FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549

 
 
Report of Foreign Private Issuer
 
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
 
For February 4, 2016
 
Commission File Number: 001-10306

 
The Royal Bank of Scotland Group plc

 
RBS, Gogarburn, PO Box 1000
Edinburgh EH12 1HQ

 
(Address of principal executive offices)
 
 
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
 
Form 20-F X
 
Form 40-F ___
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):_________

 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):_________


Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.


Yes
  ___
No X
 
 
If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- ________

 

 
The following information was issued as a Company announcement in London, England and is furnished pursuant to General Instruction B to the General Instructions to Form 6-K:

 




The Royal Bank of Scotland Group plc



Restatement
Document
February 2016






 

Contents
 
 


 
Page
   
Introduction
1
Customer segments
4
   
Appendix 1 Financial statement reconciliations
 
   
Financial statement reconciliations
11
   
Appendix 2 Components of customer segments
 
   
Operating profit/(loss) by segment
17
UK PBB
18
Ulster Bank RoI
21
Commercial Banking
24
Private Banking
27
RBS International
30
Corporate & Institutional Banking
33
Capital Resolution
36
Williams & Glyn
39
   
Appendix 3 Allocation of previous segments to new customer segments
 
   
Introduction
43
UK PBB
44
Ulster Bank
47
Commercial Banking
50
Private Banking
53
Corporate & Institutional Banking
56
RCR
59
Central items & other
62





Forward-looking statements
Certain sections in this document contain ‘forward-looking statements’ as that term is defined in the United States Private Securities Litigation Reform Act of 1995, such as statements that include the words ‘expect’, ‘estimate’, ‘project’, ‘anticipate’, ‘believes’, ‘should’, ‘intend’, ‘plan’, ‘could’, ‘probability’, ‘risk’, ‘target’, ‘goal’, ‘objective’, ‘will’, ‘endeavour’, ‘outlook’, ‘optimistic’, ‘prospects’ and similar expressions or variations on such expressions. These statements concern or may affect future matters, such as RBS's future economic results, business plans and current strategies. Forward-looking statements are subject to a number of risks and uncertainties that might cause actual results and performance to differ materially from any expected future results or performance expressed or implied by the forward-looking statements. Factors that could cause or contribute to differences in current expectations include, but are not limited to, legislative, fiscal and regulatory developments, accounting standards, competitive conditions, technological developments, exchange rate fluctuations and general economic conditions. These and other factors, risks and uncertainties that may impact any forward-looking statement or RBS’s actual results are discussed in RBS's 2015 Annual Report and Accounts (ARA). The forward-looking statements contained in this document speak only as at the date hereof, and RBS 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 Royal Bank of Scotland Group plc (RBS)

Business reorganisation and reporting changes

This announcement sets out changes to RBS’s financial reporting: a change in accounting policy for pensions; revised operating segments; and changes in results presentation.  The announcement contains restated financial results for the year ended 31 December 2014 and, to aid comparison of RBS’s fourth quarter 2015 results with prior periods, restated financial information for the quarters ended 30 September 2015 and 31 December 2014.

Pension accounting policy
In light of developments during 2015, in particular publication by the International Accounting Standards Board of its exposure draft of amendments to IFRIC 14 ‘IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction’, RBS has revised its accounting policy for determining whether or not it has an unconditional right to a refund of surpluses in its employee pension funds. Previously, where trustees have the power to use a scheme surplus to enhance benefits for members, RBS did not regard such power, in and of itself, as undermining the bank's unconditional legal right to a refund of a surplus existing at that point in time. Under the new policy, where RBS has a right to a refund, this is no longer regarded as unconditional if pension fund trustees can use a scheme surplus to enhance benefits for plan members. As a result of this policy change, a minimum funding requirement to cover an existing shortfall in a scheme may give rise to an additional liability and surpluses may not be recognised in full. The accounting policy change is being applied retrospectively and comparatives restated.
 
 
Segmental reorganisation
RBS continues to deliver on its plan to build a stronger, simpler and fairer bank for both customers and shareholders. To support this and reflect the progress made, the previously reported operating segments will now realign as follows:

Personal & Business Banking (PBB) comprises two reportable segments:
·  
UK PBB serves individuals and mass affluent customers in the UK together with small businesses (generally up to £2 million turnover). UK PBB includes Ulster Bank customers in Northern Ireland.
·  
Ulster Bank RoI serves individuals and businesses in the Republic of Ireland (RoI).

Commercial & Private Banking (CPB) comprises three reportable segments:
·  
Commercial Banking serves commercial and mid-corporate customers in the UK.
·  
Private Banking serves high net worth individuals in the UK.
·  
RBS International (RBSI) serves retail, commercial, corporate and financial institution customers in Jersey, Guernsey, Isle of Man and Gibraltar.

Corporate & Institutional Banking (CIB) serves UK and western European customers, both corporates and financial institutions, supported by trading and distribution platforms in the UK, US and Singapore.
Capital Resolution includes CIB Capital Resolution and the remainder of RBS Capital Resolution (RCR).
Williams & Glyn (W&G) comprises RBS England and Wales branch-based businesses, along with certain small and medium enterprises and corporate activities across the UK.
Central items & other includes corporate functions, such as treasury, finance, risk management, compliance, legal, communications and human resources. Central functions manages RBS capital resources and RBS-wide regulatory projects and provides services to the reportable segments. Balances in relation to Citizens and the international private banking business are included in Central items in the relevant periods.


The Royal Bank of Scotland Group plc (RBS)

Reporting changes
In line with RBS’s strategy to be a simpler bank the following reporting changes have been implemented in relation to the presentation of the results.

One-off and other items
The following items were previously reported separately after operating profit; they are now reported within operating profit:

·
Own credit adjustments;
·
Gain/(loss) on redemption of own debt;
·
Write-down of goodwill;
·
Strategic disposals; and
·
RFS Holdings minority interest (RFS MI) (restated for periods up to and including Q4 2014 only; this has been reported within operating profit since Q1 2015).


Own credit adjustments are included within segmental results in CIB, Capital Resolution and Central items (Treasury) in line with where the related liabilities are recorded. The non-statutory results will continue to show these items and restructuring costs and litigation and conduct costs as separate line items within the relevant caption of the income statement where significant.

Allocation of central balance sheet items
RBS allocates all central costs relating to Services and Functions to the business using appropriate drivers; these are reported as indirect costs in the segmental income statements. However, previously central balance sheet items have not been allocated. The assets (and risk-weighted assets) held centrally, mainly relating to Treasury, are now allocated to the business using appropriate drivers.

Revised treasury allocations
Treasury allocations which are included within segmental net interest income and segmental net interest margins, have been revised to reflect the following:
·
In preparation for the separation of W&G, the element of treasury allocations previously charged to UK PBB is now retained centrally.
·
To reflect the impact of changes to the notional equity allocation detailed below.

Revised segmental return on equity
RBS’s CET 1 target is 13% but for the purposes of computing segmental return on equity (ROE), to better reflect the differential drivers of capital usage, segmental operating profit after tax and adjusted for preference dividends is divided by notional equity allocated at different rates of 11% (Commercial Banking and Ulster Bank RoI), 12% (RBS International) and 15% for all other segments, of the monthly average of segmental risk-weighted assets after capital deductions (RWAes). This notional equity was previously 13% for all segments. In addition, due to changes in UK tax rules enacted in the Finance Act 2015, RBS has increased its longer-term effective 31 December tax rate. The notional tax rate used in the segmental ROE has been revised from 25% to 28% (Ulster Bank RoI - 15%; RBS International - 10%). RBS’s forward planning tax rate is 26%.



The Royal Bank of Scotland Group plc (RBS)

Annual results 2015
RBS’s results for the year ended 31 December 2015 will be announced on Friday 26 February 2016. These results will be reported on the new structure and reporting basis as described above.

In conjunction with this Restatement Document, a financial supplement showing restated financial information for the last nine quarters will be available at http://www.rbs.com/ir

Document roadmap
Pages 17 to 41 show the income statement, balance sheet line items and key metrics for the new reportable segments. These reflect the re-presentation of certain items that were previously reported below operating profit.

Appendix 1 reconciles the previously published non-statutory consolidated income statement to the re-presented position and the previously published statutory consolidated income statement, consolidated statement of comprehensive income and consolidated balance sheet to the restated position. The Common Equity Tier 1 capital position and RWAs will not be restated but an illustration of the impact on the metrics of the items, discussed under ‘Pension accounting policy’ and ‘Reporting changes’ is also included on pages 1 and 2.

Appendix 2 summarises the performance of each of the new reportable segments and shows how the previously reported segments have been allocated to the new reportable segments as well as the adjustments to the new reporting basis. These tables include the income statement, key metrics (e.g. ROE, net interest margin including and excluding central interest-earning assets (IEAs), cost:income ratio) and balance sheet line items.

Appendix 3 shows the adjustments to the previously reported segment results to the new reporting basis and how these segments have been allocated to the new reportable segments. These tables include certain key metrics and balance sheet line items.

For further information contact:

Richard O’Connor
Head of Investor Relations
+ 44 (0)20 7672 1758

Group Media Centre
+44 (0) 131 523 4205



Customer segments


Total RBS
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter ended 30 September 2015
 
PBB
 
CPB
 
 
 
 
 
 
 
 
Ulster Bank
 
Commercial
Private
RBS
 
 
Capital
 
Central items
Total
 
UK PBB
RoI
 
Banking
Banking
International
CIB
 
Resolution
W&G
& other (1)
RBS
Income statement
£m
£m
 
£m
£m
£m
£m
 
£m
£m
£m
£m
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
1,055 
90 
 
504 
109 
73 
29 
 
78 
167 
82 
2,187 
Non-interest income
258 
74 
 
296 
51 
14 
299 
 
(27)
44 
(149)
860 
Own credit adjustments
 
78 
 
38 
20 
136 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total income
1,313 
164 
 
800 
160 
87 
406 
 
89 
211 
(47)
3,183 
 
 
 
 
 
 
 
 
 
 
 
 
 
Direct expenses
 
 
 
 
 
 
 
 
 
 
 
 
  - staff
(202)
(40)
 
(117)
(43)
(9)
(97)
 
(60)
(55)
(658)
(1,281)
  - other
(68)
(22)
 
(20)
(11)
(3)
(19)
 
(41)
(12)
(789)
(985)
  - operating lease costs
 
(34)
 
(34)
Indirect expenses
(464)
(48)
 
(238)
(65)
(24)
(242)
 
(245)
(24)
1,350 
Restructuring costs
 
 
 
 
 
 
 
 
 
 
 
 
  - direct
(5)
(3)
 
(1)
(3)
 
(190)
(647)
(847)
  - indirect
(23)
(2)
 
(1)
(2)
(148)
 
(300)
474 
Litigation and conduct costs
 
(6)
 
(101)
(22)
(129)
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses
(762)
(115)
 
(408)
(118)
(38)
(515)
 
(937)
(91)
(292)
(3,276)
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating profit/(loss) before impairment (losses)/releases
551 
49 
 
392 
42 
49 
(109)
 
(848)
120 
(339)
(93)
Impairment (losses)/releases
(2)
54 
 
(16)
(4)
 
50 
(5)
79 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating profit/(loss)
549 
103 
 
376 
38 
50 
(109)
 
(798)
115 
(338)
(14)
 
 
 
 
 
 
 
 
 
 
 
 
 
Memo:
 
 
 
 
 
 
 
 
 
 
 
 
Profit attributable to ordinary shareholders (2)
 
 
 
 
 
 
 
 
 
 
 
940 
Total income - adjusted (3)
1,313 
164 
 
800 
160 
87 
328 
 
51 
211 
(67)
3,047 
Operating expenses - adjusted (4)
(734)
(110)
 
(409)
(119)
(36)
(358)
 
(346)
(91)
(97)
(2,300)
Operating profit/(loss) - adjusted (3,4)
577 
108 
 
375 
37 
52 
(30)
 
(245)
115 
(163)
826 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the notes to this table refer to the following page.
 
 
 
 
 
 
 
 



Customer segments


 
30 September 2015
 
PBB
 
CPB
 
 
 
 
 
 
 
 
Ulster Bank
 
 Commercial
Private
RBS
 
 
Capital
 
Central items
 Total
Key metrics
UK PBB
RoI
 
Banking
Banking
International
CIB
 
Resolution
W&G
& other (1)
RBS
 
 
 
 
 
 
 
 
 
 
 
 
 
Return on equity (5)
27.2%
16.7%
 
12.3%
7.4%
18.0%
(6.4%)
 
nm
nm
nm
9.0%
Return on equity - adjusted (3,4,5)
28.7%
17.5%
 
12.3%
7.1%
18.8%
(2.7%)
 
nm
nm
nm
16.2%
Net interest margin
3.19%
1.52%
 
1.89%
2.72%
1.43%
0.62%
 
0.60%
2.88%
nm
2.09%
Net interest margin excluding central IEAs
3.60%
1.52%
 
2.68%
3.92%
4.38%
0.78%
 
0.70%
3.40%
nm
2.09%
Cost:income ratio
58%
70%
 
51%
74%
44%
127%
 
nm
43%
nm
103%
Cost:income ratio - adjusted (3,4)
56%
67%
 
51%
74%
41%
109%
 
nm
43%
nm
75%
Loan impairment charge as a % of gross loans and advances
(1.2%)
 
0.1%
0.1%
(0.1%)
 
(0.5%)
0.1%
nm
(0.1%)
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital and balance sheet (6)
£bn
£bn
 
£bn
£bn
£bn
£bn
 
£bn
£bn
£bn
£bn
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans and advances to customers (gross)
118.3 
18.8 
 
89.8 
11.1 
7.1 
19.8 
 
34.8 
20.3 
3.0 
323.0 
Loan impairment provisions
(2.0)
(2.0)
 
(0.7)
(0.1)
 
(4.0)
(0.3)
(0.2)
(9.3)
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loans and advances to customers
116.3 
16.8 
 
89.1 
11.1 
7.0 
19.8 
 
30.8 
20.0 
2.8 
313.7 
Funded assets
140.7 
22.9 
 
129.6 
17.4 
22.9 
125.9 
 
66.0 
24.0 
31.3 
580.7 
Risk elements in lending
2.9 
3.6 
 
2.1 
0.1 
0.1 
 
5.3 
0.5 
14.6 
Customer deposits (excluding repos)
134.9 
13.6 
 
89.4 
22.7 
22.3 
5.9 
 
30.0 
23.6 
10.1 
352.5 
Loan:deposit ratio (excluding repos)
86%
123%
 
100%
49%
32%
337%
 
nm
85%
nm
89%
Provision coverage (7)
67%
54%
 
33%
32%
58%
 
76%
59%
nm
63%
Risk-weighted assets
33.3 
19.6 
 
64.2 
8.4 
8.1 
38.8 
 
59.7 
10.1 
73.8 
316.0 

nm = not meaningful

Notes:
(1)
Central items includes unallocated costs and assets which principally comprise volatile items under IFRS and balances in relation to Citizens and international private banking.
(2)
(3)
Refer to Appendix 1 for reconciliations of restated operating profit/(loss) to profit/(loss) attributable to ordinary shareholders.
Excluding own credit adjustments, gain on redemption of own debt and strategic disposals.
(4)
Excluding restructuring costs and litigation and conduct costs and write-down of goodwill.
(5)
RBS’s CET 1 target is 13% but for the purposes of computing segmental return on equity (ROE), to better reflect the differential drivers of capital usage, segmental operating profit after tax and adjusted for preference dividends is divided by notional equity allocated at different rates of 11% (Commercial Banking and Ulster Bank RoI), 12% (RBS International) and 15% for all other segments, of the monthly average of segmental risk-weighted assets after capital deductions (RWAes). This notional equity was previously 13% for all segments. In addition, due to changes in UK tax rules enacted in the Finance Act 2015, RBS has increased its longer-term effective 31 December tax rate. The notional tax rate used in the segmental ROE has been revised from 25% to 28% (Ulster Bank RoI - 15%; RBS International - 10%). RBS’s forward planning tax rate is 26%.
(6)
Including disposal groups.
(7)
Provision coverage represents loan impairment provisions as a percentage of risk elements in lending.



Customer segments


Total RBS
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter ended 31 December 2014
 
PBB
 
CPB
 
 
 
 
 
 
 
 
Ulster Bank
 
Commercial
Private
RBS
 
 
Capital
 
Central items
Total
 
UK PBB
RoI
 
Banking
Banking
International
CIB
 
Resolution
W&G
& other (1)
RBS
Income statement
£m
£m
 
£m
£m
£m
£m
 
£m
£m
£m
£m
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
1,086 
112 
 
506 
116 
83 
 
162 
167 
142 
2,382 
Non-interest income
288 
40 
 
343 
54 
18 
248 
 
37 
49 
(350)
727 
Own credit adjustments
 
(33)
 
(50)
(61)
(144)
 
 
 
 
 
 
 
 
 
 
 
 
 
Total income
1,374 
152 
 
849 
170 
101 
223 
 
149 
216 
(269)
2,965 
 
 
 
 
 
 
 
 
 
 
 
 
 
Direct expenses
 
 
 
 
 
 
 
 
 
 
 
 
  - staff
(205)
(43)
 
(115)
(44)
(11)
(36)
 
(66)
(49)
(623)
(1,192)
  - other
(72)
(23)
 
(35)
(12)
(2)
(47)
 
(80)
(10)
(1,101)
(1,382)
  - operating lease costs
 
(38)
 
(38)
Indirect expenses
(548)
(53)
 
(319)
(90)
(23)
(293)
 
(344)
(25)
1,695 
Restructuring costs
 
 
 
 
 
 
 
 
 
 
 
 
  - direct
(2)
 
(1)
(1)
(3)
 
(46)
(489)
(542)
  - indirect
(14)
 
(16)
(2)
(16)
 
(22)
68 
Litigation and conduct costs
(650)
19 
 
(62)
(90)
(370)
 
(12)
(1,164)
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses
(1,491)
(98)
 
(586)
(237)
(38)
(765)
 
(570)
(84)
(449)
(4,318)
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating (loss)/profit before impairment releases/(losses)
(117)
54 
 
263 
(67)
63 
(542)
 
(421)
132 
(718)
(1,353)
Impairment releases/(losses)
70 
 
(32)
(3)
 
634 
(9)
670 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating (loss)/profit
(115)
124 
 
231 
(66)
60 
(536)
 
213 
123 
(717)
(683)
 
 
 
 
 
 
 
 
 
 
 
 
 
Memo:
 
 
 
 
 
 
 
 
 
 
 
 
Profit attributable to ordinary shareholders (2)
 
 
 
 
 
 
 
 
 
 
 
(5,791)
Total income - adjusted (3)
1,374 
152 
 
849 
170 
101 
256 
 
199 
216 
(208)
3,109 
Operating expenses - adjusted (4)
(825)
(119)
 
(507)
(146)
(36)
(376)
 
(490)
(84)
(29)
(2,612)
Operating profit/(loss) - adjusted (3,4)
551 
103 
 
310 
25 
62 
(114)
 
343 
123 
(236)
1,167 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the notes to this table refer to page 5.
 
 
 
 
 
 
 
 
 
 
 



Customer segments


 
31 December 2014
 
PBB
 
CPB
 
 
 
 
 
 
 
 
Ulster Bank
 
 Commercial
Private
RBS
 
 
Capital
 
Central items
 Total
Key metrics
UK PBB
RoI
 
Banking
Banking
International
CIB
 
Resolution
W&G
& other (1)
RBS
 
 
 
 
 
 
 
 
 
 
 
 
 
Return on equity (5)
(7.0%)
19.8%
 
7.0%
(15.8%)
24.7%
(23.3%)
 
nm
nm
nm
(51.1%)
Return on equity - adjusted (3,4,5)
25.5%
16.4%
 
9.9%
3.7%
25.6%
(5.9%)
 
nm
nm
nm
(38.4%)
Net interest margin
3.37%
1.90%
 
1.96%
2.91%
1.67%
0.21%
 
0.71%
2.92%
nm
2.23%
Net interest margin excluding central IEAs
3.80%
1.90%
 
2.79%
4.17%
4.76%
0.16%
 
0.77%
3.42%
nm
2.23%
Cost:income ratio
109%
64%
 
69%
139%
38%
343%
 
nm
39%
nm
146%
Cost:income ratio - adjusted (3,4)
60%
78%
 
60%
86%
36%
147%
 
nm
39%
nm
84%
Loan impairment charge as a % of gross loans and advances
(1.4%)
 
0.1%
0.2%
(0.1%)
 
(4.0%)
0.2%
nm
(0.8%)
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital and balance sheet (6)
£bn
£bn
 
£bn
£bn
£bn
£bn
 
£bn
£bn
£bn
£bn
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans and advances to customers (gross)
114.1 
20.5 
 
85.8 
11.0 
7.3 
26.5 
 
64.0 
19.9 
63.7 
412.8 
Loan impairment provisions
(2.5)
(2.4)
 
(0.9)
(0.1)
 
(11.1)
(0.4)
(0.6)
(18.0)
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loans and advances to customers
111.6 
18.1 
 
84.9 
11.0 
7.2 
26.5 
 
52.9 
19.5 
63.1 
394.8 
Funded assets
137.8 
22.4 
 
127.9 
17.7 
23.4 
137.7 
 
115.6 
23.6 
90.9 
697.0 
Risk elements in lending
3.6 
4.4 
 
2.4 
0.1 
0.2 
 
15.6 
0.6 
1.3 
28.2 
Customer deposits (excluding repos)
132.6 
14.7 
 
84.9 
22.3 
20.8 
11.8 
 
36.4 
22.0 
69.4 
414.9 
Loan:deposit ratio (excluding repos)
84%
124%
 
100%
49%
35%
226%
 
nm
88%
nm
95%
Provision coverage (7)
69%
55%
 
39%
25%
27%
 
71%
61%
nm
64%
Risk-weighted assets
36.6 
21.8 
 
63.2 
8.7 
7.5 
41.9 
 
95.1 
10.1 
71.0 
355.9 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

For the notes to this table refer to page 5.



Customer segments

 
 
 
 
 
 
 
 
 
 
 
 
 
Total RBS
 
 
 
 
 
 
 
 
 
 
 
 
 
Year ended 31 December 2014
 
PBB
 
CPB
 
 
 
 
 
Ulster Bank
 
Commercial
Private
RBS
 
 
Capital
 
Central items
Total
 
UK PBB
RoI
 
Banking
Banking
International
CIB
 
Resolution
W&G
& other (1)
RBS
Income statement
£m
£m
 
£m
£m
£m
£m
 
£m
£m
£m
£m
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
4,221 
467 
 
1,976 
454 
323 
(11)
 
673 
664 
491 
9,258 
Non-interest income
1,223 
137 
 
1,329 
235 
68 
1,951 
 
1,155 
188 
(459)
5,827 
Own credit adjustments
 
(9)
 
(36)
(101)
(146)
Gain on redemption of own debt
 
 
20 
20 
Strategic disposals
 
 
191 
191 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total income
5,444 
604 
 
3,305 
689 
391 
1,931 
 
1,792 
852 
142 
15,150 
 
 
 
 
 
 
 
 
 
 
 
 
 
Direct expenses
 
 
 
 
 
 
 
 
 
 
 
 
  - staff
(824)
(164)
 
(495)
(178)
(44)
(446)
 
(444)
(196)
(2,585)
(5,376)
  - other
(346)
(83)
 
(100)
(37)
(15)
(190)
 
(293)
(36)
(3,764)
(4,864)
  - operating lease costs
 
(141)
 
(141)
Indirect expenses
(1,958)
(180)
 
(1,008)
(289)
(94)
(1,080)
 
(1,283)
(98)
5,990 
Restructuring costs
 
 
 
 
 
 
 
 
 
 
 
 
  - direct
(10)
 
(41)
(1)
(2)
(13)
 
(80)
(1,015)
(1,154)
  - indirect
(101)
(21)
 
(67)
(5)
(89)
 
(105)
388 
Litigation and conduct costs
(918)
19 
 
(112)
(90)
(832)
 
(162)
(99)
(2,194)
Write-down of goodwill
 
 
(130)
(130)
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses
(4,157)
(421)
 
(1,964)
(595)
(160)
(2,650)
 
(2,497)
(330)
(1,085)
(13,859)
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating profit/(loss) before impairment (losses)/releases
1,287 
183 
 
1,341 
94 
231 
(719)
 
(705)
522 
(943)
1,291 
Impairment (losses)/releases
(154)
306 
 
(85)
 
1,307 
(55)
12 
1,352 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating profit/(loss)
1,133 
489 
 
1,256 
99 
238 
(710)
 
602 
467 
(931)
2,643 
 
 
 
 
 
 
 
 
 
 
 
 
 
Memo:
 
 
 
 
 
 
 
 
 
 
 
 
Profit attributable to ordinary shareholders (2)
 
 
 
 
 
 
 
 
 
 
 
(3,470)
Total income - adjusted (3)
5,444 
604 
 
3,305 
689 
391 
1,940 
 
1,828 
852 
32 
15,085 
Operating expenses - adjusted (4)
(3,128)
(427)
 
(1,744)
(504)
(153)
(1,716)
 
(2,020)
(330)
(359)
(10,381)
Operating profit/(loss) - adjusted (3,4)
2,162 
483 
 
1,476 
190 
245 
233 
 
1,115 
467 
(315)
6,056 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the notes to this table refer to page 5.
 
 
 
 
 
 
 
 
 
 
 



Customer segments


 
31 December 2014
 
PBB
 
CPB
 
 
 
 
 
 
 
 
Ulster Bank
 
 Commercial
Private
RBS
 
 
Capital
 
Central items
 Total
Key metrics
UK PBB
RoI
 
Banking
Banking
International
CIB
 
Resolution
W&G
& other (1)
RBS
 
 
 
 
 
 
 
 
 
 
 
 
 
Return on equity (5)
11.9%
18.6%
 
10.2%
4.1%
24.2%
(7.9%)
 
nm
nm
nm
(8.2%)
Return on equity - adjusted (3,4,5)
23.7%
18.4%
 
12.2%
9.1%
24.9%
1.3%
 
nm
nm
nm
(1.3%)
Net interest margin
3.32%
1.92%
 
1.91%
2.89%
1.65%
(0.07%)
 
0.67%
2.93%
nm
2.13%
Net interest margin excluding central IEAs
3.75%
1.99%
 
2.74%
4.12%
4.83%
(0.06%)
 
0.72%
3.42%
nm
2.13%
Cost:income ratio
76%
70%
 
59%
86%
41%
137%
 
nm
39%
nm
91%
Cost:income ratio - adjusted (3,4)
57%
71%
 
53%
73%
39%
88%
 
nm
39%
nm
69%
Loan impairment charge as a % of gross loans and advances
0.1%
(1.5%)
 
0.1%
(0.1%)
 
(2.0%)
0.3%
nm
(0.4%)
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital and balance sheet (6)
£bn
£bn
 
£bn
£bn
£bn
£bn
 
£bn
£bn
£bn
£bn
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans and advances to customers (gross)
114.1 
20.5 
 
85.8 
11.0 
7.3 
26.5 
 
64.0 
19.9 
63.7 
412.8 
Loan impairment provisions
(2.5)
(2.4)
 
(0.9)
(0.1)
 
(11.1)
(0.4)
(0.6)
(18.0)
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loans and advances to customers
111.6 
18.1 
 
84.9 
11.0 
7.2 
26.5 
 
52.9 
19.5 
63.1 
394.8 
Funded assets
137.8 
22.4 
 
127.9 
17.7 
23.4 
137.7 
 
115.6 
23.6 
90.9 
697.0 
Risk elements in lending
3.6 
4.4 
 
2.4 
0.1 
0.2 
 
15.6 
0.6 
1.3 
28.2 
Customer deposits (excluding repos)
132.6 
14.7 
 
84.9 
22.3 
20.8 
11.8 
 
36.4 
22.0 
69.4 
414.9 
Loan:deposit ratio (excluding repos)
84%
124%
 
100%
49%
35%
226%
 
nm
88%
nm
95%
Provision coverage (7)
69%
55%
 
39%
25%
27%
 
71%
61%
nm
64%
Risk-weighted assets
36.6 
21.8 
 
63.2 
8.7 
7.5 
41.9 
 
95.1 
10.1 
71.0 
355.9 
 
 
 
 
 
 
 
 
 
 
 
 
 
nm= not meaningful
 
 
 
 
 
 
 
 
 
 
 
 

For the notes to this table refer to page 5.




Appendix 1

Financial statement
reconciliations



Consolidated income statement reconciliation for the quarter ended 30 September 2015


 
As
Pension
Re-presentation
 
 
 
 
previously
accounting
of one-off and
Non-
Presentational
Restated
 
reported
policy impact
other items
statutory
adjustments (1)
statutory
 
£m
£m
£m
£m
£m
£m
 
 
 
 
 
 
 
Interest receivable
2,963 
2,963 
2,963 
Interest payable
(776)
(776)
(776)
 
 
 
 
 
 
 
Net interest income
2,187 
2,187 
2,187 
 
 
 
 
 
 
 
Fees and commissions receivable
880 
880 
880 
Fees and commissions payable
(195)
(195)
(195)
Income from trading activities
82 
82 
88 
170 
Own credit adjustments
136 
136 
(136)
Other operating income
93 
93 
48 
141 
 
 
 
 
 
 
 
Non-interest income
860 
136 
996 
996 
 
 
 
 
 
 
 
Total income
3,047 
136 
3,183 
3,183 
 
 
 
 
 
 
 
Staff costs
(1,265)
(16)
(1,281)
(281)
(1,562)
Premises and equipment
(352)
(352)
(283)
(635)
Other administrative expenses
(477)
(477)
(253)
(730)
Depreciation and amortisation
(190)
(190)
(92)
(282)
Restructuring costs
(847)
(847)
847 
Litigation and conduct costs
(129)
(129)
129 
Write-down of goodwill and other intangible assets
(67)
(67)
 
 
 
 
 
 
 
Operating expenses
(3,260)
(16)
(3,276)
(3,276)
 
 
 
 
 
 
 
Loss before impairment releases
(213)
(16)
136 
(93)
(93)
Impairment releases
79 
79 
79 
 
 
 
 
 
 
 
Operating loss
(134)
(16)
136 
(14)
(14)
 
 
 
 
 
 
 
Own credit adjustments
136 
(136)
 
 
 
 
 
 
 
Profit/(loss) before tax
(16)
(14)
(14)
Tax (charge)/credit
(1)
 
 
 
 
 
 
 
Profit from continuing operations
(12)
(11)
(11)
Profit from discontinued operations, net of tax
1,093 
1,093 
1,093 
 
 
 
 
 
 
 
Profit for the period
1,094 
(12)
1,082 
1,082 
Non-controlling interests
(45)
(45)
(45)
Preference share and other dividends
(97)
(97)
(97)
 
 
 
 
 
 
 
Profit attributable to ordinary shareholders
952 
(12)
940 
940 
 
 
 
 
 
 
 

Note:
(1)
Reallocation of separately reported one-off items to the statutory income and operating expense lines.


Consolidated income statement reconciliation for the quarter ended 31 December 2014


 
 
Re-presentation
 
 
 
 
As previously
of one-off and
Non-
Presentational
 
 
reported
other items
statutory
adjustments (1)
Statutory
 
£m
£m
£m
£m
£m
 
 
 
 
 
 
Interest receivable
3,238 
3,238 
3,238 
Interest payable
(856)
(856)
(856)
 
 
 
 
 
 
Net interest income
2,382 
2,382 
2,382 
 
 
 
 
 
 
Fees and commissions receivable
1,055 
1,055 
1,055 
Fees and commissions payable
(204)
(204)
(204)
Income from trading activities
(319)
(319)
(84)
(403)
Own credit adjustments
(144)
(144)
144 
Other operating income
182 
13 
195 
(60)
135 
 
 
 
 
 
 
Non-interest income
714 
(131)
583 
583 
 
 
 
 
 
 
Total income
3,096 
(131)
2,965 
2,965 
 
 
 
 
 
 
Staff costs
(1,192)
(1,192)
(133)
(1,325)
Premises and equipment
(452)
(452)
(28)
(480)
Other administrative expenses
(699)
(2)
(701)
(1,298)
(1,999)
Depreciation and amortisation
(203)
(203)
(203)
Restructuring costs
(542)
(542)
542 
Litigation and conduct costs
(1,164)
(1,164)
1,164 
Write-down of goodwill and other intangible assets
(311)
(311)
Write-down of other intangible assets
(64)
(64)
64 
 
 
 
 
 
 
Operating expenses
(4,316)
(2)
(4,318)
(4,318)
 
 
 
 
 
 
Loss before impairment releases
(1,220)
(133)
(1,353)
(1,353)
Impairment releases
670 
670 
670 
 
 
 
 
 
 
Operating loss
(550)
(133)
(683)
(683)
 
 
 
 
 
 
Own credit adjustments
(144)
144 
RFS MI
11 
(11)
 
 
 
 
 
 
Loss before tax
(683)
(683)
(683)
Tax charge
(1,040)
(1,040)
(1,040)
 
 
 
 
 
 
Loss from continuing operations
(1,723)
(1,723)
(1,723)
Loss from discontinued operations, net of tax
(3,882)
(3,882)
(3,882)
 
 
 
 
 
 
Loss for the period
(5,605)
(5,605)
(5,605)
Non-controlling interests
(71)
(71)
(71)
Preference share and other dividends
(115)
(115)
(115)
 
 
 
 
 
 
Loss attributable to ordinary shareholders
(5,791)
(5,791)
(5,791)
 
 
 
 
 
 

Note:
(1)
Reallocation of separately reported one-off items to the statutory income and operating expense lines.



Consolidated income statement reconciliation for the year ended 31 December 2014


 
 
Re-presentation
 
 
 
 
As previously
of one-off and
Non-
Presentational
 
 
reported
other items
statutory
adjustments (1)
Statutory
 
£m
£m
£m
£m
£m
 
 
 
 
 
 
Interest receivable
13,079 
13,079 
13,079 
Interest payable
(3,818)
(3)
(3,821)
(3,821)
 
 
 
 
 
 
Net interest income
9,261 
(3)
9,258 
9,258 
 
 
 
 
 
 
Fees and commissions receivable
4,414 
4,414 
4,414 
Fees and commissions payable
(875)
(875)
(875)
Income from trading activities
1,325 
1,325 
(40)
1,285 
Own credit adjustments
(146)
(146)
146 
Gain on redemption of own debt
20 
20 
20 
Strategic disposals
191 
191 
(191)
Other operating income
981 
(18)
963 
85 
1,048 
 
 
 
 
 
 
Non-interest income
5,845 
47 
5,892 
5,892 
 
 
 
 
 
 
Total income
15,106 
44 
15,150 
15,150 
 
 
 
 
 
 
Staff costs
(5,376)
(5,376)
(381)
(5,757)
Premises and equipment
(1,812)
(1,812)
(269)
(2,081)
Other administrative expenses
(2,117)
(3)
(2,120)
(2,448)
(4,568)
Depreciation and amortisation
(927)
(927)
(3)
(930)
Restructuring costs
(1,154)
(1,154)
1,154 
Litigation and conduct costs
(2,194)
(2,194)
2,194 
Write-down of goodwill and other intangible assets
(523)
(523)
Write-down of other intangible assets
(146)
(146)
146 
Write-down of goodwill
(130)
(130)
130 
 
 
 
 
 
 
Operating expenses
(13,726)
(133)
(13,859)
(13,859)
 
 
 
 
 
 
Profit before impairment releases
1,380 
(89)
1,291 
1,291 
Impairment releases
1,352 
1,352 
1,352 
 
 
 
 
 
 
Operating profit
2,732 
(89)
2,643 
2,643 
 
 
 
 
 
 
Own credit adjustments
(146)
146 
Gain on redemption of own debt
20 
(20)
Strategic disposals
191 
(191)
Write-down of goodwill
(130)
130 
RFS MI
(24)
24 
 
 
 
 
 
 
Profit before tax
2,643 
2,643 
2,643 
Tax charge
(1,909)
(1,909)
(1,909)
 
 
 
 
 
 
Profit from continuing operations
734 
734 
734 
Loss from discontinued operations, net of tax
(3,445)
(3,445)
(3,445)
 
 
 
 
 
 
Loss for the period
(2,711)
(2,711)
(2,711)
Non-controlling interests
(60)
(60)
(60)
Preference share and other dividends
(699)
(699)
(699)
 
 
 
 
 
 
Loss attributable to ordinary shareholders
(3,470)
(3,470)
(3,470)
 
 
 
 
 
 

Note:
(1)
Reallocation of separately reported one-off items to the statutory income and operating expense lines.



Consolidated statement of comprehensive income


 
As
Pension
 
 
previously
accounting
 
 
reported
policy impact
Restated
Consolidated statement of comprehensive income
£m
£m
£m
 
 
 
 
Quarter ended 30 September 2015
 
 
 
Profit for the period
1,094 
(12)
1,082 
Gain resulting from changes in additional liability due to minimum funding requirements (1)
 
 
 
  - gross
  - tax
(1)
(1)
Total comprehensive income for the period
810 
(10)
800 
 
 
 
 
Nine months ended 30 September 2015
 
 
 
Profit for the period
1,452 
(38)
1,414 
Gain resulting from changes in additional liability due to minimum funding requirements (1)
 
 
 
  - gross
20 
20 
  - tax
(4)
(4)
Total comprehensive loss for the period
(16)
(22)
(38)
 
 
 
 
Quarter ended 30 June 2015
 
 
 
Profit for the period
814 
(13)
801 
Gain resulting from changes in additional liability due to minimum funding requirements (1)
 
 
 
  - gross
14 
14 
  - tax
(3)
(3)
Total comprehensive loss for the period
(605)
(2)
(607)
 
 
 
 
Half year ended 30 June 2015
 
 
 
Profit for the period
358 
(26)
332 
Gain resulting from changes in additional liability due to minimum funding requirements (1)
 
 
 
  - gross
17 
17 
  - tax
(3)
(3)
Total comprehensive loss for the period
(826)
(12)
(838)
 
 
 
 
Quarter ended 31 December 2014
 
 
 
Loss resulting from changes in additional liability due to minimum funding requirements (1)
 
 
 
  - gross
(78)
(78)
  - tax
16 
16 
Total comprehensive loss for the period
(4,432)
(62)
(4,494)
 
 
 
 
Year ended 31 December 2014
 
 
 
Loss resulting from changes in additional liability due to minimum funding requirements (1)
 
 
 
  - gross
(1,749)
(1,749)
  - tax
350 
350 
Total comprehensive loss for the year
(783)
(1,399)
(2,182)

Note:
(1)
Included in items that do not qualify for reclassification.



Consolidated balance sheet and capital reconciliation


 
 
 
Statutory
 
 
 
As
Pension
 
 
 
previously
accounting
 
 
 
reported
policy impact
Restated
Balance sheet
 
£m
£m
£m
 
 
 
 
 
As at 30 September 2015
 
 
 
 
Deferred tax assets
 
1,434 
377 
1,811 
Prepayments, accrued income and other assets
 
4,928 
(119)
4,809 
Retirement benefit liabilities
 
1,955 
1,763 
3,718 
Owners’ equity
 
51,593 
(1,505)
50,088 
Tangible net asset value per ordinary share (1)
 
384p
(13p)
371p
 
 
 
 
 
As at 30 June 2015
 
 
 
 
Deferred tax assets
 
1,479 
374 
1,853 
Prepayments, accrued income and other assets
 
4,829 
(119)
4,710 
Retirement benefit liabilities
 
1,869 
1,750 
3,619 
Owners’ equity
 
51,117 
(1,495)
49,622 
Tangible net asset value per ordinary share (1)
 
380p