F ___

Yes

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No X

Contents	Page
Introduction	1
Highlights	3
Summary consolidated results	13
Analysis of results	15
Segment performance	26
Statutory results	60
Condensed consolidated income statement (unaudited)	60
Condensed consolidated statement of comprehensive income (unaudited)	61
Condensed consolidated balance sheet (unaudited)	62
Condensed consolidated statement of changes in equity (unaudited)	63
Condensed consolidated cash flow statement (unaudited)	65
Notes	66
Independent review report to The Royal Bank of Scotland Group plc	109
Risk factors	111
Statement of directors’ responsibilities	117
Additional information	118
Share information	118
Financial calendar	118
Forward-looking statements	119
Appendix 1 – Capital and risk management
Appendix 2 – Williams & Glyn

●	Financial information in the segmental performance section on pages 26 to 59 except for Risk-Weighted Assets (RWAs), RWAs after capital deductions (RWAes), the related metrics, Return on Equity (ROE), Adjusted Return on Equity and Employee numbers.
●	Statutory results on pages 60 to 108 comprising the condensed consolidated income statement, condensed consolidated statement of comprehensive income, condensed consolidated balance sheet, condensed consolidated statement of changes in equity, condensed consolidated cash flow statement and the related notes 1 to 19.
●	Appendix 1 Capital and risk management except for those items indicated as not within the scope of the independent review.

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

Date:		Friday 5 August 2016
Time:		9.30 am UK time
Conference ID		46989713
Webcast:		www.rbs.com/results
Dial in details:		International – +44 (0) 1452 568 172 UK Free Call – 0800 694 8082 US Toll Free – 1 866 966 8024

Date:		Friday 5 August 2016
Time:		2.30 pm UK time
Conference ID		46974381
Webcast:		www.rbs.com/results
Dial in details:		International – +44 (0) 1452 568 172 UK Free Call – 0800 694 8082 US Toll Free – 1 866 966 8024

●	Interim results 2016 and background slides.
●	Financial supplement containing income statement and balance sheet information for the nine quarters ending 30 June 2016.
●	Pillar 3 supplement at 30 June 2016.

	Half year ended			Quarter ended
	30 June	30 June		30 June	31 March	30 June
Key metrics and ratios	2016	2015		2016	2016	2015
Attributable (loss)/profit (£m)	(2,045)	(179)		(1,077)	(968)	280
Operating (loss)/profit (£m)	(274)	261		(695)	421	224
Operating profit - adjusted (£m) (2)	1,156	2,893		716	440	1,538
Net interest margin	2.18%	2.14%		2.21%	2.15%	2.13%
Cost:income ratio	98%	101%		117%	79%	99%
Cost:income ratio - adjusted (3,4)	72%	64%		67%	76%	62%
(Loss)/earnings per share from continuing operations (5)
- basic	(17.6p)	(2.2p)		(9.3p)	(8.3p)	-
- adjusted (3,4)	(5.5p)	18.5p		2.6p	(8.1p)	9.9p
Return on tangible equity (6)	(10.3%)	(0.9%)		(11.0%)	(9.6%)	2.7%
Return on tangible equity - adjusted (3,4.6)	(3.2%)	10.4%		3.2%	(9.4%)	13.5%
Average tangible equity (6)	£39,870m	£42,037m		£39,283m	£40,383m	£41,572m
Average number of ordinary shares
outstanding during the period (millions)	11,639	11,481		11,673	11,606	11,511
PBB, CPB & CIB
Total income - adjusted (£m) (3)	5,801	5,898		2,986	2,815	2,915
Operating profit - adjusted (£m) (2)	2,070	2,439		1,047	1,023	1,221
Return on tangible equity - adjusted (3,4,6)	10.9%	13.3%		11.0%	10.9%	13.5%
				30 June	31 March	31 December
Balance sheet related key metrics and ratios				2016	2016	2015
Tangible net asset value per ordinary share (6)				345p	351p	352p
Loan:deposit ratio (7,8)				92%	90%	89%
Short-term wholesale funding (7,9)				£14.7bn	£16.6bn	£17.2bn
Wholesale funding (7,9)				£55.1bn	£58.9bn	£58.7bn
Liquidity portfolio				£153bn	£157bn	£156bn
Liquidity coverage ratio (10)				116%	121%	136%
Net stable funding ratio (11)				119%	119%	121%
Common Equity Tier 1 ratio				14.5%	14.6%	15.5%
Risk-weighted assets				£245.2bn	£249.5bn	£242.6bn
Leverage ratio (12)				5.2%	5.3%	5.6%
Tangible equity (6)				£40,541m	£40,892m	£40,943m
Number of ordinary shares in issue (millions) (13)				11,755	11,661	11,625

(1)	Attributable to ordinary shareholders, after payment of the £1,193 million final Dividend Access Share dividend.
(2)	Operating profit before tax excluding own credit adjustments, loss on redemption of own debt, strategic disposals, restructuring costs and litigation and conduct costs.
(3)	Excluding own credit adjustments, loss on redemption of own debt and strategic disposals.
(4)	Excluding restructuring costs and litigation and conduct costs.
(5)	Refer to Note 10 on page 73 for further details.
(6)	Tangible equity is equity attributable to ordinary shareholders less intangible assets.
(7)	Excludes repurchase agreements and stock lending.
(8)	Includes disposal groups.
(9)	Excludes derivative collateral.
(10)	On 1 October 2015 the LCR became the PRA’s primary regulatory liquidity standard; UK banks are required to meet a minimum standard of 80% initially, rising to 100% by 1 January 2018. The published LCR excludes Pillar 2 add-ons. RBS calculates the LCR using its own interpretation of the EU LCR Delegated Act, which may change over time and may not be fully comparable with that of other institutions.
(11)	NSFR for all periods have been calculated using RBS’s current interpretations of the revised BCBS guidance on NSFR issued in late 2014. Therefore, reported NSFR will change over time with regulatory developments. Due to differences in interpretation, RBS’s ratio may not be comparable with those of other financial institutions.
(12)	Based on end-point CRR Tier 1 capital and leverage exposure under the CRR Delegated Act.
(13)	Includes 41 million treasury shares (31 March 2016 - 36 million; 31 December 2015 - 26 million).

H1 2016 Highlights
●	RBS reported an attributable loss of £2,045 million for H1 2016, which included the final Dividend Access Share (DAS) dividend of £1,193 million in Q1 2016 and £1,315 million of litigation and conduct costs. These included provisions in respect of PPI, following the publication of the FCA Consultation Paper on 2 August 2016, the UK 2008 rights issue shareholder litigation, an industry-wide examination of tracker mortgages in Ulster Bank RoI and other matters in Q2 2016.
●	H1 2016 operating loss was £274 million compared with an operating profit of £261 million in H1 2015.
●	Adjusted operating profit of £1,156 million was £1,737 million lower than H1 2015, principally due to increased losses in Capital Resolution, £1,087 million, and increased IFRS volatility losses(1), £668 million compared with a gain of £80 million in H1 2015. Across our PBB, CPB and CIB franchises, adjusted operating profit of £2,070 million was £369 million, or 15%, lower than H1 2015.
●	H1 2016 income across PBB and CPB was broadly stable compared with H1 2015 whilst CIB adjusted income of £681 million was £68 million, or 9%, lower than H1 2015, adjusting for transfers(2).
●	Adjusted operating expenses reduced by £547 million compared with H1 2015, and included a £227 million VAT recovery following agreement with HMRC on recovery rates in previous years. Excluding expenses associated with Williams & Glyn, write-down of intangible assets and the VAT recovery, adjusted operating expenses reduced by £404 million.
●	Adjusted cost:income ratio was 72% compared with 64% in H1 2015 as the reduction in adjusted operating expenses has been more than offset by lower adjusted income, principally relating to Capital Resolution and IFRS volatility losses.
●	Risk elements in lending (REIL) as a percentage of gross customer loans was 3.5%, 130 basis points lower than 30 June 2015 and 10 basis points lower than 31 March 2016.
●	In H1 2016, PBB and CPB net loans and advances grew by 15% on an annualised basis with strong growth across both residential mortgage and commercial lending.
Q2 2016 Highlights
●	Q2 2016 operating loss of £695 million compared with an operating profit of £421 million in Q1 2016 and £224 million in Q2 2015.
●	Adjusted operating profit of £716 million was £276 million, or 63%, higher than Q1 2016. A £318 million reduction in adjusted operating expenses, including the benefit of a £227 million VAT recovery, and a £37 million reduction in impairments have been partially offset by a £79 million, or 3%, fall in adjusted income. Across PBB, CPB and CIB, adjusted income increased by £171 million, or 6%, to £2,986 million compared with Q1 2016.
●	Across our PBB, CPB and CIB franchises, RBS made an adjusted operating profit of £1,047 million in Q2 2016, £24 million, or 2%, higher than Q1 2016. Adjusted return on equity was 11%, in line with Q1 2016.
●	RBS has made progress on customer Net Promoter Score (NPS) with improvements across NatWest Personal, Royal Bank Business and Commercial customers in the last year.

RBS Performance
●		RBS reported an attributable loss of £2,045 million, compared with a loss of £179 million in H1 2015, which included the final DAS dividend of £1,193 million in Q1 2016 and £1,315 million of litigation and conduct costs. These included provisions in respect of PPI, the UK 2008 rights issue shareholder litigation, an industry-wide examination of tracker mortgages in Ulster Bank RoI and other matters in Q2 2016.
●		Operating loss was £274 million in H1 2016 compared with an operating profit of £261 million in H1 2015. Adjusted operating profit of £1,156 million was £1,737 million, or 60%, lower than H1 2015.
●		Net interest margin (NIM) of 2.18% for H1 2016 was 4 basis points higher than H1 2015 as the benefit associated with a reduction in low yielding assets more than offset modest asset margin pressure and mix impacts across PBB and CPB.
PBB, CPB and CIB Performance
●		Across our PBB, CPB and CIB franchises, an adjusted operating profit of £2,070 million, was £369 million, or 15%, lower than H1 2015.
	○		UK Personal & Business Banking (UK PBB) adjusted operating profit(3) of £1,065 million was £123 million, or 10%, lower than H1 2015 principally driven by an £83 million, or 6%, increase in adjusted operating expenses reflecting a higher FSCS levy and increased technology investment. Net loans and advances grew by £13.1 billion, or 12%, principally driven by continued strong mortgage growth and we continue to see positive momentum across business and personal unsecured lending.
	○		Ulster Bank RoI adjusted operating profit(3) of £122 million was £25 million, or 17%, lower than H1 2015 principally reflecting a reduced level of impairment releases.
	○		Commercial Banking adjusted operating profit(3) of £663 million was £160 million, or 19%, lower than H1 2015. Adjusted operating expenses, excluding transfers(4), increased by £75 million, or 9%, reflecting intangible asset write downs and increased investment spend, and a single name charge in respect of the Oil & Gas portfolio drove a £77 million increase in impairments. Commercial Banking net loans and advances increased by £6.7 billion, or 8%, adjusting for transfers (4).
	○		Private Banking adjusted operating profit(3) of £73 million was £16 million, or 18%, lower as the business continues to invest in its infrastructure, whilst RBS International (RBSI) adjusted operating profit(3) was stable at £106 million.
	○		CIB adjusted income of £681 million was £68 million, or 9%, lower than H1 2015, excluding transfers(2) with adjusted operating profit(3) of £41 million, £46 million lower than H1 2015. Adjusted expenses reduced by 11%, excluding transfers, as CIB moves towards a lower cost base.
Capital Resolution & Central items
●	Capital Resolution reported an adjusted operating loss(3) of £983 million, compared with an adjusted operating profit of £104 million in H1 2015; H1 2016 included a net impairment charge of £263 million, primarily related to the Shipping portfolio, compared with a release of £319 million in H1 2015. An additional £220 million valuation reserve was recorded in Q2 2016 following the EU Referendum. RWAs reduced by £26.3 billion from H1 2015 to £42.3 billion.
●	Central items adjusted operating loss(3) of £128 million compared with a profit of £87 million in H1 2015. H1 2016 included a £668 million charge in respect of IFRS volatility (H1 2015 - £80 million gain), a £227 million VAT recovery and an FX gain of £253 million principally reflecting the significant weakening of sterling against the US dollar following the EU Referendum.

RBS Performance
●	An attributable loss of £1,077 million was reported in Q2 2016 compared with a profit of £280 million in Q2 2015 and a loss of £968 million in Q1 2016, which included the final DAS dividend payment of £1,193 million.
●	An operating loss of £695 million in Q2 2016 compared with an operating profit of £224 million in Q2 2015 and £421 million in Q1 2016. Adjusted operating profit of £716 million was £822 million lower than Q2 2015 but was £276 million higher than Q1 2016.
●	Restructuring costs were £392 million in the quarter, an increase of £154 million compared with Q1 2016, and included £187 million in respect of Williams & Glyn. Litigation and conduct costs of £1,284 million in Q2 2016 compared with £31 million in Q1 2016, and included an additional PPI provision, a provision in respect of the UK 2008 rights issue shareholder litigation, a provision in Ulster Bank RoI principally in respect of an industry-wide examination of tracker mortgages and various other matters.
●	The Q2 2016 results included a net strategic disposal gain of £201 million comprising: a £246 million gain on disposal of RBS’s stake in Visa Europe and a £45 million loss associated with the sale of our Russian subsidiary.
●	A loss of £67 million was recognised in Q2 2016 in respect of a cash tender of certain US dollar, sterling and euro senior debt securities. The tender offers were part of the on-going transition to a holding company capital and term funding model in line with regulatory requirements and included securities that RBS considers non-compliant for ‘Minimum Requirement for Own Funds and Eligible Liabilities’ (MREL) purposes. In addition, RBS recognised a loss of £63 million as a result of the redemption of three RBS NV trust preferred securities as part of simplification of the RBS NV balance sheet and management of our legacy capital securities.
●	Q2 2016 NIM of 2.21% was 6 basis points higher than Q1 2016. NIM across our PBB and CPB franchises was 2.37% for Q2 2016 compared with 2.38% in Q1 2016.
●	Tangible net asset value (TNAV) was 345p per ordinary share at 30 June 2016, a 6p reduction compared with 31 March 2016. The reduction was driven by the attributable loss for the quarter, 8p, a reduction associated with the elimination of the surplus on The Royal Bank of Scotland Group Pension Fund recognised at 31 December 2015 as a result of the revised schedule of contributions, 4p, and the impact of share issuance and other movements, 3p. Partially offsetting, gains were recognised in foreign exchange reserves, 4p, reflecting the weakening of sterling, and cash flow hedging reserves, 5p, as swap rates decreased.
PBB, CPB and CIB Performance
●	Across our PBB, CPB and CIB franchises, an adjusted operating profit of £1,047 million, was £174 million lower than Q2 2015 but was £24 million higher than Q1 2016.
	○	UK PBB adjusted operating profit(3) of £534 million was £69 million lower than Q2 2015, as a higher FSCS levy charge and increased technology investment drove a £64 million increase in adjusted operating expenses, and was broadly in line with Q1 2016.
	○	Ulster Bank RoI adjusted operating profit(3) reduced by £27 million, compared with Q2 2015, to £58 million, principally reflecting reduced impairment releases, and was £6 million lower than Q1 2016.
	○	Commercial Banking adjusted operating profit(3) of £260 million was £188 million lower than Q2 2015 and £143 million lower than Q1 2016. Adjusted operating expenses increased by £61 million to £497 million compared with Q1 2016, reflecting a write down of intangible assets and increased investment spend, and a single name charge in the Oil & Gas portfolio drove a £75 million increase in impairments.
	○	Private Banking adjusted operating profit(3) of £47 million was in line with Q2 2015 but was £21 million higher than Q1 2016. RBSI adjusted operating profit(3) of £53 million was in line with both Q2 2015 and Q1 2016.

	○	CIB made an adjusted operating profit(3) of £95 million in Q2 2016 compared with losses of £13 million in Q2 2015 and £54 million in Q1 2016. CIB adjusted income of £404 million was £97 million higher than Q2 2015, excluding transfers(2), and was £127 million higher than Q1 2016.
Capital Resolution & Central items
●	Capital Resolution adjusted operating loss(3) of £606 million was £567 million higher than Q2 2015 and was £229 million up on Q1 2016, principally reflecting an additional £220 million valuation reserve following the EU Referendum. RWAs reduced by £5.3 billion in the quarter to £42.3 billion.
●	Central items adjusted operating profit(3) of £179 million compared with a profit of £242 million in Q2 2015 and a loss of £307 million in Q1 2016. The quarter included a £227 million VAT recovery, a £201 million FX gain as the US dollar strengthened against sterling and a £312 million charge in respect of IFRS volatility (Q2 2015 - £204 million; Q1 2016 - £356 million).

Strategy goal	2016 target	H1 2016 Progress
Strength and sustainability	Maintain Bank CET1 ratio of 13%	CET1 ratio of 14.5%
	£2 billion AT1 issuance	Continue to plan to issue in 2016, subject to market conditions
	Capital Resolution RWAs around £30 billion	RWAs down £6.7 billion to £42.3 billion in H1 2016. Following the EU Referendum, and the resultant significant weakening of sterling, we now anticipate that RWAs will be around £30 - £35 billion at the end of 2016
Customer experience	Narrow the gap to No.1 in NPS in every primary UK brand	Year on year Royal Bank of Scotland Business (Scotland) has narrowed the gap. NatWest Personal and RBSG Commercial have seen improvements in NPS
Simplifying the bank	Reduce operating expenses by £800 million	Operating expenses down £404 million(5) and we remain on track to achieve our target
Supporting growth	Net 4% growth in PBB and CPB customer loans	Net lending in PBB and CPB up 15% on an annualised basis in the half year
Employee engagement	Raise employee engagement to within two points of the GFS norm	Reviewed annually during Q3

(1)	IFRS volatility arises from the changes to fair value of hedges of loans which do not qualify for hedge accounting under IFRS.
(2)	CIB's results include the following financials for businesses subsequently transferred to Commercial Banking: total income of £78 million for H1 2015 (Q2 2015 - £36 million) and expenses of £23 million for H1 2015 (Q2 2015 - £11 million).
(3)	For unadjusted operating profit and expenses see segment performance on pages 26 to 30.
(4)	The portfolio transfers included operating expenses of £50 million for H1 2016 (Q2 2016 - £26 million) and net loans and advances to customers of £4.1 billion at 30 June 2016.
(5)	Excluding litigation and conduct costs, restructuring costs, write down of other intangible assets, the operating costs of Williams & Glyn and the VAT recovery.

●	RBS is progressing with its plan to build a strong, simple, fair bank for customers and shareholders.
●	CET1 remains ahead of our 13% target at 14.5%. The 10 basis point reduction in the quarter was driven by the attributable loss partially offset by the reduction in RWAs. RWAs decreased by £4.3 billion primarily reflecting disposals and run-off in Capital Resolution and a £3.9 billion reduction associated with the removal of Citizens operational risk RWAs following regulatory approval. Partially offsetting, the weakening of sterling, principally following the EU Referendum, increased RWAs by £4.4 billion. Leverage ratio decreased by 10 basis points to 5.2%.
●	Risk elements in lending (REIL) of £11.8 billion were 3.5% of gross customer loans, down from 3.6% at 31 March 2016 and 4.8% at 30 June 2015.
●	RBS continues to reposition and strengthen its balance sheet. In H1 2016, we completed two senior debt issuances (€1.5 billion seven year 2.5% notes and $1.5 billion ten year 4.8% notes) which are eligible to meet RBS’s MREL. In addition, we redeemed £2.3 billion of legacy US dollar, sterling and euro senior debt securities, including some that RBS considers non-compliant for MREL purposes.
●	In March 2016 RBS made a £4.2 billion payment into The Royal Bank of Scotland Group Pension Fund, being an accelerated payment of existing committed future contributions, and paid the final Dividend Access Share dividend of £1,193 million, actions that have been taken to help the long term resilience and normalise the ownership structure of the Bank.
●	During H1 2016 we completed the transfer of the Coutts International businesses in Asia and the Middle East to Union Bancaire Privée, the final milestone in the sale of our International Private Bank. In addition, we completed the sale of our Russian subsidiary.
●	We continue to work on our ring fencing plans, which were submitted to the PRA in January 2016, and target operational compliance by 1 January 2019. Legal entity restructuring, including the establishment of a Ring-Fenced Bank Holding company, will begin in H2 2016 details of which will be provided in H2. We are actively liaising with key stakeholders including the regulators and employee representatives, and will engage with the credit rating agencies.

●	RBS continued to deliver strong support for both household and business customers. Within UK PBB, gross new mortgage lending was £14.7 billion, representing a market share of approximately 12% compared with a quarter end stock share of 8.6%. We now have 1,001 mortgage advisors supporting our customers, an increase of 15% since H1 2015. We continue to see positive momentum across business banking and personal unsecured lending. Net lending in Commercial Banking increased by £7.9 billion in H1 2016, 17% growth on an annualised basis.
●	The Reward account continues to show positive momentum and now has 815,000 customer accounts compared with 202,000 as at 31 December 2015.
●	We continue to make better use of our digital channels to make it simpler to serve our customers and for them to do business with us. NatWest customers can now apply for personal loans or credit cards via the mobile app. We now have 4.1 million active users of our personal mobile app, up 25% in the last year, with 69,000 unsecured products applied for via the mobile app in H1 2016. We became the first UK based bank to launch Android fingerprint authentication, with 37% of app logins now biometric.
●	RBS became the first UK Bank to be accredited by the Royal National Institute for Blind People for making the voiceover mode simpler and easier to use for our visually impaired customers. In addition, we launched a new service for British Sign Language (BSL) customers, making it possible to instantly chat with an advisor through a BSL interpreter.
●	RBS continues to support UK business growth through the launch of three new business accelerator hubs in H1 2016, bringing the total to nine, with a further three more opening in H2 2016. This included the opening of an Entrepreneurial Centre in our Edinburgh headquarters. In addition, NatWest launched a £1 billion lending fund to support small businesses.
●	RBS is one of only two banks to achieve formal recognition from the Chartered Banker Professional Standards Board for excellence in monitoring the Foundation Standard for Professional Bankers. More than 94% of the in-scope employee population achieved this standard in 2015.

		Q2 2015	Q1 2016	Q2 2016	Year end 2016 target
Personal Banking	NatWest (England & Wales)(1)	8	13	12	15
	Royal Bank of Scotland (Scotland)(1)	-10	-6	-7	-5
	Ulster Bank (Northern Ireland)(2)	-11	-14	-16	-3
	Ulster Bank (Republic of Ireland)(2)	-14	-12	-11	-10
Business Banking	NatWest (England & Wales)(3)	4	9	4	13
	Royal Bank of Scotland (Scotland)(3)	-17	-7	-4	2
Ulster Bank Business & Commercial	Ulster Bank (Northern Ireland) (4)	n/a	-10	3	-4
Commercial Banking(5)		10	15	18	17

		Q2 2015	Q1 2016	Q2 2016	Year end 2016 target
Customer trust(6)	NatWest (England & Wales)	48%	48%	48%	51%
	Royal Bank of Scotland (Scotland)	-2%	21%	23%	26%

(1)	Source: GfK FRS 6 month rolling data. Latest base sizes: NatWest (England & Wales) (3387) Royal Bank of Scotland (Scotland) (527). 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?“
(2)	Source: Coyne Research 12 month rolling data. Latest base sizes: Ulster Bank NI (372) Ulster Bank RoI (332) 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”.
(3)	Source: Charterhouse Research Business Banking Survey (GB), based on interviews with businesses with an annual turnover up to £2 million. Quarterly rolling data. Latest base sizes: NatWest England & Wales (1361), RBS Scotland (438). Weighted by region and turnover to be representative of businesses in England & Wales/Scotland, 4 quarter rolling data.
(4)	Source: Charterhouse Research Business Banking Survey (NI). Latest base size: Ulster (362) Weighted by turnover and industry sector to be representative of businesses in Northern Ireland, 4 quarter rolling data. In 2016 we switched the source of advocacy measurement for Ulster Bank Corporate NI to the Charterhouse Business Banking Study. Charterhouse is a recognised, independent syndicate study that provides more frequent reporting of NPS as well as additional diagnostic customer feedback to help us improve the customer experience. Ulster Bank Business & Commercial RoI reports annually.
(5)	Source: Charterhouse Research Business Banking Survey (GB), based on interviews with businesses with annual turnover between £2 million and £1 billion. Latest base size: RBSG Great Britain (972). Weighted by region and turnover to be representative of businesses in Great Britain, 4 quarter rolling data.
(6)	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: NatWest, England & Wales (852), RBS Scotland (185).

●	The outcome of the UK’s EU Referendum has created considerable uncertainty in our core market and we continue to assess all its implications. In the current low rate and low growth environment, achieving our longer term cost:income ratio and return targets by 2019 is likely to be more challenging.
●	We expect PBB and CPB income to be broadly stable in 2016 compared with 2015 as strong planned balance sheet growth, particularly in mortgages but also in core commercial lending, is balanced by headwinds from the reduction in interchange fees, low interest rates and the uncertain macroeconomic environment. In H1 2016 income across PBB and CPB was broadly stable. CIB income recovered in Q2 2016, following a difficult Q1 2016, and we now expect income to be stable in 2016 compared with 2015.
●	RBS remains on track to achieve an £800 million cost reduction in 2016. We retain our expectation that cost reduction will exceed any income erosion across our combined PBB, CPB and CIB businesses.
●	The impairment charge taken during H1 largely related to sector specific issues particularly in the Oil & Gas and Capital Resolution Shipping portfolios. There is a continuing risk of large single name/sector driven events across our portfolios given the uncertain macroeconomic environment. The outcome of the UK’s EU Referendum has increased the level of uncertainty however it is too early at this point to quantify the impact of any potential credit losses that may result.
●	Restructuring costs are expected to remain high in 2016, totalling over £1 billion. The H1 2016 restructuring charge was £630 million, of which £345 million related to Williams & Glyn.
●	We expect Capital Resolution disposal losses of approximately £1.5 billion, and we anticipate that we will incur most of the remaining losses in 2016 (2015 - £367 million). Losses of £368 million in H1 2016 include an impairment charge of £264 million in relation to the Shipping portfolio. Following the EU Referendum and the resultant significant weakening of sterling, we now anticipate that Capital Resolution RWAs will be around £30 - £35 billion by the end of 2016.
●	We continue to deal with a range of uncertainties in the external environment and we will also have to manage conduct-related investigations and litigation, including US RMBS, throughout 2016, and substantial related incremental provisions may be recognised during the remainder of the year.

	Half year ended			Quarter ended
	30 June	30 June		30 June	31 March	30 June
	2016	2015*		2016	2016	2015*
	£m	£m		£m	£m	£m
Net interest income	4,333	4,418		2,177	2,156	2,215
Own credit adjustments	450	288		194	256	168
Loss on redemption of own debt	(130)	-		(130)	-	-
Strategic disposals	195	(135)		201	(6)	-
Other operating income	1,216	2,685		558	658	1,354
Non-interest income	1,731	2,838		823	908	1,522
Total income	6,064	7,256		3,000	3,064	3,737
Restructuring costs	(630)	(1,470)		(392)	(238)	(1,023)
Litigation and conduct costs	(1,315)	(1,315)		(1,284)	(31)	(459)
Other costs	(3,984)	(4,531)		(1,833)	(2,151)	(2,223)
Operating expenses	(5,929)	(7,316)		(3,509)	(2,420)	(3,705)
Profit/(loss) before impairment (losses)/releases	135	(60)		(509)	644	32
Impairment (losses)/releases	(409)	321		(186)	(223)	192
Operating (loss)/profit before tax	(274)	261		(695)	421	224
Tax charge	(340)	(287)		(260)	(80)	(97)
(Loss)/profit from continuing operations	(614)	(26)		(955)	341	127
Profit from discontinued operations, net of tax	-	358		-	-	674
(Loss)/profit for the period	(614)	332		(955)	341	801
Attributable to:
Non-controlling interests	30	344		8	22	428
Other owners	208	167		114	94	93
Dividend access share	1,193	-		-	1,193	-
Ordinary shareholders	(2,045)	(179)		(1,077)	(968)	280
Memo:
Total income - adjusted (1)	5,549	7,103		2,735	2,814	3,569
Operating expenses - adjusted (2)	(3,984)	(4,531)		(1,833)	(2,151)	(2,223)
Operating profit - adjusted (1,2)	1,156	2,893		716	440	1,538

(1)	Excluding own credit adjustments, loss on redemption of own debt and strategic disposals.
(2)	Excluding restructuring costs and litigation and conduct costs.

	30 June	31 March	31 December
	2016	2016	2015
	£m	£m	£m
Cash and balances at central banks	65,307	72,083	79,404
Net loans and advances to banks (1)	21,763	19,295	18,361
Net loans and advances to customers (1)	326,503	317,088	306,334
Reverse repurchase agreements and stock borrowing	45,778	42,356	39,843
Debt securities and equity shares	84,807	88,877	83,458
Assets of disposal groups (2)	396	3,405	3,486
Other assets	31,047	27,609	22,008
Funded assets	575,601	570,713	552,894
Derivatives	326,023	312,217	262,514
Total assets	901,624	882,930	815,408
Bank deposits (3)	31,377	31,774	28,030
Customer deposits (3)	355,719	352,344	343,186
Repurchase agreements and stock lending	40,881	39,030	37,378
Debt securities in issue	27,148	29,576	31,150
Subordinated liabilities	20,113	20,870	19,847
Derivatives	322,390	304,789	254,705
Liabilities of disposal groups (2)	252	2,816	2,980
Other liabilities	50,017	47,566	43,985
Total liabilities	847,897	828,765	761,261
Non-controlling interests	820	788	716
Owners’ equity	52,907	53,377	53,431
Total liabilities and equity	901,624	882,930	815,408

(1)	Excludes reverse repurchase agreements and stock borrowing.
(2)	Primarily international private banking business at 31 March 2016 and 31 December 2015.
(3)	Excludes repurchase agreements and stock lending.

	Half year ended			Quarter ended
	30 June	30 June		30 June	31 March	30 June
	2016	2015		2016	2016	2015
Net interest income	£m	£m		£m	£m	£m
Net interest income (1)	4,333	4,418		2,177	2,156	2,215
RBS
- UK Personal & Business Banking	2,109	2,067		1,090	1,019	1,035
- Ulster Bank RoI	198	190		93	105	95
- Commercial Banking	1,067	981		531	536	499
- Private Banking	226	219		113	113	109
- RBS International	151	152		76	75	76
- Corporate & Institutional Banking	43	30		24	19	16
- Capital Resolution	168	281		82	86	124
- Williams & Glyn	324	326		162	162	163
- Central items & other	47	172		6	41	98
Average interest-earning assets (IEA)
RBS	399,751	416,319		396,118	403,384	417,248
- UK Personal & Business Banking	138,192	128,485		140,591	135,793	128,957
- Ulster Bank RoI	24,233	23,136		24,288	24,178	23,029
- Commercial Banking	117,312	104,067		119,768	114,855	104,648
- Private Banking	16,441	15,716		16,622	16,259	15,855
- RBS International	21,436	20,527		21,798	21,075	20,416
- Corporate & Institutional Banking	11,745	18,702		11,923	11,568	23,128
- Capital Resolution	29,962	75,727		29,157	30,767	68,544
- Williams & Glyn	23,764	22,703		24,172	23,356	22,769
- Central items & other	16,666	7,256		7,799	25,533	9,902
Yields, spreads and margins of the banking business
Gross yield on interest-earning assets of the banking business (2)	2.85%	2.96%		2.87%	2.82%	2.91%
Cost of interest-bearing liabilities of banking business	(1.00%)	(1.18%)		(1.00%)	(1.01%)	(1.14%)
Interest spread of banking business (3)	1.85%	1.78%		1.87%	1.81%	1.77%
Benefit from interest-free funds	0.33%	0.36%		0.34%	0.34%	0.36%
Net interest margin (1,4)
RBS	2.18%	2.14%		2.21%	2.15%	2.13%
- UK Personal & Business Banking (5)	3.07%	3.24%		3.12%	3.02%	3.22%
- Ulster Bank RoI (5)	1.64%	1.66%		1.54%	1.75%	1.65%
- Commercial Banking (5)	1.83%	1.90%		1.78%	1.88%	1.91%
- Private Banking (5)	2.76%	2.81%		2.73%	2.80%	2.76%
- RBS International (5)	1.42%	1.49%		1.40%	1.43%	1.49%
- Corporate & Institutional Banking	0.74%	0.32%		0.81%	0.66%	0.28%
- Capital Resolution	1.13%	0.75%		1.13%	1.12%	0.73%
- Williams & Glyn	2.74%	2.90%		2.70%	2.79%	2.87%
Average interest rates
Base rate	0.50	0.50		0.50	0.50	0.50
London inter-bank three month offered rates
- Sterling	0.59	0.57		0.58	0.59	0.57
- Eurodollar	0.63	0.27		0.64	0.62	0.28
- Euro	(0.22)	0.02		(0.26)	(0.19)	(0.01)
For notes to this table refer to next page.

	Half year ended			Quarter ended
	30 June	30 June		30 June	31 March	30 June
	2016	2015		2016	2016	2015
	%	%		%	%	%
Third party customer rates (6)
Third party customer asset rate
- UK Personal & Business Banking	3.96	4.19		3.96	3.95	4.18
- Ulster Bank RoI (7)	2.20	2.31		2.07	2.33	2.34
- Commercial Banking	2.85	2.97		2.82	2.87	2.96
- Private Banking	3.00	3.19		2.97	3.01	3.19
- RBS International	3.14	3.08		3.02	3.29	3.01
Third party customer funding rate
- UK Personal & Business Banking	(0.54)	(0.69)		(0.46)	(0.62)	(0.67)
- Ulster Bank RoI (7)	(0.56)	(0.97)		(0.53)	(0.59)	(0.90)
- Commercial Banking	(0.36)	(0.39)		(0.36)	(0.35)	(0.31)
- Private Banking	(0.22)	(0.27)		(0.20)	(0.23)	(0.25)
- RBS International	(0.18)	(0.38)		(0.13)	(0.24)	(0.38)

(1)	For the purpose of net interest margin (NIM) calculations, no increase (H1 2015 - £8 million; Q2 2016 - nil; Q1 2016 - nil; Q2 2015 - £3 million) was made in respect of interest payable on financial liabilities designated as at fair value through profit or loss. Related average interest-earning assets and average interest-bearing liabilities have also been adjusted.
(2)	Gross yield is the interest earned on average interest-earning assets as a percentage of average interest-earning assets.
(3)	Interest spread is the difference between the gross yield and interest paid on average interest-bearing liabilities as a percentage of average interest-bearing liabilities.
(4)	Net interest margin is net interest income as a percentage of average interest-earning assets.
(5)	PBB NIM was 2.86% (H1 2015 - 3.00%; Q2 2016 - 2.89%; Q1 2016 - 2.83%; Q2 2015 - 2.98%); CPB NIM was 1.87% (H1 2015 - 1.94%; Q2 2016 - 1.83%; Q1 2016 - 1.91%; Q2 2015 - 1.95%).
(6)	Net interest margin includes Treasury allocations and interest on intercompany borrowings, which are excluded from third party customer rates.
(7)	Ulster Bank Ireland DAC manages its funding and liquidity requirements locally. Its liquid asset portfolios and non-customer related funding sources are included within its net interest margin, but excluded from its third party asset and liability rates.

	Half year ended				Half year ended
	30 June 2016				30 June 2015*
	Average				Average
	balance	Interest	Rate		balance	Interest	Rate
Average balance sheet	£m	£m	%		£m	£m	%
Assets
Loans and advances to banks	66,179	115	0.35		75,199	197	0.53
Loans and advances to customers	287,575	5,364	3.75		304,857	5,771	3.82
Debt securities	45,997	177	0.77		36,263	139	0.77
Interest-earning assets
- banking business (1,2)	399,751	5,656	2.85		416,319	6,107	2.96
- trading business (3)	132,839				151,588
Non-interest earning assets	338,903				493,066
Total assets	871,493				1,060,973
Memo: Funded assets	535,848				701,616
Liabilities
Deposits by banks	4,437	12	0.54		6,806	25	0.74
Customer accounts	237,126	575	0.49		243,601	758	0.63
Debt securities in issue	21,742	298	2.76		34,014	420	2.49
Subordinated liabilities	19,837	442	4.48		20,730	442	4.30
Internal funding of trading business	(17,508)	(4)	0.05		(15,505)	52	(0.68)
Interest-bearing liabilities
- banking business (1,2)	265,634	1,323	1.00		289,646	1,697	1.18
- trading business (3)	141,714				159,632
Non-interest-bearing liabilities
- deposits(4)	84,660				80,207
- other liabilities	325,071				471,405
Total equity	54,414				60,083
Total liabilities and equity	871,493				1,060,973

(1)	Interest payable has been increased by nil (H1 2015 - £8 million) to record interest on financial liabilities designated as at fair value through profit or loss. Related interest-earning assets and interest-bearing liabilities have also been adjusted.
(2)	Interest income includes amounts (unwind of discount) recognised on impaired loans and receivables. The average balances of such loans are included in average loans and advances to banks and loans and advances to customers.
(3)	Interest receivable and interest payable on trading assets and liabilities are included in income from trading activities.
(4)	Of which, PBB - £49 billion, CPB - £28 billion and other - £8 billion (H1 2015; PBB - £44 billion, CPB - £25 billion and other - £11 billion).

●	Net interest income of £4,333 million decreased £85 million, or 2%, compared with H1 2015 principally driven by a £113 million reduction in Capital Resolution in line with the planned shrinkage of the balance sheet.
●	NIM was 2.18% for H1 2016, 4 basis points higher than H1 2015 as the benefit associated with reductions in the low yielding ‘non-core’ assets has been partially offset by modest asset margin pressure and mix impacts across PBB and CPB.
●	In UK PBB, NIM decreased by 17 basis points to 3.07% compared with H1 2015 reflecting the impact of the overall portfolio mix being increasingly weighted towards secured lending and mortgage customers switching from standard variable rate (SVR) to lower rate products. SVR mortgages represented 12% of the mortgage book as at 30 June 2016 compared with 18% a year earlier.
●	Commercial Banking NIM declined by 7 basis points reflecting asset margin pressure and an increased allocation of the low yielding liquidity portfolio.

●	Net interest income of £2,177 million was £21 million higher than Q1 2016 principally driven by a £71 million increase in UK PBB reflecting deposit re-pricing, strong volume growth and a release of previously suspended credit card interest of £32 million.
●	NIM was 2.21% for Q2 2016, 6 basis points higher than Q1 2016 as low yielding non-core and liquid assets become a smaller proportion of the overall book.
●	NIM for our combined PBB and CPB franchises was 2.37% in Q2 2016 compared with 2.38% in Q1 2016.
●	UK PBB NIM increased by 10 basis points to 3.12% reflecting a one-off release of suspended interest, 9 basis points, and deposit re-pricing whilst Commercial Banking NIM decreased by 10 basis points to 1.78% principally driven by an increased allocation of the low yielding liquidity portfolio.

●	Net interest income of £2,177 million was £38 million lower than Q2 2015 and included a £42 million reduction in Capital Resolution in line with planned shrinkage of the balance sheet.
●	NIM was 8 basis points higher than Q2 2015 principally reflecting the benefit associated with reductions in the low yielding ‘non-core’ assets.

	Half year ended			Quarter ended
	30 June	30 June		30 June	31 March	30 June
	2016	2015		2016	2016	2015
Non-interest income	£m	£m		£m	£m	£m
Net fees and commissions	1,284	1,595		630	654	783
(Loss)/income from trading activities	(267)	665		(157)	(110)	430
Own credit adjustments	450	288		194	256	168
Loss on redemption of own debt	(130)	-		(130)	-	-
Strategic disposals	195	(135)		201	(6)	-
Other operating income	199	425		85	114	141
Total non-interest income	1,731	2,838		823	908	1,522
Memo:
IFRS volatility in Treasury (1)	(668)	80		(312)	(356)	204

(1)	IFRS volatility arises from the changes to fair value of hedges of loans which do not qualify for hedge accounting under IFRS.

●	Non-interest income was £1,731 million, a reduction of £1,107 million, or 39%, compared with H1 2015. Capital Resolution non-interest income fell by £771 million reflecting planned asset disposals and an additional £220 million funding valuation adjustment in Q2 2016 (H1 2016 - £330 million) following the EU Referendum. CIB income reduced by £130 million reflecting the reduced scale of the business. In addition, we recognised a £668 million charge for volatile items under IFRS compared with an £80 million gain in H1 2015. Partially offsetting this, we reported a strategic disposal gain of £195 million, versus a loss of £135 million in H1 2015, and recognised an FX gain of £253 million principally reflecting the significant weakening of sterling against the dollar following the EU Referendum.
●	Net fees and commissions decreased by £311 million, or 19%, compared with H1 2015 reflecting the planned Capital Resolution asset run-down, £131 million, lower CIB income, down £133 million, and lower credit card interchange fees in UK PBB, down £41 million.
●	Losses from trading activities totalled £267 million compared with income of £665 million in H1 2015, reflecting an increased charge for volatile items under IFRS as well as increased losses in Capital Resolution (including an incremental £220 million funding valuation adjustment in Q2 2016).
●	Other operating income of £199 million was £226 million lower than H1 2015 principally reflecting the planned Capital Resolution asset run-down as well as equity disposal and fair value gains of £75 million reported in Commercial Banking in H1 2015.

●

Non-interest income reduced by £85 million to £823 million. Capital Resolution non-interest income fell by £474 million reflecting planned asset disposals, including disposal losses of £102 million, and an additional £220 million funding valuation adjustment following the EU Referendum. Partially offsetting, CIB non-interest income increased by £131 million principally reflecting robust levels of customer activity within the Rates business. In addition, we recognised a £246 million gain on the disposal of our stake in Visa Europe.

●	Non-interest income reduced by £699 million largely reflecting a £537 million fall in Capital Resolution. In addition, a £312 million IFRS volatility charge was reported compared with a gain of £204 million in Q2 2015.

	Half year ended			Quarter ended
	30 June	30 June		30 June	31 March	30 June
	2016	2015*		2016	2016	2015*
Operating expenses	£m	£m		£m	£m	£m
Staff costs	2,329	2,543		1,127	1,202	1,258
Premises and equipment	630	709		315	315	298
Other administrative expenses	625	861		179	446	481
Restructuring costs (see below)	630	1,470		392	238	1,023
Litigation and conduct costs	1,315	1,315		1,284	31	459
Administrative expenses	5,529	6,898		3,297	2,232	3,519
Depreciation and amortisation	352	418		174	178	186
Write down of intangible assets	48	-		38	10	-
Operating expenses	5,929	7,316		3,509	2,420	3,705
Adjusted operating expenses (1)	3,984	4,531		1,833	2,151	2,223
Restructuring costs comprise:
- staff expenses	366	344		245	121	288
- premises, equipment, depreciation and amortisation	24	330		15	9	42
- other	240	796		132	108	693
	630	1,470		392	238	1,023
Of which Williams & Glyn	345	259		187	158	126
Staff costs as a % of total income	38%	35%		38%	39%	34%
Cost:income ratio	98%	101%		117%	79%	99%
Cost:income ratio - adjusted (2)	72%	64%		67%	76%	62%
Employee numbers (FTE - thousands)	89.2	91.6		89.2	92.4	91.6