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 October 30, 2015
 
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
Q3 2015 Results

Contents
Page
   
Introduction
1
Highlights
3
Analysis of results
11
Segment performance
18
Selected statutory financial statements
26
Notes
31
Appendix 1 - Additional segment information
 
Appendix 2 - Go-forward Bank profile
 
Appendix 3 - Income statement reconciliations
 

Introduction

Presentation of information
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 2014 have been filed with the Registrar of Companies. The report of the auditor on those statutory accounts was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Act.

In this document, ‘RBSG plc’ or the ‘company’ refers to The Royal Bank of Scotland Group plc, and ‘RBS’ or the ‘Group’ refers to RBSG plc and its subsidiaries. Some of the financial information contained in this document, prepared using Group accounting policies, shows the operating performance of RBS on a non-statutory basis which excludes own credit adjustments, gain on redemption of own debt, write down of goodwill and strategic disposals. RFS Holdings minority interest (RFS MI) was also excluded in the periods ended 30 September 2014. Such information is provided to give a better understanding of the results of RBS’s operations.

RBS is committed to becoming a leaner, less volatile business based around its core franchises of Personal & Business Banking (PBB) and Commercial & Private Banking (CPB). To achieve this goal a number of initiatives have been announced which include, but are not limited to, the restructuring of Corporate & Institutional Banking (CIB) into CIB Go-forward and CIB Capital Resolution, the divestment of the remaining stake in Citizens, the sale of the international private banking business (the remaining Private Banking UK business is within the Go-forward Bank (Private Banking Go-forward)), the exit of Williams & Glyn (mainly within UK Personal & Business Banking (UK PBB)) and the continued run down of RBS Capital Resolution (RCR). Significant progress towards these exits is expected by the end of 2015. This document contains some information to illustrate the impact on certain key performance measures of these initiatives by showing the future profile of the bank (the ‘Go-forward Bank’) and the segments, businesses and portfolios which it intends to exit (the ‘Exit Bank’). This information is presented to illustrate the strategy and its impact on the business and is on a non-statutory basis and should be read in conjunction with the notes attached as well as the section titled Forward-looking statements. Other than the change in treatment of Citizens described on page 2 there has been no change to the reportable segments in the period as a result of these initiatives.

Introduction

Citizens
On 31 December 2014 Citizens was classified as a disposal group and a discontinued operation: its aggregate assets were presented in Assets of disposal groups and its aggregate liabilities in Liabilities of disposal groups. Prior period results were re-presented.

From 3 August 2015, when RBS’s interest fell to 20.9%, Citizens has been accounted for as an associate classified as held for sale. Citizens Financial Group is no longer a reportable segment; the non-statutory operating results and operating segment disclosures for all periods have been restated accordingly.

Statutory results
The condensed consolidated income statement, condensed consolidated statement of comprehensive income, condensed consolidated balance sheet, condensed consolidated statement of changes in equity and related Notes presented on pages 26 to 35 inclusive are on a statutory basis. Reconciliations between income statement lines on a non-statutory basis and a statutory basis are included in Appendix 3.

Contacts

For analyst enquiries:
   
Richard O’Connor
Head of Investor Relations
+44 (0) 20 7672 1758
     
For media enquiries:
   
RBS Press Office
 
+44 (0) 131 523 4205

Analysts and investors conference call
RBS will hold an audio Q&A session for analysts and investors on the results for the quarter ended 30 September 2015. Details are as follows:

Date:
 
Friday 30 October 2015
Time:
 
9.00 am UK time
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

Announcement and slides are available on www.rbs.com/results

Financial supplement
A financial supplement containing income statement and balance sheet information for the nine quarters ended 30 September 2015 is available on www.rbs.com/results
Highlights

The Royal Bank of Scotland Group (RBS) continues to deliver on its plan to build a stronger, simpler and fairer bank for both customers and shareholders; on track for 2015 targets.

Q3 attributable profit was £952 million, up slightly from £896 million in Q3 2014. Restructuring costs remained high at £847 million as the Go-forward Bank transforms, while litigation and conduct costs were £129 million compared with £780 million in Q3 2014.
Attributable profit included (in profit from discontinued operations) the gain on loss of control of Citizens (£1,147 million). The principal component of this gain was a reclassification of foreign exchange reserves of £962 million to profit or loss with no effect on RBS's net asset value.
Q3 operating loss(1) was £134 million, down from a profit of £1,107 million in Q3 2014. Adjusted operating profit(2) was £842 million (Q3 2014 - £2,054 million), after £126 million of losses relating to IFRS volatility, and £77 million of CIB disposal losses.
 
Income was £596 million lower than in Q3 2014, principally driven by a £394 million decline in Corporate & Institutional Banking (CIB), reflecting its planned reshaping. Income pressures were also seen in UK Personal & Business Banking (UK PBB) and Commercial Banking where good loan volume growth was offset by continued competitive pressure on asset margins.
 
Operating expenses, excluding restructuring costs and litigation and conduct costs, were £152 million lower, with headcount down and restructuring benefits feeding through to a lower cost base.
 
Credit quality remained good, with net impairment releases of £79 million, £768 million lower than the high levels of releases recorded in Q3 2014.
Tangible net asset value per ordinary and equivalent B share increased from 380p per share at 30 June 2015 to 384p per share at 30 September 2015. This was largely driven by the attributable profit for the period (less the impact of reclassified reserves), together with underlying gains in foreign exchange reserves reflecting the strengthening of the US dollar and the euro, and gains in cash flow hedging reserves as swap rates decreased.

Good progress on 2015 targets
RBS remains well on track to achieve substantially all its priority targets for 2015. The cost savings target for the year has already been exceeded and strong improvements were recorded in the bank’s annual employee engagement survey.




Strategy goal
2015 target
Q3 2015 Progress
Strength and sustainability
Reduce risk-weighted assets (RWAs) to <£300 billion
£316 billion, a reduction of £10 billion in the quarter
RCR exit substantially completed
Funded assets down 83% since initial pool of assets identified
Citizens deconsolidation
Further sale in August 2015 takes holding to 20.9%; de-consolidated for accounting purposes
£2 billion AT1 issuance
Successfully priced US$3.15 billion AT1 capital notes (£2 billion equivalent)
Customer experience
Improve NPS in every UK franchise
Year-on-year, significant improvement in NatWest Business Banking, RBS Business Banking and Ulster Bank Personal Banking (NI)
Simplifying the bank
Reduce costs by £800 million(3)
Target exceeded by Q3 2015, target increased to >£900 million
Supporting growth
Lending growth in strategic segments ≥ nominal UK GDP growth
4.6% annualised growth in the first nine months of 2015 in UK PBB and Commercial Banking
Employee engagement
Raise employee engagement index to within 8% of Global Financial Services (GFS) norm
Surpassed employee engagement goal, up six points to within three points of GFS
Highlights

Building a stronger RBS
RBS is on track with its plan to build a stronger, simpler, fairer bank for customers and shareholders.
 
Capital strength continued to build with the Common Equity Tier 1 ratio strengthening to 12.7% at 30 September 2015, up 40 basis points from 30 June 2015 and 150 basis points from 31 December 2014. RBS’s leverage ratio rose from 4.6% at 30 June 2015 to 5.0% at 30 September 2015, assisted by the successful issue of US$3.15 billion (£2 billion) of Additional Tier 1 capital notes in August 2015.
 
We continue to develop our technology capabilities to make it simpler for us to serve our customers and for them to do business with us. A new automated account-opening system is being rolled out and will increase the efficiency of our onboarding processes, reducing end-to-end account opening times by 50% for business banking customers and 30% for Commercial Banking customers. Our Pay on Your Mobile (PAYM) capability has been enhanced, with customers now able to both send and receive payments. We continue to simplify our core technology platforms with 245 applications decommissioned year-to-date.
 
We are seeking to build customer engagement with a market-leading current account that enables customers to receive 3% cash back on their household bills for a monthly account fee of £3. The initial launch of the Reward account to existing private and packaged account holders has attracted around one million customers with the majority of these moving additional direct debits to their RBS and NatWest accounts. We are also extending our stand against teaser rates by offering three year fixed rates on home insurance, breaking with insurance industry practice.
 
RBS delivered good support for both household and business customers. UK PBB net mortgage lending totalled £3.8 billion in Q3 2015, with a strong applications pipeline and gross lending up 42% from Q3 2014 to £7.4 billion. Our flow market share in Q3 2015 was 12.1% of the UK market, compared with RBS’s stock share of 8.5%. Net new lending in Commercial Banking totalled £1.5 billion in the quarter with growth across most of the customer segments. Further support was provided to small businesses with the opening of three new business accelerator hubs in Brighton, Leeds and Bristol in partnership with Entrepreneurial Spark: seven hubs are now open.
 
Adjusted return on equity(4) in the Go-forward Bank on an annualised basis for the first nine months of 2015 is estimated at 13%. IFRS volatility had a minimal impact on the adjusted return on equity during the first nine months of 2015.


Notes:
(1)
Operating profit/(loss) before tax, own credit adjustments, gain on redemption of own debt and strategic disposals. The nine months and quarter ended 30 September 2014 are stated before RFS minority interest.
(2)
Excluding restructuring costs and litigation and conduct costs.
(3)
Excluding restructuring costs and litigation and conduct costs, write off of intangible assets and operating expenses of Williams & Glyn.
(4)
Calculated using operating profit after tax on a non-statutory basis excluding restructuring costs and litigation and conduct costs adjusted for preference share dividends divided by average notional equity (based on 13% of average RWA equivalent (RWAe)).

Highlights

Accelerated run-down of the Exit Bank
RBS has maintained good momentum in the run-down of its Exit Bank, with RWAs down by approximately £31 billion since the start of 2015 to £141 billion at 30 September 2015.
   
RBS Capital Resolution (RCR) funded assets have fallen to £6.5 billion at 30 September 2015, down 83% since the initial pool of assets was identified. This leaves it on track to achieve its targeted 85% reduction in funded assets by the end of 2015, a year ahead of schedule. Good progress was also recorded in CIB Capital Resolution where RWAs were reduced by £6.7 billion to £38.7 billion in Q3 2015 with the reduction since the start of 2015 totalling £25.4 billion.
   
The sale of a further 109 million shares in August 2015 reduced RBS’s stake in Citizens to 20.9%. Following this significant reduction in its voting interest RBS no longer controls Citizens for accounting purposes and ceased to consolidate it, classifying its remaining investment as an associate held for sale. Citizens remains fully consolidated for regulatory capital purposes. RBS continues to target a complete exit by the end of 2015, subject to market conditions.
   
On a pro forma basis, assuming full deconsolidation of Citizens credit and counterparty risk RWAs at 30 September 2015, RBS’s CET1 ratio would have been 16.2% and its leverage ratio 5.6%.
   
Williams & Glyn submitted its banking licence application to the UK regulatory authorities in October 2015. RBS continues to work towards its separation in the summer of 2016 and an initial public offering by the end of 2016.

UK Government ownership
On 4 August 2015, HM Treasury sold 630 million RBS ordinary shares, its first sale since its initial investment in 2008. The sale of the 5.4% stake reduced HM Treasury’s economic interest in RBS to 72.9%.
   
On 8 October 2015, HM Treasury gave notice of its intention to convert 51 billion B shares it held into 5.1 billion ordinary shares, a move that helps normalise the ownership structure of RBS. These new ordinary shares have now been admitted to the London Stock Exchange. HM Treasury’s economic interest in RBS remains unchanged at 72.9%. The Dividend Access Share (DAS) remains outstanding and may be retired at any time following the payment of dividends amounting to £1,180 million (with interest starting to accrue on this amount from 1 January 2016).


Highlights

Customer
RBS remains committed to achieving its target of being number one bank for customer service, trust and advocacy by 2020. In recent years, RBS has launched a number of initiatives to make it simpler, fairer and easier to do business with, and it continues to deliver on the commitments that it made to its customers in 2014.

We use independent surveys to measure our customers’ experience and track our progress against our goal in each of our markets.

Net promoter score (NPS)
Customers are asked how likely they would be to recommend their bank to a friend or colleague, and respond based on a 0-10 scale with 10 indicating ‘extremely likely’ and 0 indicating ‘not at all likely’. Customers scoring 0 to 6 are termed detractors and customers scoring 9 to 10 are termed promoters. NPS is established by subtracting the proportion of detractors from the proportion of promoters.

The table below lists all of the businesses for which we have a NPS for Q3 2015. Year-on-year, NatWest Business Banking, RBS Business Banking and Ulster Bank (Northern Ireland) Personal Banking have seen significant improvements in NPS.

   
Q3 2014
Q2 2015
Q3 2015
Year end 2015 target
Personal Banking
NatWest (England & Wales)(1)
7
8
8
9
Royal Bank of Scotland (Scotland)(1)
-4
-10
-9
-10
Ulster Bank (Northern Ireland)(2)
-29
-11
-9
-21
Ulster Bank (Republic of Ireland)(2)
-19
-14
-15
-15
Business Banking
NatWest (England & Wales)(3)
-13
4
6
-7
Royal Bank of Scotland (Scotland)(3)
-26
-17
-12
-21
Commercial Banking(4)
10
10
9
15

Customer trust
We also use independent experts to measure our customers’ trust in the bank. Each quarter we ask customers to what extent they trust or distrust their bank to do the right thing. The score is a net measure of those customers that trust their bank (a lot or somewhat) minus those that distrust their bank (a lot or somewhat).

Trust in the RBS brand in Q2 2015 was impacted by the IT incident on 17 June 2015, current quarter scores return to pre-incident levels.

   
Q3 2014
Q2 2015
Q3 2015
Year end 2015 target
Customer trust(5)
NatWest (England & Wales)(1)
45%
48%
44%
46%
Royal Bank of Scotland (Scotland)
8%
-2%
11%
11%

Notes:
(1)
Source: GfK FRS six month rolling data. Latest base sizes: NatWest (England & Wales) (3392) Royal Bank of Scotland (Scotland) (545). 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 MAT data. Latest base sizes: Ulster Bank NI (305) 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, based on interviews with businesses with an annual turnover up to £2 million. Quarterly rolling data. Latest base sizes: NatWest England & Wales (1289), RBS Scotland (429). Weighted by region and turnover to be representative of businesses in England & Wales/Scotland.
(4)
Source: Charterhouse Research Business Banking Survey, based on interviews with businesses with annual turnover between £2 million and £1 billion. Latest base size: RBSG Great Britain (878). Weighted by region and turnover to be representative of businesses in Great Britain.
(5)
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 (925), RBS Scotland (214).
 
Highlights

Outlook
The credit environment is expected to remain relatively benign, with modest underlying impairment charges. Competitive pressure on asset margins is likely to continue, with limited opportunities for offsetting deposit repricing. In addition, non-interest income from fee-related products remains subdued due to modest volume growth, and specific regulatory impacts such as the change in interchange fees in the cards business.

Our estimate of overall restructuring and disposal losses guidance for 2015 to 2019 remains unchanged. In the fourth quarter of 2015, we expect restructuring costs to remain high as we continue to implement our core bank transformation and disposal losses to be elevated within the overall guidance on disposal losses, although the timing and quantum of these losses are subject to market conditions.

Whilst legacy issues continue to be addressed, material further and incremental costs and provisions in respect of conduct and litigation related matters are expected, and could be substantially greater than the aggregate provisions RBS has recognised. The timing and quantum of any future costs, provisions and settlements, however, remain uncertain.
 
Highlights

Summary consolidated income statement for the period ended 30 September 2015
 
 
Nine months ended
 
Quarter ended
 
30 September
30 September
 
30 September
30 June
30 September
 
2015
2014 
 
2015 
2015 
2014 
 
£m
£m
 
£m
£m
£m
 
 
 
 
 
 
 
Net interest income
6,605 
6,879 
 
2,187 
2,215 
2,370 
Non-interest income
3,545 
5,131 
 
860 
1,354 
1,273 
 
 
 
 
 
 
 
Total income
10,150 
12,010 
 
3,047 
3,569 
3,643 
 
 
 
 
 
 
 
Litigation and conduct costs
(1,444)
(1,030)
 
(129)
(459)
(780)
Restructuring costs
(2,317)
(612)
 
(847)
(1,023)
(167)
Other costs
(6,783)
(7,768)
 
(2,284)
(2,207)
(2,436)
 
 
 
 
 
 
 
Operating expenses
(10,544)
(9,410)
 
(3,260)
(3,689)
(3,383)
 
 
 
 
 
 
 
(Loss)/profit before impairment releases
(394)
2,600 
 
(213)
(120)
260 
Impairment releases
400 
682 
 
79 
192 
847 
 
 
 
 
 
 
 
Operating profit/(loss) (1)
3,282 
 
(134)
72 
1,107 
Own credit adjustments
424 
(2)
 
136 
168 
49 
Gain on redemption of own debt
20 
 
Write down of goodwill
(130)
 
Strategic disposals
(135)
191 
 
RFS Holdings minority interest
(35)
 
(56)
 
 
 
 
 
 
 
Operating profit before tax
295 
3,326 
 
240 
1,100 
Tax charge
(294)
(869)
 
(1)
(100)
(277)
 
 
 
 
 
 
 
Profit from continuing operations
2,457 
 
140 
823 
Profit from discontinued operations, net of tax (2)
1,451 
437 
 
1,093 
674 
117 
 
 
 
 
 
 
 
Profit for the period
1,452 
2,894 
 
1,094 
814 
940 
Non-controlling interests
(389)
11 
 
(45)
(428)
53 
Other owners
(264)
(264)
 
(97)
(93)
(97)
Dividend access share
(320)
 
 
 
 
 
 
 
 
Profit attributable to ordinary and B shareholders
799 
2,321 
 
952 
293 
896 
 
 
 
 
 
 
 
Memo:
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses - adjusted (3)
(6,783)
(7,768)
 
(2,284)
(2,207)
(2,436)
Operating profit - adjusted (3)
 
3,767 
4,924 
 
842 
1,554 
2,054 
 
 
 
 
 
 
 
Key metrics and ratios
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest margin
2.12%
2.09%
 
2.09%
2.13%
2.17%
Cost:income ratio
104%
78%
 
107%
103%
93%
(Loss)/earnings per share from continuing operations
 
 
 
 
 
 
  - basic
(2.8p)
16.9p
 
(0.9p)
0.2p
6.9p
  - adjusted (4)
(4.5p)
16.1p
 
(1.8p)
(0.9p)
6.5p
Return on tangible equity (5)
2.4%
7.3%
 
8.8%
2.7%
8.2%
Average tangible equity (5)
£43,538m
£42,231m
 
£43,403m
£43,062m
£43,536m
Average number of ordinary shares and equivalent B
 
 
 
 
 
 
  shares outstanding during the period (millions)
11,503 
11,333 
 
11,546 
11,511 
11,384 
 
 
Notes:
(1)
Operating profit/(loss) before tax, own credit adjustments, gain on redemption of own debt, write down of goodwill and strategic disposals. The nine months and quarter ended 30 September 2014 are stated before RFS minority interest.
(2)
Refer to Note 2 on page 31 for further details.
(3)
Excluding restructuring costs and litigation and conduct costs.
(4)
Adjusted earnings excludes own credit adjustments, gain on redemption of own debt, write down of goodwill and strategic disposals. RFS minority interest was also a reconciling item for periods ended 30 September 2014.
(5)
Tangible equity is equity attributable to ordinary and B shareholders less intangible assets.

Highlights

Summary consolidated balance sheet as at 30 September 2015
 
30 September 
30 June 
31 December 
 
2015 
2015 
2014 
 
£m 
£m 
£m 
 
 
 
 
Cash and balances at central banks
77,220 
81,900 
74,872 
Net loans and advances to banks (1)
22,681 
20,714 
23,027 
Net loans and advances to customers (1)
311,383 
314,993 
334,251 
Reverse repurchase agreements and stock borrowing
51,800 
67,606 
64,695 
Debt securities and equity shares
83,506 
80,550 
92,284 
Assets of disposal groups (2)
6,300 
89,071 
82,011 
Other assets
27,517 
28,010 
26,033 
 
 
 
 
Funded assets
580,407 
682,844 
697,173 
Derivatives
296,019 
281,857 
353,590 
 
 
 
 
Total assets
876,426 
964,701 
1,050,763 
 
 
 
 
Bank deposits (3)
30,543 
30,978 
35,806 
Customer deposits (3)
346,267 
342,023 
354,288 
Repurchase agreements and stock lending
43,355 
66,362 
62,210 
Debt securities in issue
37,360 
41,819 
50,280 
Subordinated liabilities
20,184 
19,683 
22,905 
Derivatives
288,905 
273,589 
349,805 
Liabilities of disposal groups (2)
6,401 
80,388 
71,320 
Other liabilities
45,164 
48,090 
43,957 
 
 
 
 
Total liabilities
818,179 
902,932 
990,571 
Non-controlling interests
703 
5,705 
2,946 
Owners’ equity
57,544 
56,064 
57,246 
 
 
 
 
Total liabilities and equity
876,426 
964,701 
1,050,763 
 
 
 
 
Contingent liabilities and commitments
160,205 
210,679 
241,186 

Notes:
(1)
Excludes reverse repurchase agreements and stock borrowing.
(2)
Primarily International Private Banking and the interest in associate in relation to Citizens at 30 September 2015, Citizens and International Private Banking at 30 June 2015 and Citizens at 31 December 2014.
(3)
Excludes repurchase agreements and stock lending.


Highlights
 
 
 
 
 
30 September
30 June
31 December
Balance sheet related key metrics and ratios
2015 
2015 
2014 
 
 
 
 
Tangible net asset value per ordinary and equivalent B share (1)
384p
380p
387p
Loan:deposit ratio (2,3)
89%
92%
95%
Short-term wholesale funding (3,4)
£17bn
£25bn
£28bn
Wholesale funding (3,4)
£66bn
£76bn
£90bn
Liquidity portfolio
£164bn
£161bn
£151bn
Liquidity coverage ratio (5)
136%
117%
112%
Net stable funding ratio (6)
117%
115%
112%
Tangible equity (7)
£44,442m
£43,919m
£44,368m
Number of ordinary shares and equivalent B shares in issue (millions) (8)
11,574 
11,570 
11,466 
Common Equity Tier 1 ratio
12.7%
12.3%
11.2%
Risk-weighted assets
£316.0bn
£326.4bn
£355.9bn
Leverage ratio (9)
5.0%
4.6%
4.2%
 
 
 
 
Balance sheet related key metrics and ratios excluding Citizens (10)
 
 
 
 
 
 
 
Liquidity portfolio
£149bn
£148bn
 
Liquidity coverage ratio (5)
139%
118%
 
Net stable funding ratio (6)
118%
112%
 
Common Equity Tier 1 ratio
16.2%
15.3%
 
Risk-weighted assets
£248.7bn
£261.5bn
 
Leverage ratio (9)
5.6%
5.1%
 

Notes:
(1)
Tangible net asset value per ordinary and equivalent B share represents tangible equity divided by the number of ordinary shares and equivalent B shares in issue.
(2)
Includes disposal groups.
(3)
Excludes repurchase agreements and stock lending.
(4)
Excludes derivative collateral.
(5)
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.
(6)
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.
(7)
Tangible equity is equity attributable to ordinary and B shareholders less intangible assets.
(8)
Includes 26 million Treasury shares (30 June 2015 - 26 million; 31 December 2014 - 28 million).
(9)
Based on end-point CRR Tier 1 capital and revised 2014 Basel III leverage ratio framework and the CRR Delegated Act.
(10)
Assuming Citizens was fully divested at the carrying value at 30 September 2015 and excluding only credit and counterparty risk RWAs.

Analysis of results

 
Nine months ended
 
Quarter ended
 
30 September
30 September
 
30 September
30 June
30 September
2015
2014
 
2015
2015
2014
Net interest income
£m
£m
 
£m
£m
£m
 
 
 
 
 
 
 
Net interest income
 
 
 
 
 
 
RBS
6,605 
6,879 
 
2,187 
2,215 
2,370 
 
 
 
 
 
 
 
  - UK Personal & Business Banking
3,460 
3,474 
 
1,170 
1,147 
1,198 
  - Ulster Bank
392 
486 
 
127 
132 
163 
  - Commercial Banking
1,673 
1,520 
 
565 
562 
521 
  - Private Banking
377 
516 
 
123 
126 
172 
  - Corporate & Institutional Banking
518 
595 
 
142 
174 
230 
  - Central items
227 
312 
 
77 
88 
109 
  - RCR
(42)
(24)
 
(17)
(14)
(23)
 
 
 
 
 
 
 
Average interest-earning assets
 
 
 
 
 
 
RBS
415,463 
436,876 
 
413,778 
417,248 
431,863 
 
 
 
 
 
 
 
  - UK Personal & Business Banking
129,422 
127,101 
 
131,299 
128,569 
127,896 
  - Ulster Bank
27,621 
28,033 
 
27,825 
27,404 
27,922 
  - Commercial Banking
78,559 
74,611 
 
79,689 
78,880 
74,339 
  - Private Banking
15,752 
18,669 
 
15,557 
15,729 
18,681 
  - Corporate & Institutional Banking
63,634 
83,821 
 
48,612 
69,437 
83,903 
  - Central items
85,117 
70,662 
 
99,526 
82,471 
69,872 
  - RCR
15,358 
33,979 
 
11,270 
14,758 
29,250 
 
 
 
 
 
 
 
Gross yield on interest-earning assets of banking
 
 
 
 
 
 
   business
2.92%
3.01%
 
2.84%
2.91%
3.04%
Cost of interest-bearing liabilities of banking business
(1.15%)
(1.26%)
 
(1.09%)
(1.14%)
(1.20%)
 
 
 
 
 
 
 
Interest spread of banking business
1.77%
1.75%
 
1.75%
1.77%
1.84%
Benefit from interest free funds
0.35%
0.34%
 
0.34%
0.36%
0.33%
Net interest margin (1)
 
 
 
 
 
 
RBS
2.12%
2.09%
 
2.09%
2.13%
2.17%
 
 
 
 
 
 
 
  - UK Personal & Business Banking
3.57%
3.65%
 
3.54%
3.58%
3.72%
  - Ulster Bank
1.90%
2.32%
 
1.81%
1.93%
2.32%
  - Commercial Banking
2.85%
2.72%
 
2.81%
2.86%
2.78%
  - Private Banking
3.20%
3.70%
 
3.14%
3.21%
3.65%
  - Corporate & Institutional Banking
1.09%
0.95%
 
1.16%
1.00%
1.08%
  - Central items
0.34%
0.52%
 
0.29%
0.41%
0.58%
  - RCR
(0.37%)
(0.09%)
 
(0.60%)
(0.38%)
(0.31%)

Non-interest income
 
 
 
 
 
 
 
 
 
 
 
 
 
Net fees and commissions
2,280 
2,688 
 
685 
783 
920 
Income from trading activities
747 
1,644 
 
82 
430 
205 
Other operating income
518 
799 
 
93 
141 
148 
 
 
 
 
 
 
 
Total non-interest income
3,545 
5,131 
 
860 
1,354 
1,273 

Notes:
(1)
For the purposes of net interest margin (NIM) calculations, a decrease of £12 million arising in Central items (nine months ended 30 September 2014 - £35 million; Q3 2015 - £4 million; Q2 2015 - £3 million; Q3 2014 - £7 million) was made in respect of interest on financial assets and liabilities designated as at fair value through profit or loss. Related interest-earning assets and interest-bearing liabilities have also been adjusted.
(2)
PBB NIM Q3 2015 was 3.23% and Q2 2015 was 3.29%. CPB NIM for Q3 2015 was 2.87% and Q2 2015 was 2.92%.

Analysis of results

Key points
·
Net interest income of £2,187 million was down £183 million from Q3 2014. While there has been good volume growth in some segments during the quarter, average interest-earnings assets remain 4% lower than Q3 2014. Higher yielding assets such as credit card balances and personal unsecured loans have declined in volume, reflecting RBS’s positioning in these products. Good progress in the run-down of CIB Capital Resolution assets has amplified the bank’s excess liquidity position.
   
·
NIM for RBS of 2.09% continues to compress modestly, down 4 basis points from Q2 2015 and 8 basis points from Q3 2014. RBS’s previously reported NIM included Citizens, whose exclusion results in a lower bank NIM.
   
·
In UK PBB, NIM declined by 4 basis points during Q3 2015, principally reflecting more competitive front book pricing in combination with increased switching from the standard variable rate book (15% of the overall mortgage book at 30 September 2015 compared with 23% a year earlier and 18% at the end of Q2 2015).
   
·
Non-interest income totalled £860 million, down £413 million from Q3 2014. This was principally driven by the planned reshaping of CIB (down £306 million) and reduced trading income and disposal gains in RCR (down £144 million). Equity gains were also lower in Commercial Banking, which had recorded significant disposal gains in previous quarters. Interchange fee income in UK PBB remains under pressure.
   
·
Compared with Q2 2015, non-interest income was £494 million lower. This included a movement of £331 million in volatile items under IFRS, which represented a charge of £126 million in the quarter compared with a credit of £205 million in Q2 2015.

Analysis of results

 
Nine months ended
 
Quarter ended
 
30 September
30 September
 
30 September
30 June
30 September
2015
2014 
 
2015
2015 
2014 
Operating expenses
£m
£m
 
£m
£m
£m
 
 
 
 
 
 
 
Staff costs
3,776 
4,184 
 
1,265 
1,242 
1,356 
Premises and equipment
1,061 
1,360 
 
352 
298 
423 
Other
1,338 
1,418 
 
477 
481 
396 
Restructuring costs*
2,317 
612 
 
847 
1,023 
167 
Litigation and conduct costs
1,444 
1,030 
 
129 
459 
780 
 
 
 
 
 
 
 
Administrative expenses
9,936 
8,604 
 
3,070 
3,503 
3,122 
Depreciation and amortisation
608 
724 
 
190 
186 
261 
Write down of intangible assets
82 
 
 
 
 
 
 
 
 
Operating expenses
10,544 
9,410 
 
3,260 
3,689 
3,383 
 
 
 
 
 
 
 
Adjusted operating expenses (1)
6,783 
7,768 
 
2,284 
2,207 
2,436 
 
 
 
 
 
 
 
*Restructuring costs comprise:
 
 
 
 
 
 
  - staff expenses
625 
248 
 
281 
288 
79 
  - premises, equipment, depreciation and amortisation
705 
244 
 
375 
42 
52 
  - other
987 
120 
 
191 
693 
36 
 
 
 
 
 
 
 
Restructuring costs
2,317 
612 
 
847 
1,023 
167 
 
 
 
 
 
 
 
Staff costs as a % of total income
37%
35%
 
42%
35%
37%
Cost:income ratio
104%
78%
 
107%
103%
93%
Cost:income ratio - adjusted (1)
67%
65%
 
75%
62%
67%
Employee numbers (FTE - thousands)
92.4 
93.3 
 
92.4 
91.6 
93.3 

Note:
(1)
Excluding restructuring costs and litigation and conduct costs.


Key points
·
Staff costs totalled £1,265 million, down £91 million or 7%, compared with Q3 2014, principally driven by declining headcount. Premises and equipment expenses were down £71 million from Q3 2014 as RBS’s property portfolio is managed down.
   
·
Adjusted operating expenses in the nine months ended 30 September 2015 totalled £6,783 million, down £985 million or 13%, compared with the same period of 2014. RBS expects to exceed £900 million of cost savings for the full year. However, Q4 2015 will include the annual bank levy charge; in addition, £190 million of accrual reversals were recorded in Q4 2014.
   
·
Restructuring costs totalled £847 million for Q3 2015, principally relating to CIB (£637 million, including £276 million of property related charges) and to Williams & Glyn separation (£190 million). Restructuring costs in the first nine months of 2015 were £2.3 billion, approaching half of the expected c.£5 billion of total restructuring costs from 2015 to 2019.
   
·
Litigation and conduct costs of £129 million were lower than recorded in recent quarters and related principally to a charge in CIB in relation to certain mortgage-backed securities litigation.


Analysis of results

 
Nine months ended
 
Quarter ended
 
30 September
30 September
 
30 September
30 June
30 September
2015 
2014 
 
2015 
2015 
2014 
Impairment (releases)/losses
£m
£m
 
£m
£m
£m
 
 
 
 
 
 
 
Loan impairment (releases)/losses
 
 
 
 
 
 
  - individually assessed
(135)
(321)
 
(15)
(105)
(415)
  - collectively assessed
(8)
293 
 
(13)
(7)
16 
  - latent
(380)
(642)
 
(64)
(91)
(450)
 
 
 
 
 
 
 
Customer loans
(523)
(670)
 
(92)
(203)
(849)
Bank loans
(4)
(10)
 
(4)
 
 
 
 
 
 
 
Total loan impairment releases
(527)
(680)
 
(96)
(203)
(849)
Securities
127 
(2)
 
17 
11 
 
 
 
 
 
 
 
Total impairment releases
(400)
(682)
 
(79)
(192)
(847)

 
30 September 
30 June 
31 December 
Credit metrics (1)
2015 
2015 
2014 
 
 
 
 
Gross customer loans
£322,957m
£390,781m
£412,801m
Loan impairment provisions
£9,277m
£11,303m
£18,040m
Risk elements in lending (REIL)
£14,643m
£18,714m
£28,219m
Provisions as a % of REIL
63%
60%
64%
REIL as a % of gross customer loans
4.5%
4.8%
6.8%

 
 
 
 
Credit metrics excluding Citizens
 
 
 
 
 
 
 
Gross customer loans
£322,957m
£328,821m
£352,659m
Loan impairment provisions
£9,277m
£10,771m
£17,504m
Risk elements in lending (REIL)
£14,643m
£17,474m
£26,889m
Provisions as a % of REIL
63%
62%
65%
REIL as a % of gross customer loans
4.5%
5.3%
7.6%

Note:
(1)
Includes disposal groups. Citizens is included in disposal groups at 30 June 2015 and 31 December 2014.

Key points
·
Loan impairment releases in Q3 2015 were £96 million compared with £849 million in Q3 2014.
   
·
Excluding Citizens, provision coverage increased from 62% at 30 June 2015 to 63% at 30 September 2015, largely reflecting the £2.8 billion reduction in REIL, principally driven by RCR disposals.


Analysis of results

Selected credit risk portfolios
 
 
 
 
 
 
 
 
 
 
30 September 2015
 
30 June 2015 (1)
 
31 December 2014 (1)
 
CRA (2)
TCE (2)
EAD (2)
 
CRA (2)
TCE (2)
EAD (2)
 
CRA (2)
TCE (2)
EAD (2)
Natural resources
£m
£m
£m
 
£m
£m
£m
 
£m
£m
£m
 
 
 
 
 
 
 
 
 
 
 
 
Oil and gas
4,632 
9,181 
7,224 
 
6,664 
15,499 
11,318 
 
9,421 
22,014 
15,877 
Mining and metals
1,397 
2,516 
1,934 
 
1,717 
2,914 
2,543 
 
2,660 
4,696 
3,817 
Electricity
3,323 
9,145 
6,282 
 
4,361 
11,935 
7,933 
 
4,927 
16,212 
9,984 
Water and waste
4,901 
5,955 
5,906 
 
5,006 
6,174 
6,041 
 
5,281 
6,718 
6,466 
 
 
 
 
 
 
 
 
 
 
 
 
Natural resources
14,253 
26,797 
21,346 
 
17,748 
36,522 
27,835 
 
22,289 
49,640 
36,144 
 
 
 
 
 
 
 
 
 
 
 
 
Commodity traders (3)
884 
1,239 
1,355 
 
1,136 
1,835 
1,996 
 
1,968 
2,790 
3,063 
Of which: natural resources
662 
915 
922 
 
706 
1,083 
1,197 
 
1,140 
1,596 
1,852 
Shipping
7,937 
8,568 
8,266 
 
8,258 
8,874 
8,616 
 
10,087 
10,710 
10,552 

Notes:
(1)
Prior period data excludes Citizens for comparative purposes: Citizens totals for natural resources and shipping were 30 June 2015 - TCE £4.4 billion, EAD £3.6 billion; 31 December 2014 - TCE £4.2 billion, EAD £3.4 billion.
(2)
Credit risk assets (CRA) consist of lending gross of impairment provisions, derivative exposures after netting and contingent obligations. Total committed exposure (TCE) comprises CRA, securities financing transactions after netting, banking book debt securities and committed undrawn facilities. Exposure at default (EAD) is gross of credit provisions and is after credit risk mitigation. EAD reflects an estimate of the extent to which a bank will be exposed under a specific facility on the default of a customer or counterparty. Uncommitted undrawn facilities are excluded from TCE but included within EAD; therefore EAD can exceed TCE.
(3)
Commodity traders represents customers in a number of industry sectors, predominately natural resources above.

Key points
·
Oil and gas: total exposure has more than halved during 2015 and decreased significantly during Q3 2015. This primarily reflected continued loan sales and run-off across the CIB portfolio in Asia-Pacific and the US.
·
Mining and metals: the reduction in exposure during 2015 reflected proactive management of more vulnerable sub-sectors. The majority of the exposure is to large international customers and matures within five years.
·
Commodity traders: total exposure has more than halved during 2015 and is primarily to the largest physical commodity traders, the exposure is predominantly short-dated, collateralised and uncommitted facilities used for working capital.
·
Shipping: exposure is in CIB Capital Resolution and RCR. The decrease in exposure in Q3 2015 principally reflected sales in RCR.

 
 
 
 
 
 
 
 
 
 
30 September 2015
 
30 June 2015
 
31 December 2014
 
Balance
Total
 
Balance
Total
 
Balance
Total
 
sheet
exposure
 
sheet
exposure
 
sheet
exposure
Emerging markets (1)
£m
£m
 
£m
£m
 
£m
£m
 
 
 
 
 
 
 
 
 
India
1,952 
2,456 
 
1,680 
2,225 
 
1,989 
2,628 
China
1,588 
1,651 
 
2,358 
2,510 
 
3,548 
4,079 
Russia
953 
1,028 
 
1,618 
1,709 
 
1,830 
1,997 

Note:
(1)
Balance sheet and total exposures include banking and trading book debt securities and are net of impairment provisions in respect of lending - refer to the Country risk section of the 2014 Annual Report and Accounts for detailed definitions.



Key point
·
Exposure to most emerging markets decreased in 2015 as RBS continues to implement its strategy to withdraw from non-strategic countries. The drop in Chinese exposure in Q3 2015 reflected corporate loan sales and reductions in cash collateral due to reduced volumes of foreign exchange trading. Total exposure to Russia has halved during 2015 and the reduction in Q3 2015 was mostly due to corporate loan sales.

Analysis of results

Capital and leverage ratios
 
 
 
 
 
 
 
 
End-point CRR basis (1)
 
PRA transitional basis
 
30 September 
30 June 
31 December 
 
30 September 
30 June 
31 December 
 
2015 
2015 
2014 
 
2015 
2015 
2014 
Risk asset ratios
 
 
 
 
 
 
 
 
 
CET1
12.7 
12.3 
11.2 
 
12.7 
12.3 
11.1 
Tier 1
13.3 
12.3 
11.2 
 
15.5 
14.3 
13.2 
Total
16.0 
14.8 
13.7 
 
19.8 
18.5 
17.1 
 
 
 
 
 
 
 
 
Capital
£m
£m
£m
 
£m
£m
£m
 
 
 
 
 
 
 
 
Tangible equity
44,442 
43,919 
44,368 
 
44,442 
43,919 
44,368 
Expected loss less impairment provisions
(1,185)
(1,319)
(1,491)
 
(1,185)
(1,319)
(1,491)
Prudential valuation adjustment
(392)
(366)
(384)
 
(392)
(366)
(384)
Deferred tax assets
(1,159)
(1,206)
(1,222)
 
(1,159)
(1,206)
(1,222)
Own credit adjustments
208 
345 
500 
 
208 
345 
500 
Pension fund assets
(256)
(250)
(238)
 
(256)
(250)
(238)
Other deductions
(1,478)
(1,070)
(1,614)
 
(1,456)
(1,047)
(1,884)
 
 
 
 
 
 
 
 
Total deductions
(4,262)
(3,866)
(4,449)
 
(4,240)
(3,843)
(4,719)
 
 
 
 
 
 
 
 
CET1 capital
40,180 
40,053 
39,919 
 
40,202 
40,076 
39,649 
AT1 capital
1,997 
 
8,716 
6,709 
7,468 
Tier 1 capital
42,177 
40,053 
39,919 
 
48,918 
46,785 
47,117 
Tier 2 capital
8,331 
8,181 
8,717 
 
13,742 
13,573 
13,626 
 
 
 
 
 
 
 
 
Total regulatory capital
50,508 
48,234 
48,636 
 
62,660 
60,358 
60,743 
 
 
 
 
 
 
 
 
Risk-weighted assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Credit risk
 
 
 
 
 
 
 
  - non-counterparty
237,800 
245,000 
264,700 
 
237,800 
245,000 
264,700 
  - counterparty
26,900 
27,500 
30,400 
 
26,900 
27,500 
30,400 
Market risk
19,700 
22,300 
24,000 
 
19,700 
22,300 
24,000 
Operational risk
31,600 
31,600 
36,800 
 
31,600 
31,600 
36,800 
 
 
 
 
 
 
 
 
Total RWAs
316,000 
326,400 
355,900 
 
316,000 
326,400 
355,900 
 
 
 
 
 
 
 
 
Leverage (2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivatives
296,500 
282,300 
354,000 
 
 
 
 
Loans and advances
402,300 
402,800 
419,600 
 
 
 
 
Reverse repos
52,100 
67,800 
64,700 
 
 
 
 
Other assets
207,700 
211,800 
212,500 
 
 
 
 
 
 
 
 
 
 
 
 
Total assets
958,600 
964,700 
1,050,800 
 
 
 
 
Derivatives
 
 
 
 
 
 
 
  - netting
(280,300)
(266,600)
(330,900)
 
 
 
 
  - potential future exposures
82,200 
83,500 
98,800 
 
 
 
 
Securities financing transactions gross up
6,600 
6,200 
25,000 
 
 
 
 
Undrawn commitments
78,900 
84,700 
96,400 
 
 
 
 
Regulatory deductions and other
 
 
 
 
 
 
 
  adjustments
500 
2,000 
(600)
 
 
 
 
 
 
 
 
 
 
 
 
Leverage exposure
846,500 
874,500 
939,500 
 
 
 
 
 
 
 
 
 
 
 
 
Tier 1 capital
42,177 
40,053 
39,919 
 
 
 
 
 
 
 
 
 
 
 
 
Leverage ratio %
5.0 
4.6 
4.2 
 
 
 
 

Notes:
(1)
Capital Requirements Regulation (CRR) as implemented by the Prudential Regulation Authority in the UK, with effect from 1 January 2014. All regulatory adjustments and deductions to CET1 have been applied in full for the end-point CRR basis with the exception of unrealised gains on AFS securities which has been included from 2015 under the PRA transitional basis.
(2)
Based on end-point CRR Tier 1 capital and leverage exposure under the revised 2014 Basel III leverage ratio framework and the CRR Delegated Act.

Analysis of results

Key points
·
RBS’s CET1 ratio strengthened to 12.7% at 30 September 2015, up 40 basis points from 30 June 2015 and 150 basis points since the start of the year. The increase was principally driven by a further reduction in RWAs, which fell by £10.4 billion during Q3 2015. Excluding the impact of movements in both US dollar and euro exchange rates, the RWA reduction would have been £14.9 billion.
   
·
CIB Capital Resolution RWAs decreased by £6.7 billion from 30 June 2015 due to portfolio reduction of £7 billion, including further sale to Mizuho of £1.3 billion and ongoing GTS exit activity of £1.5 billion, partly offset by foreign exchange movements as sterling weakened against the dollar.
   
·
CIB Go-forward RWAs decreased by £3.3 billion from 30 June 2015 principally due to a decrease of £2.2 billion in market risk RWAs.
   
·
RCR RWAs reduced by £2.0 billion from 30 June 2015 reflecting ongoing disposal and run-off strategy.
   
·
The leverage ratio improved to 5.0% at 30 September 2015, up 40 basis points from 30 June 2015, assisted by the successful issue of US$3.15 billion (£2 billion) Additional Tier 1 capital notes in August 2015 and reduced leverage exposure driven by lower reverse repos and undrawn commitments.
   
·
On a pro-forma basis, assuming full deconsolidation of Citizens credit and counterparty risk RWAs at 30 September 2015, RBS’s CET1 ratio would have been 16.2% and its leverage ratio 5.6%.

Segment performance

On 3 August 2015, RBS’s interest in Citizens fell to 20.9% and Citizens Financial Group (CFG) ceased to be a reportable segment. The following segment disclosures have been restated accordingly. Refer to pages 2 and 31 for further information.
 
Nine months ended 30 September 2015
 
PBB
 
CPB
 
CIB
 
 
 
 
Ulster
 
 
Commercial
Private
 
 
 
Central
 
Total
 
UK PBB
Bank
Total
 
Banking
Banking
Total
 
 
 items (1)
RCR
RBS
 
£m
£m
£m
 
£m
£m
£m
 
£m
£m
£m
£m
 
 
 
 
 
 
 
 
 
 
 
 
 
Income statement
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
3,460 
392 
3,852 
 
1,673 
377 
2,050 
 
518 
227 
(42)
6,605 
Non-interest income
920 
190 
1,110 
 
871 
248 
1,119 
 
1,243 
(114)
187 
3,545 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total income
4,380 
582 
4,962 
 
2,544 
625 
3,169 
 
1,761 
113 
145 
10,150 
 
 
 
 
 
 
 
 
 
 
 
 
 
Direct expenses - staff costs
(694)
(179)
(873)
 
(377)
(209)
(586)
 
(461)
(1,778)
(78)
(3,776)
                           - other costs
(221)
(54)
(275)
 
(166)
(49)
(215)
 
(209)
(2,294)
(14)
(3,007)
Indirect expenses
(1,379)
(196)
(1,575)
 
(657)
(289)
(946)
 
(1,571)
4,139 
(47)
Restructuring costs - direct
(5)
(21)
(26)
 
(11)
(1)
(12)
 
(404)
(1,875)
(2,317)
                                 - indirect
(72)
(3)
(75)
 
(8)
(83)
(91)
 
(1,258)
1,428 
(4)
Litigation and conduct costs
(362)
(356)
 
(59)
(28)
(87)
 
(980)
(21)
(1,444)
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses
(2,733)
(447)
(3,180)
 
(1,278)
(659)
(1,937)
 
(4,883)
(401)
(143)
(10,544)
 
 
 
 
 
 
 
 
 
 
 
 
 
Profit/(loss) before impairment losses
1,647 
135 
1,782 
 
1,266 
(34)
1,232 
 
(3,122)
(288)
(394)
Impairment releases/(losses)
110 
116 
 
(42)
(1)
(43)
 
35 
(47)
339 
400 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating profit/(loss)
1,653 
245 
1,898 
 
1,224 
(35)
1,189 
 
(3,087)
(335)
341 
 
 
 
 
 
 
 
 
 
 
 
 
 
Additional information
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses - adjusted (2)
(2,294)
(429)
(2,723)
 
(1,200)
(547)
(1,747)
 
(2,241)
67 
(139)
(6,783)
Operating profit/(loss) - adjusted (2)
2,092 
263 
2,355 
 
1,302 
77 
1,379 
 
(445)
133 
345 
3,767 
Return on equity (3)
26.2%
10.1%
20.7%
 
11.6%
(4.5%)
9.6%
 
(26.0%)
nm
nm
2.4%
Return on equity - adjusted (2,3)
33.7%
10.8%
26.0%
 
12.5%
4.1%
11.4%
 
(5.1%)
nm
nm
11.7%
Cost:income ratio
62%
77%
64%
 
50%
105%
61%
 
277%
nm
nm
104%
Cost:income ratio - adjusted (2)
52%
74%
55%
 
47%
88%
55%
 
127%
nm
nm
67%
Total assets (£bn)
139.1 
28.0 
167.1 
 
95.9 
16.8 
112.7 
 
464.1 
119.6 
12.9 
876.4 
Funded assets (£bn)
139.1 
27.9 
167.0 
 
95.9 
16.7 
112.6 
 
177.4 
116.9 
6.5 
580.4 
Net loans and advances to customers (£bn)
132.5 
20.6 
153.1 
 
91.6 
13.5 
105.1 
 
50.8 
0.4 
4.3 
313.7 
Risk elements in lending (£bn)
3.0 
4.0 
7.0 
 
2.2 
0.1 
2.3 
 
0.2 
5.1 
14.6 
Impairment provisions (£bn)
(2.0)
(2.3)
(4.3)
 
(0.8)
(0.1)
(0.9)
 
(0.1)
(0.1)
(3.9)
(9.3)
Customer deposits (£bn)
152.9 
19.2 
172.1 
 
98.9 
29.1 
128.0 
 
47.8 
3.7 
0.9 
352.5 
Risk-weighted assets (RWAs) (£bn)
39.4 
21.5 
60.9 
 
67.2 
9.8 
77.0 
 
78.0 
87.7 
12.4 
316.0 
RWA equivalent (£bn) (4)
43.2 
21.7 
64.9 
 
72.1 
9.8 
81.9 
 
79.7 
88.1 
13.9 
328.5 
Employee numbers (FTEs - thousands)
25.6 
4.2 
29.8 
 
6.0 
2.7 
8.7 
 
2.8 
50.6 
0.5 
92.4 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the notes to this table refer to page 22. nm = not meaningful
 
 
 
 
 
 
 
 
 
 
 

Segment performance
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter ended 30 September 2015
 
PBB
 
CPB
 
CIB
 
 
 
 
 
Ulster
 
 
Commercial
Private
 
 
 
Central
 
Total
 
UK PBB
Bank
Total
 
Banking
Banking
Total
 
 
 items (1)
RCR
RBS
 
£m
£m
£m
 
£m
£m
£m
 
£m
£m
£m
£m
 
 
 
 
 
 
 
 
 
 
 
 
 
Income statement
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
1,170 
127 
1,297 
 
565 
123 
688 
 
142 
77 
(17)
2,187 
Non-interest income
289 
87 
376 
 
265 
81 
346 
 
295 
(154)
(3)
860 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total income
1,459 
214 
1,673 
 
830 
204 
1,034 
 
437 
(77)
(20)
3,047 
 
 
 
 
 
 
 
 
 
 
 
 
 
Direct expenses - staff costs
(238)
(59)
(297)
 
(122)
(66)
(188)
 
(139)
(619)
(22)
(1,265)
                            - other costs
(81)
(21)
(102)
 
(56)
(23)
(79)
 
(60)
(777)
(1)
(1,019)
Indirect expenses
(466)
(70)
(536)
 
(224)
(95)
(319)
 
(510)
1,380 
(15)
Restructuring costs - direct
(5)
(3)
(8)
 
(1)
 
(193)
(647)
(847)
                                 - indirect
(22)
(3)
(25)
 
(3)
(3)
 
(444)
476 
(4)
Litigation and conduct costs
(2)
 
 
(107)
(22)
(129)
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses
(810)
(158)
(968)
 
(403)
(185)
(588)
 
(1,453)
(209)
(42)
(3,260)
 
 
 
 
 
 
 
 
 
 
 
 
 
Profit/(loss) before impairment losses
649 
56 
705 
 
427 
19 
446 
 
(1,016)
(286)
(62)
(213)
Impairment (losses)/releases
(11)
58 
47 
 
(15)
(4)
(19)
 
46 
79 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating profit/(loss)
638 
114 
752 
 
412 
15 
427 
 
(1,012)
(285)
(16)
(134)
 
 
 
 
 
 
 
 
 
 
 
 
 
Additional information
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses - adjusted (2)
(785)
(150)
(935)
 
(402)
(184)
(586)
 
(709)
(16)
(38)
(2,284)
Operating profit/(loss) - adjusted (2)
663 
122 
785 
 
413 
16 
429 
 
(268)
(92)
(12)
842 
Return on equity (3)
31.8%
14.1%
25.5%
 
11.7%
1.7%
10.5%
 
(29.2%)
nm
nm
8.8%
Return on equity - adjusted (2,3)
33.1%
15.1%
26.7%
 
11.7%
1.9%
10.6%
 
(9.1%)
nm
nm
15.8%
Cost:income ratio
56%
74%
58%
 
49%
91%
57%
 
332%
nm
nm
107%
Cost:income ratio - adjusted (2)
54%
70%
56%
 
48%
90%
57%
 
162%
nm
nm
75%
Total assets (£bn)
139.1 
28.0 
167.1 
 
95.9 
16.8 
112.7 
 
464.1 
119.6 
12.9 
876.4 
Funded assets (£bn)
139.1 
27.9 
167.0 
 
95.9 
16.7 
112.6 
 
177.4 
116.9 
6.5 
580.4 
Net loans and advances to customers (£bn)
132.5 
20.6 
153.1 
 
91.6 
13.5 
105.1 
 
50.8 
0.4 
4.3 
313.7 
Risk elements in lending (£bn)
3.0 
4.0 
7.0 
 
2.2 
0.1 
2.3 
 
0.2 
5.1 
14.6 
Impairment provisions (£bn)
(2.0)
(2.3)
(4.3)
 
(0.8)
(0.1)
(0.9)
 
(0.1)
(0.1)
(3.9)
(9.3)
Customer deposits (£bn)
152.9 
19.2 
172.1 
 
98.9 
29.1 
128.0 
 
47.8 
3.7 
0.9 
352.5 
Risk-weighted assets (RWAs) (£bn)
39.4 
21.5 
60.9 
 
67.2 
9.8 
77.0 
 
78.0 
87.7 
12.4 
316.0 
RWA equivalent (£bn) (4)
43.2 
21.7 
64.9 
 
72.1 
9.8 
81.9 
 
79.7 
88.1 
13.9 
328.5 
Employee numbers (FTEs - thousands)
25.6 
4.2 
29.8 
 
6.0 
2.7 
8.7 
 
2.8 
50.6 
0.5 
92.4 
For the notes to this table refer to page 22. nm = not meaningful
 
 
 
 
 
 
 
 
 
 
 

Segment performance
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine months ended 30 September 2014
 
PBB
 
CPB
 
CIB
 
 
 
 
 
Ulster
 
 
Commercial
Private
 
 
 
Central
 
Total
 
UK PBB
Bank
Total
 
Banking
Banking
Total
 
 
 items (1)
RCR
RBS
 
£m
£m
£m
 
£m
£m
£m
 
£m
£m
£m
£m
 
 
 
 
 
 
 
 
 
 
 
 
 
Income statement
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
3,474 
486 
3,960 
 
1,520 
516 
2,036 
 
595 
312 
(24)
6,879 
Non-interest income
1,031 
140 
1,171 
 
859 
299 
1,158 
 
2,663 
(115)