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 26, 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 Company announcements 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
 
 
Annual Results
for the year ended 31 December 2015
 

 
The Royal Bank of Scotland Group plc
Annual Results 2015
Contents
Page
   
Introduction
1
Highlights
3
Chief Executive's message
11
Analysis of results
14
Segment performance
25
Statutory results
39
Notes
46
Statement of directors' responsibilities
51
Forward-looking statements
52
   
Appendix 1 - Williams & Glyn
 
 
 
 

 
Introduction
 
Presentation of information
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. The results commentary in this document refers to measures of financial performance, principally operating performance before own credit adjustments, (loss)/gain on redemption of own debt, write down of goodwill, strategic disposals, restructuring costs and litigation and conduct costs, to exclude items which distort period-on-period comparison.  These measures, derived from the reported results, are non-GAAP financial measures.
 
Restatements
Pension accounting policy
As set out in 'Basis of preparation', 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. The change has been applied retrospectively and comparatives restated.
 
RBS has made certain changes to its financial reporting which are effective for the 2015 Annual results.
 
·      revised reportable segments;
 
·      a change to the treatment of one-off and other items;
 
·      allocation of central balance sheet items;
 
·      revised treasury allocations; and
 
·      revised segmental return on equity.
 
Comparatives have been restated accordingly for the changes outlined above.
 
For further information on these changes refer to the Restatement document issued on 4 February 2016, available on www.investors.rbs.com/restatement.
 
Citizens Financial Group
On 31 December 2014, Citizens was classified as a discontinued operation and a disposal group: its aggregate assets were presented in Assets of disposal groups and its aggregate liabilities in Liabilities of disposal groups.
 
From 3 August 2015, when RBS's interest fell to 20.9%, Citizens was accounted for as an associate classified as held for sale. On 30 October 2015, RBS sold all of its remaining shareholding in Citizens. Citizens is no longer treated as a reportable segment.
 
Introduction

Statutory results
The consolidated income statement, consolidated statement of comprehensive income, consolidated balance sheet, consolidated statement of changes in equity, consolidated cash flow statement and related notes presented on pages 46 to 50 inclusive are on a statutory basis.
 
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 and those for the year ended 31 December 2015 will be filed with the Registrar of Companies following the company's Annual General Meeting. The report of the auditor on those statutory accounts was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Act.
 
Analysts and investors conference call
RBS will be hosting a presentation for analysts and investors on the results for the year ended 31 December 2015. Details are as follows:
 
 
Date:
 
Friday 26 February 2016
Time:
 
9.30 am UK time
Conference ID
 
46694275
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
 
There will also be a call for fixed income analysts and investors. Details are as follows:
 
Date:
 
Friday 26 February 2016
Time:
 
3.30 pm UK time
Conference ID
 
47837905
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
 
 
Available on www.rbs.com/results
 
·      announcement and slides
 
·      2015 Annual Report and Accounts 
 
·      a financial supplement containing income statement and balance sheet information for the nine quarters ended 31 December 2015
 
·      Pillar 3 Report 2015
 
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
 

 
Highlights

The Royal Bank of Scotland Group (RBS) continues to deliver on its plan to build a strong, simple and fair bank for both customers and shareholders. RBS delivered against its 2015 targets.
 
RBS reported a loss attributable to ordinary shareholders of £1,979 million, compared with a loss of £3,470 million in 2014. This included elevated restructuring costs (£2,931 million), as the bank's repositioning accelerated, particularly in the Corporate & Institutional Banking (CIB) business. Litigation and conduct costs (£3,568 million) increased as further steps were taken to clear legacy obstacles from RBS's path to normalisation.
 
RBS continues to strengthen and reshape the balance sheet, building on a strong track record of delivery. Risk-weighted assets (RWAs) reduced 32%, or £113 billion, including £109 billion from the disposal of Citizens Financial Group and the accelerated run-down of Capital Resolution. 
 
RBS intends to pay a final dividend on the Dividend Access Share (DAS) during the first half of 2016 subject to final Board and PRA approval, further normalising the capital structure of the bank and removing a constraint on the resumption of capital distributions.
 
 
2015 results included a charge for goodwill impairment of £498 million attributed to Private Banking; a loss on redemption of own debt of £263 million; and a gain of £1,147 million on loss of control of Citizens largely arising from the reclassification of foreign exchange reserves (£962 million).
 
Adjusted operating profit(1) totalled £4,405 million compared with an adjusted operating profit of £6,056 million in 2014, lower primarily due to income attrition and disposal losses in the Capital Resolution business.
 
UK Personal & Business Banking (UK PBB)(2) recorded an adjusted operating profit of £2,169 million, broadly stable compared with the prior year. There was a good performance in mortgages with net new lending totalling £9.3 billion, RBS's strongest performance since 2009, albeit at lower overall margins as customers shift from standard variable rate to fixed rate products. Adjusted operating costs(3) were 3% lower, while credit quality remained good, with modest net impairment releases.
Commercial Banking(2) adjusted operating profit was down 6% at £1,384 million, driven by a marginal fall in income reflecting margin pressure and included a Q4 2015 loss of £34 million on the sale of non-strategic asset portfolios. Deposit and lending volumes (net new lending of £3.6 billion excluding business transfers, run-off and disposals), contributed to a 1% rise in net interest income.
Ulster Bank RoI(2) adjusted operating profit declined 45% to £264 million as net impairment releases, though still substantial, were lower than in 2014. Private Banking adjusted operating profit was 41% lower at £113 million, while RBS International (RBSI) recorded an adjusted operating profit of £211 million, down 14%. 
CIB(2)  made an adjusted operating loss of £55 million, compared with an adjusted operating profit of £233 million in 2014, driven by lower income in line with the business's reduced scale and risk appetite. Adjusted expenses were down 15% as CIB continues to move towards a more sustainable cost base.
Capital Resolution(2)  recorded an adjusted operating loss of £412 million, compared with a profit of £1,115 million in 2014, reflecting increased disposal losses as it accelerated the run-down of its portfolios, reducing RWAs by almost half to £49.0 billion. 
 
Adjusted bank return on equity was 11.0% in 2015, compared with (1.5%) in 2014. Franchise return on equity(4) was 11.2%.
 
Notes:
 
(1)
Operating profit/(loss) before tax, own credit adjustments, (loss)/gain on redemption of own debt, strategic disposals and excluding restructuring costs, litigation and conduct costs and write down of goodwill. 
(2)
For unadjusted operating profit, see segment performance on pages 25 to 29.
(3)
Excluding restructuring costs, litigation and conduct costs and write down of goodwill.
(4)
Return on equity for Personal & Business Banking (PBB), Commercial & Private Banking (CPB) and CIB combined.
 
 
Highlights

Common Equity Tier 1 (CET1) ratio improved 430 basis points to 15.5% in 2015, as RWAs declined by £113 billion, partially offset by the attributable loss and the accelerated recognition of previously committed contributions in relation to the The Royal Bank of Scotland Group Pension Fund following a change in accounting policy.
 
Tangible net asset value was 352p per ordinary share at 31 December 2015, down from 374p at 31 December 2014 post restatement for the accounting policy change. This was largely driven by the attributable loss for the year less the impact of reclassified reserves on the deconsolidation of Citizens and cash flow hedging reclassifications from equity arising as the hedged transactions occurred.
 
Q4 2015 financial performance
The loss attributable to ordinary shareholders amounted to £2,740 million, compared with a loss of £5,791 million in Q4 2014 and a profit of £940 million in Q3 2015. The loss was primarily driven by litigation and conduct costs of £2,124 million principally relating to additional provisions for mortgage-backed securities litigation in the US (£1,500 million) and additional PPI provisions (£500 million). Q4 2015 results were also impacted by certain significant items including the charge for goodwill impairment attributed to Private Banking (£498 million) (Q4 2014 - nil) and the loss on redemption of own debt (£263 million) (Q4 2014 - nil).
 
Adjusted operating profit for the quarter was £686 million, compared with £1,167 million in Q4 2014 and £826 million in Q3 2015. Lower income, primarily reflecting the planned run down of Capital Resolution which included £180 million of total disposal losses, weighed on Q4 2015 performance. The UK Bank Levy of £230 million increased operating expenses relative to Q3 2015. In addition, net impairment releases were £327 million, significantly lower than Q4 2014 (£670 million) but higher than Q3 2015 (£79 million).
 
 
Highlights

Delivery against our 2015 targets
In 2015, RBS set out targets across its five strategic priorities, and continued its track record of delivery.
 
Strategy goal
2015 targets
2015
Strength & sustainability
Reduce risk-weighted assets (RWAs) to <£300 billion
£243 billion, a reduction of £113 billion.
RCR exit substantially completed
Funded assets down 88% since initial pool of assets identified. Residual £4.6 billion of assets within Capital Resolution.
Citizens deconsolidation
Sold full stake a year ahead of schedule, allowing full deconsolidation.
£2 billion AT1 issuance
Successfully issued 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, target exceeded and increased to >£900 million
Achieved £983(1) million of cost savings.
Supporting growth
Lending growth in strategic segments ≥ nominal UK GDP growth
4.8% growth achieved in UK PBB and Commercial Banking in 2015, exceeding nominal UK GDP growth(2).
Employee engagement
Raise employee engagement index to within 8% of GFS norm
Surpassed employee engagement goal, up six points to within three points of GFS.
 
Notes:                                                                                                                                           
 
(1)
Excluding litigation and conduct costs, restructuring costs, write down of goodwill and other intangible assets and the operating costs of Williams & Glyn.
(2)
Preliminary estimate for nominal UK GDP growth in 2015 is 2.6% year-on-year.
 
Building a strong, simple, fair bank
 
Balance sheet progress
RBS continued to improve its capital strength, with the CET1 ratio increasing to 15.5% at 31 December 2015, up 430 basis points from 11.2% at 31 December 2014 and up 690 basis points from 8.6% at 31 December 2013. CET1 ratio benefited from the disposal of Citizens and Capital Resolution's performance in  running off and disposing of capital intensive assets, partly offset by the attributable loss and the pension accounting policy change. 
 
The leverage ratio rose to 5.6% at 31 December 2015, an improvement of 140 basis points from 4.2% at 31 December 2014 and 220 basis points from 3.4% at 31 December 2013, assisted by the successful issuance of Additional Tier 1 (AT1) capital notes in August 2015 and a substantial reduction in leverage exposure to £702 billion, down £237 billion from 31 December 2014 and £380 billion from 31 December 2013. Planned 2016 issuance of £2 billion AT1 capital notes, subject to market conditions, will provide further balance sheet resilience. In addition, issuance of £3-5 billion of senior debt, eligible to meet RBS's Minimum Requirement for Own Funds and Eligible Liabilities (MREL), is targeted from the RBS Group plc holding company, again subject to market conditions.
 
Progress was made in de-risking the balance sheet as the bank continued the run-down or sale of certain businesses and higher risk or capital intensive assets. RWAs decreased from £356 billion at 31 December 2014 to £243 billion at 31 December 2015.
 
 
Highlights

In 2015 RBS:
 
Completed the exit from Citizens a year ahead of schedule, reducing RWAs by £63 billion in the process and underlining our commitment to a UK market focus.
Delivered strong progress in the first year of CIB Capital Resolution, reducing RWAs by £32.6 billion to £40.5 billion, exceeding its target RWA reduction of £25 billion. The business substantially exited the North American and Asia-Pacific (APAC) portfolios, and a partnership for our international customers was agreed with BNP Paribas as an alternative to the Global Transaction Services business. Agreed the sale of our Russian subsidiary which is due to complete in Q2 2016.
Achieved the run-down target of RCR a year ahead of schedule, reducing funded assets by 88% since the original pool of assets was identified, exceeding the targeted 85%, to £4.6 billion at 31 December 2015.
Completed the first tranche of the international private banking business sale, with the final tranche due to complete in the first half of 2016.
Improved the quality of its core loan books, primarily through the sale of commercial real estate and infrastructure portfolios in Commercial Banking and a buy-to-let portfolio in Ulster Bank RoI.
Continued to progress the Williams & Glyn (W&G) divestment, submitting a banking licence application to UK regulatory authorities in September 2015 and work continues on separation (although this will not now be achieved until after the previously announced Q1 2017). The Group remains committed to full divestment by the end of 2017.
 
Credit quality remained stable, with risk elements in lending (REIL) decreasing to £12.2 billion (3.9% of gross customer loans) at 31 December 2015, from £28.2 billion (6.8%) at 31 December 2014 and £39.4 billion (9.4%) at 31 December 2013. This reduction was primarily driven by disposals in Capital Resolution coupled with the recovering Irish economy.
 
In line with the progress to de-risk the balance sheet, committed exposures to the natural resources sectors have more than halved, with oil and gas in particular substantially reducing by 70% during 2015 to £6.6 billion. The majority of our emerging market exposures have declined following action on non-strategic activities, reducing by 75% our exposure to China and Russia. Reductions primarily reflected corporate loan portfolio disposal activity and the strategic direction of CIB.
 
Our funding and liquidity position remains strong, aided by the accelerated reduction of the Capital Resolution balance sheet. The liquidity coverage ratio was 136%, compared with 112% at 31 December 2014, whilst the net stable funding ratio was 121%, compared with 112% at 31 December 2014, both well above regulatory minima at the end of 2015.
 
The 2015 Bank of England stress test results concluded that RBS did not need to alter its capital plan, as sufficient steps had already been taken by RBS to strengthen its capital position.
 
Delivering for our customers
 
Product proposition enhanced:
 
Investing in building deeper customer engagement through the launch of a new current account, 'Reward', which enables customers to receive 3% cashback on household bills for a monthly account fee of £3.
 
Launched an innovative new home insurance product offering customers a fixed premium for three years, which we believe is a positive departure from industry practice.
 
Committed to fair banking through making overdrafts more accessible to one million customers who are now eligible for overdrafts of £100 and £250.
 
One of the first UK banks to offer the Government-led Help to Buy: ISA as we continue to help first time buyers.
 
Highlights

 
Continue to lead on collaboration and innovation:
 
Launched Royal National Institute of Blind People (RNIB) approved cards, becoming the first bank to achieve RNIB accreditation.
 
Became the first UK bank to enable customers to use only their fingerprint to log into their phone banking app via Touch ID.
 
Real time registration of our mobile banking app enabling customers to log in as they open their current account.
 
One of the first UK banks to launch Apple Pay and subsequently created an Apple Watch app.
Supporting UK entrepreneurs and businesses:
 
Opened four Entrepreneur Hubs across the UK, increasing our involvement to seven, enabling entrepreneurs and small businesses to access free office space, mentoring and financial support, with a further five hubs to be opened in 2016.
 
The Commercial Bank has issued 12,500 statements of appetite letters to our customers, offering up to £8 billion of new borrowing facilities.
Investing in our operational capabilities:
 
Enhanced our mortgage operations, including an online mortgage tracker application to improve customer experience, whilst increasing mortgage advisors by 21% from 803 to 974.
 
Employed a new automated account-opening system to improve our onboarding process, accelerating end-to-end account opening times by 50% for business customers and 30% for commercial customers.
 
Launched a new customer relationship management tool, enabling a single view of the customer.
 
Planned £3.5 billion IT investment spend committed from 2015 to 2017 to improve core infrastructure and resilience whilst addressing innovation capabilities.
 
Core technology platforms continued to be simplified with 370 applications and over 6,000 servers decommissioned.
Upgrading our points of presence:
 
Upgraded 322 branches and replaced 922 ATMs as the bank enhances customers' experience.
 
Customers in Ireland are benefiting from a joint venture with 'An Post', accessing 1,140 new points of presence.
 
Continued to evolve the NatWest mobile app through Touch ID and the ability to apply for loans and savings products, whilst enhancing the PAYM feature and ability to use Apple Pay. Active mobile users have increased 27% to 3.7 million in 2015.
 
Broke with tradition to open 34 of the busiest branches in the UK during bank holidays.
 
Launched an 'online diary' where customers can book an appointment with an advisor from the comfort of their own home.
Investing in our people:
 
Delivered leadership training to over 13,000 leaders through a comprehensive 'Determined to Lead' training programme.
 
Around 5,500 front line staff completed certified banking skills programmes, with a further c.11,000 enrolled.
 
Announced a target of having 30% female leaders in every business unit by 2020 and a further goal of a 50/50 spilt by 2030 across all levels of the business.
 
Became the first bank to achieve Investing in Young People Accreditation.
 
Highlights

Government shareholding
On 4 August 2015, HM Treasury (HMT) sold 630 million RBS ordinary shares, its first sale since its initial investment in 2008.
 
On 8 October 2015, HMT converted the 51 billion B shares it held into 5.1 billion ordinary shares, further normalising the ownership structure of RBS. These new ordinary shares were admitted to the London Stock Exchange on 14 October 2015. HMT's economic interest was 72.6% at 31 December 2015.
 
Our current plan assumes that we will pay the final Dividend Access Share (DAS) dividend of £1,180 million, plus interest, during the first half of 2016, subject to final Board and PRA approval. This thereby effects the conversion of the DAS into a single ordinary share. This will further normalise the capital structure of the bank and remove a constraint on the resumption of capital distributions. The retirement of the DAS demonstrates the strategic progress of the bank and follows an initial payment of £320 million in 2014. The pro forma impact, at 31 December 2015, to TNAV from making the payment in 2016 is approximately 10p per share and approximately 50 basis points to the CET1 ratio.
 
Pension Fund
On 27 January 2016, the bank announced a change to its pensions accounting policy; in particular, the policy for determining whether or not it has an unconditional right to a refund of surpluses in its employee pension funds. As a result of this accounting change, a minimum funding requirement of £3.3 billion in respect of the Main scheme was recorded as a liability at 31 December 2015 representing the present value of deficit reduction contributions for 2016 to 2023 (£3.7 billion) less an asset ceiling of £400 million. The net post tax impact of the policy change, together with updated IAS 19 year-end scheme valuations, is approximately £1.6 billion or approximately 13p per share reduction in TNAV and approximately 70 basis points on the CET1 ratio.
 
Separately, RBS has signed a memorandum of understanding with the RBS Group Pension Fund trustee to make a payment of £4.2 billion into the scheme. The pro-forma 2016 impact on TNAV, at point of payment, is a further £400 million or approximately 3p per share and approximately 30 basis points on the CET1 ratio.
The accelerated payment improves capital planning and resilience, bringing forward the valuation date not later than 31 December 2015. The next valuation date will take place between 31 October 2018 and 31 December 2018, with any future funding arrangements needed to be agreed with the Trustee no later than Q1 2020. This provides increased certainty on contribution commitments and the pension balance sheet position. Subject to PRA approval, the bank expects the adverse core capital impact to be partially offset by a reduction in RBS's core capital requirements. Any such potential core capital offsets are likely to occur at the earliest 1 January 2017 and will depend on the PRA's assessment of RBS's core capital position at that time.
 
Current trading
PBB and CPB franchises have traded in line with expectations in the first six weeks of 2016. CIB has had a difficult start to the year, given overall market conditions.
 
The net impact of lower long term yields and year to date sterling weakness have contributed to earnings volatility, reflected in certain line items such as IFRS volatility, own credit adjustments and foreign exchange gains/losses. 
 
 
Highlights

Outlook
In our core PBB and CPB franchises we expect income to stabilise in 2016 as headwinds from low interest rates and the uncertain macroeconomic environment are balanced by strong planned volume growth, particularly in mortgages but also in core commercial lending. CIB may see some modest further income erosion. Cost savings of £800 million are planned in 2016 (in addition to the £2 billion achieved in 2014 and 2015). Our expectation is for cost reduction to exceed any income erosion across our combined core businesses.
 
Legacy credit portfolios have now been substantially disposed of, so we do not expect the considerable recoveries seen in 2014 and 2015 to be repeated and some portfolios may see net impairment charges. However, impairments on core portfolios are expected to remain low in 2016, with a modest overall net impairment charge for the year, though we recognise that the risk of larger single name events has increased, given the uncertain macroeconomic environment.
 
Previous guidance has indicated restructuring costs of approximately £5 billion and disposal losses of approximately £1.5 billion in the period 2015-19. Consistent with this, restructuring costs are expected to remain high in 2016, totalling over £1 billion. Most of the remaining signalled disposal losses are expected to be incurred in 2016 (2015 - £367 million). Capital Resolution is expected to reduce RWAs to around £30 billion by the end of 2016, ahead of our original plan, despite a more difficult economic environment for disposals, given the momentum we created in 2015, and continued substantial run-off activity.
 
Based upon the currently expected timing of payments, the combined impact of the accelerated pension payment, as announced on 27 January 2016, and the final DAS dividend would be to reduce TNAV per share by 13p during Q1 2016.
 
We continue to deal with a range of uncertainties in the external environment, including those caused by the referendum on the UK's continuing membership of the European Union. We will also have to manage conduct-related investigations and litigation, including US RMBS, throughout 2016, and substantial incremental provisions may be recognised during the year.
 
Work continues on the separation of Williams & Glyn, but this will now not be achieved until after Q1 2017. The Group remains committed to full divestment by the end of 2017, although it continues to face significant challenges and risks in separating the Williams & Glyn business, some of which may only emerge as various separation process phases are progressed. The Williams & Glyn separation process is a high priority for the Group and involves the diversion of Group resources away from other key areas. The associated risks are discussed in more detail in the Risk Factors on pages 390 to 414 in the 2015 Annual Report and Accounts.
 
RBS plans to return excess capital to shareholders through dividends or buybacks, subject to Board and PRA approval at the time. Key milestones before seeking such approval for capital distributions would include, among other considerations: passing the 2016 Bank of England stress test (including our Individual Capital Guidance hurdle); operating within our capital risk appetite; passing the peak of litigation and conduct costs including US RMBS; confidence in sustainable profitability; and an assured exit of Williams & Glyn. Given the challenges in separating Williams & Glyn and the potentially elongated period to resolve US RMBS-related litigation claims and regulatory investigations, we now consider it more likely that capital distributions will resume later than Q1 2017.
 
 
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 a simple and fair bank 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 Q4 2015. Year-on-year, NatWest Business Banking, RBS Business Banking and Ulster Bank Personal Banking (Northern Ireland) have seen significant improvements in NPS.
 
   
Q4 2014
Q3 2015
Q4 2015
Year end 2015 target
Personal Banking
NatWest (England & Wales)(1)
6
8
9
9
Royal Bank of Scotland (Scotland)(1)
-13
-9
-9
-10
Ulster Bank (Northern Ireland)(2)
-24
-9
-9
-21
Ulster Bank (Republic of Ireland)(2)
-18
-15
-14
-15
Business Banking
NatWest (England & Wales)(3)
-11
6
9
-7
Royal Bank of Scotland (Scotland)(3)
-23
-12
-7
-21
Ulster Bank Corporate
Ulster Bank (Northern Ireland)(4)
-44
n/a
-45
-34
Ulster Bank (Republic of Ireland)(4)
-17
n/a
-21
-15
Commercial Banking(5)
12
9
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). Customer trust in RBS is at its highest in two years and NatWest has also improved.
 
 
   
Q4 2014
Q3 2015
Q4 2015
Year end 2015 target
Customer Trust(6)
NatWest (England & Wales)
41%
44%
48%
46%
Royal Bank of Scotland (Scotland)
2%
11%
14%
11%
 
Notes:
 
(1)
Source: GfK FRS 6 month rolling data. Latest base sizes: NatWest (England & Wales) (3509) Royal Bank of Scotland (Scotland) (623). 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 (300) Ulster bank RoI (302) 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 (1352), RBS Scotland (432). Weighted by region and turnover to be representative of businesses in England & Wales/Scotland.
(4)
Source: PWC Northern Ireland Business Banking Tracker and PWC Republic of Ireland Business Banking Tracker. Data collected annually. Latest base sizes: Ulster Bank NI (377), Ulster Bank RoI (222). Weighted by turnover to be representative of businesses in Northern Ireland and Republic of Ireland.
(5)
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 (872). Weighted by region and turnover to be representative of businesses in Great Britain.
(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 (974), RBS Scotland (187).
 
 
 

Chief Executive's message

RBS made progress again in 2015. We ended the year a simpler, stronger bank with a business anchored squarely in the UK and Ireland, focused on retail and commercial markets.
 
Year one of our plan in 2014 was about getting cost out and improving our capital position. This gave us the platform to go further, faster in 2015 by exiting more businesses that didn't fit our strategy, and accelerating improvements in our core bank. We delivered on both.
 
Simpler and stronger
Over the last few years, RBS has built a good track record in restructuring and we reinforced that record in 2015. The sale of Citizens was completed early following the largest US bank IPO ever. We are well through the sale of our international private banking business, and are winding down our non-UK transaction services business. Major loan portfolios have been divested, and the progress continues on the complex process to exit 25 of the 38 countries in our international network. We also marked the end of RBS Capital Resolution (RCR), having substantially completed its run-down one year ahead of schedule. 
 
Our progress on exits and disposals has supported a substantial uplift in capital strength, with our CET1 ratio up by 430 basis points over the year to 15.5%.
 
Like other banks, we continue to look for opportunities to resolve legacy conduct issues on terms we believe to be acceptable. We have recently added to our provisions in relation to residential mortgage-backed securities in the US (RMBS) and Payment Protection Insurance (PPI). We hope to conclude many of the remaining substantial conduct and litigation issues over the coming year, but the timing of many of these matters is not in our hands.
 
An improving core bank
As well as exiting businesses that don't fit our strategy, we have made strong progress in improving our core retail and commercial franchises. Mortgage and commercial lending showed healthy growth over the year as we played a key role in supporting the UK economy.
 
Focus continues around simplifying processes as the scale and footprint of the bank is reshaped. At an operational level, we have reduced our London property footprint, further rationalised and simplified our systems, and increased stability across our core platforms. Simplification across the bank has helped reduce our cost base by £983 million this year.
 
We have also improved our products and service for customers. Our new current account proposition - Reward - is a further step forward in terms of our offering, with our customers receiving 3% cashback on their household bills. This product is geared toward building stronger and deeper customer relationships.  
 
Across our franchises we demonstrated further commitment to becoming a fair bank that earns the trust and loyalty of its customers. We launched a progressive three year fixed premium rate home insurance product, made £100 and £250 overdrafts automatically available to an additional one million customers, and launched new cards for visually impaired customers that secured approval from the Royal National Institute of Blind People (RNIB).
 
Our underlying performance over the year shows the strength - and further potential - of our core businesses, but the conduct and restructuring issues mentioned have taken their toll on our bottom line. While adjusted operating profit for the year totalled £4,405 million, we recorded a full year attributable loss of £1,979 million.
 
 
Chief Executive's message

We went further, faster against our targets in 2015
We have consistently referred to five priorities, which have become a familiar framework for tracking performance. This management team is committed to a simple approach: we set out our priorities, we commit to targets against each of them, and then we deliver, as we have set out on page 5.
 
2016 Targets
Each year, the bank moves toward delivering stronger returns from a lower risk profile; our strategic priorities are at the core of this. For 2016, we have a new set of targets which ultimately underpin achieving the long-term target of being number one for customer service, trust and advocacy:
 
 
Strength & sustainability: maintain bank CET1 ratio of 13%.
Customer experience: narrow the gap to No.1 for NPS in every primary UK brand.
Simplifying the bank: reduce operating expenses by £800 million(1).
Supporting growth: net 4% growth in PBB and CPB customer loans.
Employee engagement: raise employee engagement to within two points of GFS norm.
 
Our long-term financial and customer targets remain unchanged, but we have stretched our employee engagement target further. The logic we are following is simple: more engaged employees have better customer conversations, which will drive better service and, as a result, higher returns.
 
Focus for 2016
We are looking to take another £800 million from our cost base. This is an area where we must continue to be disciplined given the uncertain macroeconomic and low interest rate environment our core businesses face. In two years, we have taken out £2 billion in costs and next year will see us move closer to a sustainable cost base that reflects the size and scale of this bank.
 
Our 'Reward' current account proposition and increasing share of the mortgage market give us a platform to be the main bank provider to more valuable customers.
 
In Commercial Banking, we will continue to shift capital toward business that delivers higher quality returns, and cement our position as the number one bank for UK business.
 
RBS International is another strong franchise. The solid returns in this business will become an increasing feature of our profit mix over the coming years.
 
We also have businesses that can and will do better.
 
Corporate & Institutional Banking (CIB) has plans through to 2020 to deliver acceptable returns and will now be focused on serving our largest and most valuable corporate clients.
 
We have repositioned Ulster Bank with Ulster Bank customers in Northern Ireland included in Personal & Business Banking and the Republic of Ireland (RoI) business separated into Ulster Bank RoI. The franchise is focused on improving returns by reducing its costs, given it is now a smaller but safer business.
 
The sale of our international private banking business in 2015 means we can accelerate the repositioning of our UK Private Banking business so it delivers sustainable returns.
 
The separation and eventual divestment of Williams & Glyn remains a top priority for us. We will not now achieve our planned separation until after the previously announced Q1 2017, but remain committed to full divestment by the end of 2017. Separation of this business is a complex process and we continue to invest sizeable resources.
 
Note:                                                                                                                                             
 
(1)
Excluding litigation and conduct costs, restructuring costs, write down of goodwill and other intangible assets and the operating costs of Williams & Glyn.
 
 
Chief Executive's message

Delivering for customers and shareholders
The UK government's decision to start disposing of its majority stake in RBS during 2015 was a significant step forward, and underlined the progress we have made over the last two years.
 
We have previously said that we are in phase two of our plan, working through as many of the remaining conduct and restructuring issues as we can.  This is a tough but important part of our plan and we are determined to get through it as quickly as possible.
 
We will then move to the third phase as a strong, simple and fair bank that delivers solidly on the needs of its customers and shareholders.
 
Ross McEwan
Chief Executive
 
 

 
Analysis of results

Summary consolidated income statement for the period ended 31 December 2015
 
 
Year ended
 
Quarter ended
 
31 December
31 December
 
31 December
30 September
31 December
 
2015
2014 
 
2015 
2015*
2014 
 
£m
£m
 
£m
£m
£m
Net interest income
8,767 
9,258 
 
2,162 
2,187 
2,382 
             
Own credit adjustments
309 
(146)
 
(115)
136 
(144)
(Loss)/gain on redemption of own debt
(263)
20 
 
(263)
Strategic disposals
(157)
191 
 
(22)
Other operating income
4,267 
5,827 
 
722 
860 
727 
             
Non-interest income
4,156 
5,892 
 
322 
996 
583 
             
Total income
12,923 
15,150 
 
2,484 
3,183 
2,965 
             
Litigation and conduct costs
(3,568)
(2,194)
 
(2,124)
(129)
(1,164)
Restructuring costs
(2,931)
(1,154)
 
(614)
(847)
(542)
Write down of goodwill
(498)
(130)
 
(498)
Other costs
(9,356)
(10,381)
 
(2,525)
(2,300)
(2,612)
             
Operating expenses
(16,353)
(13,859)
 
(5,761)
(3,276)
(4,318)
             
(Loss)/profit before impairment releases
(3,430)
1,291 
 
(3,277)
(93)
(1,353)
Impairment releases
727 
1,352 
 
327 
79 
670 
             
Operating (loss)/profit before tax
(2,703)
2,643 
 
(2,950)
(14)
(683)
Tax (charge)/credit
(23)
(1,909)
 
261 
(1,040)
             
(Loss)/profit from continuing operations
(2,726)
734 
 
(2,689)
(11)
(1,723)
Profit/(loss) from discontinued operations, net of tax (1)
1,541 
(3,445)
 
90 
1,093 
(3,882)
             
(Loss)/profit for the period
(1,185)
(2,711)
 
(2,599)
1,082 
(5,605)
Non-controlling interests
(409)
(60)
 
(20)
(45)
(71)
Other owners
(385)
(379)
 
(121)
(97)
(115)
Dividend access share
(320)
 
             
(Loss)/profit attributable to ordinary shareholders
(1,979)
(3,470)
 
(2,740)
940 
(5,791)
             
Memo:
           
             
Total income - adjusted (2)
13,034 
15,085 
 
2,884 
3,047 
3,109 
Operating expenses - adjusted (3)
(9,356)
(10,381)
 
(2,525)
(2,300)
(2,612)
Operating profit - adjusted (2,3)
4,405 
6,056 
 
686 
826 
1,167 
               
Key metrics and ratios
             
               
Net interest margin
2.12%
2.13%
 
2.10%
2.09%
2.23%
 
Cost:income ratio
127%
91%
 
232%
103%
146%
 
Cost:income ratio - adjusted (2,3)
72%
69%
 
88%
75%
84%
 
(Loss)/earnings per ordinary share from
             
  continuing operations
             
  - basic
(27.7p)
0.5p
 
(24.5p)
(1.0p)
(16.2p)
 
  - adjusted (2,3,4)
29.2p
25.4p
 
5.1p
5.6p
(2.4p)
 
Return on tangible equity (5)
(4.7%)
(8.2%)
 
(26.5%)
9.0%
(51.1%)
 
Return on tangible equity - adjusted (2,3,5)
11.0%
(1.5%)
 
6.6%
16.3%
(37.4%)
 
Average tangible equity (5)
£41,821m
£42,464m
 
£41,319m
£41,911m
£45,268m
 
Average number of ordinary shares outstanding during
             
  the period (millions)
11,516 
11,356 
 
11,554 
11,546 
11,422 
 
 

*Restated, refer to page 46 for further details.
 
Notes:
 
(1)
Refer to Note 2 on page 46 for further details.
(2)
Excluding own credit adjustments, (loss)/gain on redemption of own debt and strategic disposals.
(3)
Excluding restructuring costs, litigation and conduct costs and write down of goodwill.
(4)
Adjusted earnings per share excludes the participation rights of the dividend access share (DAS).
(5)
Tangible equity is equity attributable to ordinary shareholders less intangible assets.
 
 
 

 
Analysis of results

Summary consolidated balance sheet as at 31 December 2015
 
 
31 December 
30 September 
31 December 
 
2015 
2015*
2014*
 
£m 
£m 
£m 
       
Cash and balances at central banks
79,404 
77,220 
74,872 
Net loans and advances to banks (1)
18,361 
22,681 
23,027 
Net loans and advances to customers (1)
306,334 
311,383 
334,251 
Reverse repurchase agreements and stock borrowing
39,843 
51,800 
64,695 
Debt securities and equity shares
83,458 
83,506 
92,284 
Assets of disposal groups (2)
3,486 
6,300 
82,011 
Other assets
22,008 
27,775 
26,289 
       
Funded assets
552,894 
580,665 
697,429 
Derivatives
262,514 
296,019 
353,590 
       
Total assets
815,408 
876,684 
1,051,019 
       
Bank deposits (3)
28,030 
30,543 
35,806 
Customer deposits (3)
343,186 
346,267 
354,288 
Repurchase agreements and stock lending
37,378 
43,355 
62,210 
Debt securities in issue
31,150 
37,360 
50,280 
Subordinated liabilities
19,847 
20,184 
22,905 
Derivatives
254,705 
288,905 
349,805 
Liabilities of disposal groups (2)
2,980 
6,401 
71,320 
Other liabilities
43,985 
46,927 
45,696 
       
Total liabilities
761,261 
819,942 
992,310 
Non-controlling interests
716 
703 
2,946 
Owners' equity
53,431 
56,039 
55,763 
       
Total liabilities and equity
815,408 
876,684 
1,051,019 
       
Contingent liabilities and commitments
153,752 
160,205 
241,186 
 
 
Balance sheet related key metrics and ratios
     
       
Tangible net asset value per ordinary share (4)
352p
371p
374p
Loan:deposit ratio (3,5)
89%
89%
95%
Short-term wholesale funding (3,6)
£17bn
£17bn
£28bn
Wholesale funding (3,6)
£59bn
£66bn
£90bn
Liquidity portfolio
£156bn
£164bn
£151bn
Liquidity coverage ratio (LCR) (7)
136%
136%
112%
Net stable funding ratio (8)
121%
117%
112%
Tangible equity (9)
£40,943m
£42,937m
£42,885m
Number of ordinary shares in issue (millions) (10)
11,625 
11,574 
11,466 
Common Equity Tier 1 ratio
15.5%
12.7%
11.2%
Risk-weighted assets
£242.6bn
£316.0bn
£355.9bn
Leverage ratio (11)
5.6%
5.0%
4.2%
 
*Restated, refer to page 46 for further details.
 
Notes:
 
(1)
Excludes reverse repurchase agreements and stock borrowing.
(2)
Primarily international private banking business at 31 December 2015 and 30 September 2015. The interest in associate in relation to Citizens is also included at 30 September 2015. Primarily Citizens at 31 December 2014.
(3)
Excludes repurchase agreements and stock lending.
(4)
Tangible net asset value per ordinary share represents tangible equity divided by the number of ordinary shares in issue.
(5)
Includes disposal groups.
(6)
Excludes derivative collateral.
(7)
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 tax of other institutions.
(8)
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.
(9)
Tangible equity is equity attributable to ordinary shareholders less intangible assets.
(10)
Includes 26 million Treasury shares (30 September 2015 - 26 million; 31 December 2014 - 28 million).
(11)
Based on end-point CRR Tier 1 capital and leverage exposure under the CRR Delegated Act.
 
 
 

Analysis of results

 
 
Year ended
 
Quarter ended
 
31 December
31 December
 
31 December
30 September
31 December
2015
2014
 
2015
2015
2014
Net interest income
£m
£m
 
£m
£m
£m
             
Net interest income (1)
8,767 
9,258 
 
2,162 
2,187 
2,382 
RBS
           
             
  - UK Personal & Business Banking
4,152 
4,221 
 
1,030 
1,055 
1,086 
  - Ulster Bank RoI
365 
467 
 
85 
90 
112 
  - Commercial Banking
1,997 
1,976 
 
512 
504 
506 
  - Private Banking
436 
454 
 
108 
109 
116 
  - RBS International
303 
323 
 
78 
73 
83 
  - Corporate & Institutional Banking
87 
(11)
 
28 
29 
  - Capital Resolution
365 
673 
 
78 
162 
  - Williams & Glyn
658 
664 
 
165 
167 
167 
  - Central items & other
404 
491 
 
150 
82 
142 
             
Average interest-earning assets (IEA)
           
RBS
413,345 
432,935 
 
407,061 
413,778 
421,244 
             
  - UK Personal & Business Banking
130,702 
126,951 
 
134,687 
131,406 
127,980 
  - Ulster Bank RoI
23,232 
24,344 
 
23,195 
23,456 
23,372 
  - Commercial Banking
106,429 
103,248 
 
111,600 
105,905 
102,324 
  - Private Banking
15,835 
15,687 
 
16,025 
15,878 
15,789 
  - RBS International
20,518 
19,540 
 
20,773 
20,244 
19,712 
  - Corporate & Institutional Banking
16,552 
14,917 
 
10,190 
18,686 
14,940 
  - Capital Resolution
60,656 
100,716 
 
39,875 
51,786 
90,538 
  - Williams & Glyn
22,940 
22,678 
 
23,327 
23,020 
22,681 
  - Central items & other
16,481 
4,854 
 
27,389 
23,397 
3,908 
             
             
Yields, spreads and margins of the banking business
           
             
Gross yield on interest-earning assets of
           
 banking business (3)
2.88%
3.02%
 
2.78%
2.84%
3.05%
Cost of interest-bearing liabilities of banking business
(1.11%)
(1.24%)
 
(1.00%)
(1.09%)
(1.16%)
             
Interest spread of banking business (4)
1.77%
1.78%
 
1.78%
1.75%
1.89%
Benefit from interest-free funds
0.35%
0.35%
 
0.32%
0.34%
0.34%
             
Net interest margin (1,5)
           
RBS
2.12%
2.13%
 
2.10%
2.09%
2.23%
             
  - UK Personal & Business Banking (2)
3.18%
3.32%
 
3.03%
3.19%
3.37%
  - Ulster Bank RoI (2)
1.57%
1.92%
 
1.45%
1.52%
1.90%
  - Commercial Banking (2)
1.88%
1.91%
 
1.82%
1.89%
1.96%
  - Private Banking (2)
2.75%
2.89%
 
2.67%
2.72%
2.91%
  - RBS International (2)
1.48%
1.65%
 
1.49%
1.43%
1.67%
  - Corporate & Institutional Banking
0.53%
(0.07%)
 
1.09%
0.62%
0.21%
  - Capital Resolution
0.60%
0.67%
 
0.06%
0.60%
0.71%
  - Williams & Glyn
2.87%
2.93%
 
2.81%
2.88%
2.92%
 
 
Third party customer rates (6)
           
Third party customer asset rate
           
  - UK Personal & Business Banking
4.13%
4.30%
 
4.00%
4.15%
4.37%
  - Ulster Bank RoI (7)
2.27%
2.43%
 
2.19%
2.26%
2.28%
  - Commercial Banking
2.93%
3.03%
 
2.84%
2.93%
3.01%
  - Private Banking
3.13%
3.24%
 
3.06%
3.08%
3.22%
  - RBS International
3.10%
3.33%
 
3.09%
3.13%
3.39%
Third party customer funding rate
           
  - UK Personal & Business Banking
(0.66%)
(0.85%)
 
(0.63%)
(0.65%)
(0.73%)
  - Ulster Bank RoI (7)
(0.88%)
(1.36%)
 
(0.74%)
(0.82%)
(1.14%)
  - Commercial Banking
(0.38%)
(0.45%)
 
(0.36%)
(0.36%)
(0.41%)
  - Private Banking
(0.26%)
(0.34%)
 
(0.25%)
(0.25%)
(0.31%)
  - RBS International
(0.31%)
(0.36%)
 
(0.24%)
(0.23%)
(0.34%)
 
For the notes to this table refer to the next page.
 
 
Analysis of results

Key points
 
2015 compared with 2014
 
·
Net interest income declined by £491 million, or 5% to £8,767 million compared with £9,258 million, driven principally by a 46% reduction in Capital Resolution, down from £673 million to £365 million, in line with the planned shrinkage of the balance sheet.
·
Net interest margin (NIM) declined by 1 basis point to 2.12% reflecting strong new business volumes in core UK businesses, primarily mortgages, remaining under competitive margin pressures combined with an increased portion of the book shifting toward lower margin secured assets. This was partly offset by deposit repricing and the planned successful run down of low margin assets in Capital Resolution.
·
UK PBB net interest income fell by £69 million, 2% to £4,152 million, as competitive front book margin pressures impacted. In addition, customers continued to roll off standard variable rate products (17% of overall mortgage book at the end of 2015) and onto lower margin fixed rate products. As a result NIM fell by 14 basis points to 3.18% compared with 3.32% in 2014.
·
Ulster Bank RoI net interest income fell by £102 million, 22% to £365 million compared with £467 million primarily due to the weakening of the euro relative to sterling and a lower return on free funds. Ulster Bank RoI NIM continues to be impacted by the low yielding tracker mortgage book.
 
Q4 2015 compared with Q4 2014
 
·
Net interest income declined by £220 million, or 9%, to £2,162 million compared with £2,382 million, principally due to the wind-down of Capital Resolution where net interest income fell to £6 million compared with £162 million in Q4 2014.
·
NIM fell by 13 basis points to 2.10%, compared with 2.23%, as competitive asset margin pressure, particularly in UK PBB, was partly offset by deposit re-pricing in UK PBB and Commercial Banking.
   
 
Q4 2015 compared with Q3 2015
 
·
Net interest income declined by £25 million, or 1% to £2,162 million compared with £2,187 million primarily due to margin pressure in UK PBB and the wind-down of Capital Resolution. NIM was broadly stable at 2.10%.
 
Notes:                                                                                                                                           
 
(1)
For the purpose of net interest margin (NIM) calculations a decrease of £15 million (year ended 31 December 2014 - £47 million; Q4 2015 - £3 million; Q3 2015 - £4 million; Q4 2014 - £12 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 was 2.93% (2014 - 3.10%; Q4 2015 - 2.80%; Q3 2015 - 2.93%; Q4 2014 - 3.14%) CPB NIM was 1.92% (2014 - 1.99%; Q4 2015 - 1.87%; Q3 2015 - 1.92%; Q4 2014 - 2.03%).
(3)
Gross yield is the interest earned on average interest-earning assets of the banking book.
(4)
Interest spread is the difference between the gross yield and the interest rate paid on average interest-bearing liabilities of the banking business.
(5)
Net interest margin is net interest income of the banking business as a percentage of average interest-earning assets of the banking business.
(6)
Net interest margin includes Treasury allocations and interest on intercompany borrowings, which are excluded from third party customer rates.
(7)
Ulster Bank Ireland Limited 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.
 
 
Analysis of results

 
 
 
Year ended
 
Quarter ended
 
31 December
31 December
 
31 December
30 September
31 December
2015
2014
 
2015
2015
2014
Non-interest income
£m
£m
 
£m
£m
£m
             
Net fees and commissions
2,933 
3,539 
 
653 
685 
851 
Income from trading activities
806 
1,325 
 
59 
82 
(319)
Own credit adjustments
309 
(146)
 
(115)
136 
(144)
(Loss)/gain on redemption of own debt
(263)
20 
 
(263)
Strategic disposals
(157)
191 
 
(22)
Other operating income
528 
963 
 
10 
93 
195 
             
Total non-interest income
4,156 
5,892 
 
322 
996 
583 
 
Key points
 
2015 compared with 2014
 
·
Non-interest income totalled £4,156 million, a decline of £1,736 million, or 29%, compared with £5,892 million in 2014, primarily driven by a reduction of £945 million in Capital Resolution as the business accelerated the planned shrinkage of the balance sheet, including disposal losses from the sale of several portfolios in the year. A movement of £530 million from volatile items under IFRS was recorded, which represented a gain of £29 million in 2015 compared with a charge of £501 million in 2014.
·
Net fees and commissions fell by £606 million, or 17%, to £2,933 million, compared with £3,539 million, principally from the reduced scale of activity in CIB, run down of Capital Resolution and lower card interchange fees in UK PBB, down £59 million.
·
Income from trading activities declined by £519 million, or 39%, to £806 million compared with £1,325 million, due to the reduced scale and resources in CIB and the continued planned reduction of the Capital Resolution business and the impact of disposal losses.
·
Own credit adjustments represented a gain of £309 million compared with a charge of £146 million in 2014.
·
A loss of £263 million was recognised on the redemption of own debt, from a liability management exercise to repurchase certain US dollar, sterling and euro senior debt securities, compared with a gain of £20 million in 2014.
·
Total disposal losses in Capital Resolution were £367 million, including £38 million of strategic disposal losses. Total strategic disposal losses were £157 million, compared with a gain of £191 million in 2014, principally relating to the international private banking business.
·
Other operating income reduced by £435 million, or 45%, to £528 million compared with £963 million, principally due to the reduced scale of CIB, together with the run down of Capital Resolution and the impact of disposal losses. A loss of £67 million on the disposal of available-for-sale securities in Treasury was recorded, compared with a gain of £149 million in 2014.
 
Q4 2015 compared with Q4 2014
 
·
Non-interest income was £322 million, a reduction of 45%, compared with £583 million in Q4 2014  primarily due to a loss of £268 million in Capital Resolution, including the impact of total disposal losses of £180 million (including £24 million of strategic disposals) together with the loss on redemption of own debt of £263 million and £30 million lower equity gains in Commercial Banking. This was partly offset by a gain of £113 million from volatile items under IFRS compared with a charge of £340 million Q4 2014.
·
Net fees and commissions fell by £198 million, or 23%, to £653 million compared with £851 million due to planned Capital Resolution rundown, lower CIB income of £35 million and pressure on interchange fees in UK PBB, down £14 million.
·
Income from trading activities totalled £59 million, up £378 million, compared with a loss of £319 million, reflecting improved trading activity in CIB, primarily from a stronger performance in Rates.
 
 
Analysis of results

Key points (continued)
 
Q4 2015 compared with Q3 2015
 
·
Non-interest income reduced by £674 million, or 68%, to £322 million compared with £996 million, principally due to the loss of £263 million on redemption of own debt. Own credit adjustments represented a charge of £115 million compared with a gain of £136 million in Q3 2015. This was mostly offset by a gain of £113 million from volatile items under IFRS compared with a charge of £126 million in Q3 2015. In Q4 2015, Capital Resolution continued its accelerated run down with total disposal losses of £180 million (including £24 million of strategic disposals) compared with £89 million in Q3 2015, whilst Commercial Banking recorded a loss of £34 million on the disposal of a non-strategic portfolio in Q4 2015.
·
A loss of £24 million for strategic disposals was recorded in Capital Resolution in Q4 2015, primarily due to the transfer of the Russian subsidiary to disposal groups. The sale is due to complete in Q2 2016.
 
 
 
Year ended
 
Quarter ended
 
31 December
31 December
 
31 December
30 September
31 December
2015
2014 
 
2015
2015*
2014 
Operating expenses
£m
£m
 
£m
£m
£m
             
Staff costs
4,896 
5,376 
 
1,072 
1,281 
1,192 
Premises and equipment
1,483 
1,812 
 
422 
352 
452 
Other administrative expenses
2,124 
2,120 
 
786 
477 
701 
Restructuring costs (see below)
2,931 
1,154 
 
614 
847 
542 
Litigation and conduct costs
3,568 
2,194 
 
2,124 
129 
1,164 
             
Administrative expenses
15,002 
12,656 
 
5,018 
3,086 
4,051 
Depreciation and amortisation
778 
927 
 
170 
190 
203 
Write down of goodwill
498 
130 
 
498 
Write down of other intangible assets
75 
146 
 
75 
64 
             
Operating expenses
16,353 
13,859 
 
5,761 
3,276 
4,318 
             
Adjusted operating expenses (1)
9,356 
10,381 
 
2,525 
2,300 
2,612 
             
Restructuring costs comprise:
           
  - staff expenses
830 
381 
 
205 
281 
133 
  - premises, equipment, depreciation and amortisation
746 
272 
 
41 
375 
28 
  - other
1,355 
501 
 
368 
191 
381 
             
Restructuring costs
2,931 
1,154 
 
614 
847 
542 
             
Staff costs as a % of total income
38%
35%
 
43%
40%
40%
Cost:income ratio
127%
91%
 
232%
103%
146%
Cost:income ratio - adjusted (2)
72%
69%
 
88%
75%
84%
Employee numbers (FTE - thousands)
91.5 
91.3 
 
91.5 
92.4 
91.3 
 
*Restated, refer to page 46 for further details.
 
Notes:
 
(1)
Excluding restructuring costs, litigation and conduct costs, and write down of goodwill.
(2)
Excluding restructuring costs, litigation and conduct costs, write down of goodwill, own credit adjustments, (loss)/gain on redemption of own debt and strategic disposals.
 
 
 
Year ended
 
31 December
31 December
 
2015 
2014 
UK Bank levy segmental allocations
£m
£m
     
UK Personal & Business Banking
45 
42 
Ulster Bank RoI
10 
Commercial Banking
103 
82 
Private Banking
22 
11 
RBS International Banking
18 
17 
Corporate & Institutional Banking
24 
41 
Capital Resolution
43 
45 
Central items
(34)
     
Total UK Bank levy
230 
250 
 
 
Analysis of results

Key points
 
2015 compared with 2014
 
·
Total operating expenses of £16,353 million included significantly higher litigation and conduct costs of £3,568 million (2014 - £2,194 million), restructuring costs of £2,931 million (2014 - £1,154 million) and a goodwill impairment of £498 million attributed to Private Banking (2014 - £130 million in Capital Resolution).
·
Adjusted operating expenses fell by £1,025 million, 10% to £9,356 million compared with £10,381 million. Excluding expenses associated with Williams & Glyn and the benefit of lower intangible asset write offs, adjusted operating expenses reduced by £983 million, exceeding the revised 2015 cost saving target of over £900 million.
·
Staff costs were 9% lower totalling £4,896 million compared with £5,376 million, reflecting reduced headcount in CIB and Capital Resolution.
·
Restructuring costs totalled £2,931 million compared with £1,154 million in 2014, as the transformation of the bank accelerated, particularly re-engineering the CIB business. This is in line with prior guidance for total restructuring costs of c.£5 billion from 2015 to 2019. CIB restructuring costs totalled £524 million, including software and property write downs. Capital Resolution restructuring costs were much higher totalling £1,307 million as the business continues its planned rundown. Williams & Glyn  separation costs totalled £630 million. Private Banking also recorded a £91 million asset write down related to software.
·
Litigation and conduct costs increased by £1,374 million, or 63% to £3,568 million, compared with £2,194 million in 2014. This includes: additional provisions for mortgage backed securities litigation in the US of £2,100 million; provisions for foreign exchange investigations in the US of £334 million; customer redress provisions primarily relating to PPI of £600 million; packaged accounts provisions of £157 million; and other conduct provisions of £377 million.
 
Q4 2015 compared with Q4 2014
 
·
Operating expenses increased by £1,443 million, or 33%, to £5,761 million, compared with £4,318 million, driven by the additional litigation and conduct costs primarily relating to mortgage-backed securities litigation in the US and PPI redress provisions totalling £2,124 million compared with £1,164 million in Q4 2014 and the write down of goodwill of £498 million attributed to Private Banking.  
·
Adjusted operating expenses were £87 million lower totalling £2,525 million including staff costs declining 10% to £1,072 million, and £190 million of accrual reversals in Q4 2014. The bank levy was £230 million, compared with £250 million in 2014. However, the charge allocated to some segments was higher in 2015 than in the prior year.
 
Q4 2015 compared with Q3 2015
 
·
Operating expenses increased by £2,485 million, or 76% to £5,761 million driven by additional charges for litigation and conduct costs of £2,124 million and the write down of goodwill of £498 million. This was party offset by lower restructuring costs of £614 million compared with £847 million in Q3 2015. Q4 2015 included £181 million related to Williams & Glyn.
·
Adjusted operating expenses were 10% higher at £2,525 million with lower staff costs, down 16% to £1,072 million offset by the impact of the UK bank levy (£230 million).
 
 
Analysis of results
 

 
 
Year ended
 
Quarter ended
 
31 December
31 December
 
31 December
30 September
31 December
2015 
2014 
 
2015 
2015 
2014 
Impairment (releases)/losses
£m
£m
 
£m
£m
£m
             
Loan impairment (releases)/losses
           
  - individually assessed
(406)
(835)
 
(271)
(15)
(514)
  - collectively assessed
(35)
173 
 
(27)
(13)
(120)
  - latent
(408)
(692)
 
(28)
(64)
(50)
             
Customer loans
(849)
(1,354)
 
(326)
(92)
(684)
Bank loans
(4)
(10)
 
(4)
             
Total loan impairment releases
(853)
(1,364)
 
(326)
(96)
(684)
Securities
126 
12 
 
(1)
17 
14 
             
Total impairment releases
(727)
(1,352)
 
(327)
(79)
(670)
 
 
 
31 December 
30 September 
31 December 
Credit metrics (1)
2015 
2015 
2014 
       
Gross customer loans
£315,111m
£322,957m
£412,801m
Loan impairment provisions
£7,139m
£9,277m
£18,040m
Risk elements in lending (REIL)
£12,157m
£14,643m
£28,219m
Provisions as a % of REIL
59%
63%
64%
REIL as a % of gross customer loans
3.9%
4.5%
6.8%
 
Note:                                                                                                                                             
 
(1)
Includes disposal groups.
 
Key points 
 
2015 compared with 2014
 
·
Net impairment releases of £727 million were 46% lower compared with net impairment releases of £1,352 million in 2014. Although releases were at lower levels than in 2014, credit quality remained stable, reflecting supportive economic conditions in UK and Ireland with continued elevated recoveries in certain businesses.
   
·
Capital Resolution recorded net releases of £725 million, compared with £1,307 million in 2014, with disposal activity continuing. Ulster Bank RoI recorded net impairment releases of £141 million, down from £306 million in 2014, as economic conditions in Ireland continue to improve. UK PBB recorded a release of £7 million compared with a loss of £154 million, due to lower debt flows and increased releases and recoveries. Net impairment releases were also reported in CIB, although at more modest levels.
·
Securities losses rose to £126 million from £12 million in 2014, principally related to a small number of single name exposures, mainly in the RBS N.V. liquidity portfolio.
·
Risk elements in lending (REIL) declined from £28.2 billion to £12.2 billion, with REIL as a percentage of gross loans falling from 6.8% to 3.9%. The reduction was driven by the disposal of Citizens and the continued rundown of Capital Resolution.
 
Q4 2015 compared with Q4 2014
 
·
Net impairment releases of £327 million were recorded, compared with net impairment releases of £670 million in the previous year. Capital Resolution and Ulster Bank RoI continued to record net impairment releases, albeit at lower levels than in Q4 2014.
 
Q4 2015 compared with Q3 2015
 
·
An increase in net impairment releases from £79 million to £327 million was primarily due to a large single write-back from the disposal of an Irish Real Estate loan portfolio.
 
 
Analysis of results

 
               
Selected credit risk portfolios
         
 
31 December 2015
 
31 December 2014 (1)
 
CRA (2)
TCE (3)
EAD (4)
 
CRA (2)
TCE (3)
EAD (4)
Natural resources
£m
£m
£m
 
£m
£m
£m
               
Oil & Gas
3,533 
6,609 
5,606 
 
9,421 
22,014 
15,877 
Mining & Metals
1,134 
2,105 
1,555 
 
2,660 
4,696 
3,817 
Electricity
2,848 
7,454 
5,205 
 
4,927 
16,212 
9,984 
Water & Waste
4,835 
5,948 
5,873 
 
5,281 
6,718 
6,466 
               
 
12,350 
22,116 
18,239 
 
22,289 
49,640 
36,144 
               
Commodity traders (5)
749 
1,117 
1,350 
 
1,968 
2,790 
3,063 
Of which: natural resources
548 
772 
776 
 
1,140 
1,596 
1,852 
               
Shipping
7,140 
7,688 
7,509 
 
10,087 
10,710 
10,552 
 
Notes:
 
(1)
Prior period data excludes Citizens for comparative purposes; Citizens totals for natural resources and transport at 31 December 2014 - CRA £2.6 billion, EAD £3.6 billion.
(2)
Credit risk assets (CRA) consist of lending gross of impairment provisions and derivative exposures after netting and contingent obligations.
(3)
Total committed exposure (TCE) comprises CRA, securities financing transactions after netting, banking book debt securities and committed undrawn facilities.
(4)
Exposure at default (EAD) reflects an estimate of the extent to which a bank will be exposed to 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.
(5)
Commodity traders represents customers in a number of industry sectors, predominantly natural resources above.
 
Key points
 
·      Oil & Gas: exposure decreased significantly during 2015. This reflected proactive credit management, continued sales and run-off across the CIB portfolio in Asia-Pacific and the North America. There was an increase in             forbearance, predominantly involving the relaxation of financial covenants to give customers more financial flexibility. Non-performing exposures at 31 December 2015 were £138 million on a CRA basis.
 
·      Mining & Metals: the reduction in exposure during 2015 reflected proactive credit management of more vulnerable sub-sectors. The majority of the exposure is to large international customers and matures within five years.         The asset quality remained strong and 63% (31 December 2014 - 60%) of the portfolio was investment grade at 31 December 2015 and non performing exposures at 31 December 2015 were £48 million on a CRA basis.
 
·      Commodity traders: exposure more than halved during 2015. The remaining exposure is mainly to the largest and most dominant traders in physical commodities
 
·      Shipping: the exposure decrease during 2015 reflected scheduled loan repayments, prepayments and secondary sales in Capital Resolution. Non-performing exposures at 31 December 2015 were £362 million (CRA) with an         impairment provision of £135 million.
 
 
 
31 December 2015
 
31 December 2014
 
Balance
Total
 
Balance
Total
 
sheet
exposure
 
sheet
exposure
Emerging markets (1)
£m
£m
 
£m
£m
           
India
1,563 
1,879 
 
1,989 
2,628 
China
1,054 
1,094 
 
3,548 
4,079 
Russia
429 
441 
 
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 Capital and risk management section of the 2015 Annual Report and Accounts for detailed definitions and additional disclosures.
 
Key points
 
·      Exposure to most emerging markets decreased in 2015 as RBS continued to implement its strategy to withdraw from non-strategic countries.
 
·      Exposure to Russia declined significantly throughout the year to less than a quarter of the 2014 exposure.
 
 
Analysis of results

 
Capital and leverage ratios
             
 
End-point CRR basis (1)
 
PRA transitional basis
 
31 December 
30 September 
31 December 
 
31 December 
30 September 
31 December 
 
2015 
2015*
2014*
 
2015 
2015*
2014*
Risk asset ratios
 
               
CET1
15.5 
12.7 
11.2 
 
15.5 
12.7 
11.1 
Tier 1
16.3 
13.3 
11.2 
 
19.1 
15.5 
13.2 
Total
19.6 
16.0 
13.7 
 
24.7 
19.8 
17.1 
               
Capital
£m
£m
£m
 
£m
£m
£m
               
Tangible equity
40,943 
42,937 
42,885 
 
40,943 
42,937 
42,885 
Expected loss less impairment provisions
(1,035)
(1,185)
(1,491)
 
(1,035)
(1,185)
(1,491)
Prudential valuation adjustment
(381)
(392)
(384)
 
(381)
(392)
(384)
Deferred tax assets
(1,110)
(1,159)
(1,222)
 
(1,110)
(1,159)
(1,222)
Own credit adjustments
(104)
208 
500 
 
(104)
208 
500 
Pension fund assets
(161)
(256)
(238)
 
(161)
(256)
(238)
Other deductions
(544)
27 
(131)
 
(522)
49 
(401)
               
Total deductions
(3,335)
(2,757)
(2,966)
 
(3,313)
(2,735)
(3,236)
               
CET1 capital
37,608 
40,180 
39,919 
 
37,630 
40,202 
39,649 
AT1 capital
1,997 
1,997 
 
8,716 
8,716 
7,468 
Tier 1 capital
39,605 
42,177 
39,919 
 
46,346 
48,918 
47,117 
Tier 2 capital
8,002 
8,331 
8,717 
 
13,619 
13,742 
13,626 
               
Total regulatory capital
47,607 
50,508 
48,636 
 
59,965 
62,660 
60,743 
               
Risk-weighted assets
             
               
Credit risk
             
  - non-counterparty
166,400 
237,800 
264,700 
       
  - counterparty
23,400 
26,900 
30,400 
       
Market risk
21,200 
19,700 
24,000 
       
Operational risk
31,600 
31,600 
36,800 
       
               
Total RWAs
242,600 
316,000 
355,900 
       
               
Leverage (2)
             
               
Derivatives
262,500 
296,500 
354,000 
       
Loans and advances
327,000 
402,300 
419,600 
       
Reverse repos
39,900 
52,100 
64,700 
       
Other assets
186,000 
208,000 
212,700 
       
               
Total assets
815,400 
958,900 
1,051,000 
       
Derivatives
             
  - netting
(258,600)
(280,300)
(330,900)
       
  - potential future exposures
75,600 
82,200 
98,800 
       
Securities financing transactions gross up
5,100 
6,600 
25,000 
       
Undrawn commitments
63,500 
78,900 
96,400 
       
Regulatory deductions and other
             
  adjustments
1,500 
200 
(800)
       
               
Leverage exposure
702,500 
846,500 
939,500 
       
               
Tier 1 capital
39,605 
42,177 
39,919 
       
               
Leverage ratio %
5.6%
5.0%
4.2%
       
 
*Capital and leverage ratios have not been restated following the pension accounting policy change. Components within CET1 capital have however been re-presented to reflect revisions to accounting tangible equity, with corresponding adjustments to other deductions above - refer to page 46 for further details.
 
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 both bases 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 CRR Delegated Act.
 
 
Analysis of results

Key points
 
31 December 2015 compared with 31 December 2014
 
·
The CET1 ratio increased from 11.2% to 15.5% driven by the disposal of Citizens and continued de-risking of the balance sheet, primarily in Capital Resolution which accelerated its exit from several portfolios. The pension accounting policy change lowered the CET1 ratio by approximately 70 basis points at 2015 year end and by approximately 40 basis points on a pro forma basis at 31 December 2014.
   
·
RWAs fell by £113 billion, from £356 billion to £243 billion, driven by the disposal of Citizens accounting for £63.3 billion and the continued progress of Capital Resolution (down £46 billion). There were further small reductions across most core businesses.
   
·
The leverage ratio improved from 4.2% to 5.6%, primarily due to the successful issuance of £2 billion ($3.15 billion) AT1 capital notes and a reduction in leverage exposure as funded assets fell £145 billion to £553 billion, including the disposal of Citizens. The pension accounting policy change lowered the leverage ratio on a proforma basis by approximately 20 basis points both at 2015 year end and at 31 December 2014.
   
 
Q4 2015 compared with Q3 2015
 
·
The CET1 ratio increased from 12.7% to 15.5% driven by RWA reduction of £73 billion following the disposal of Citizens (£67.3 billion) in Q3 2015 and further reduction in Capital Resolution (£11 billion), partially offset by the impact of the pension accounting policy change.
   
·
The leverage ratio improved from 5.0% to 5.6% due to the disposal of Citizens, partially offset by the impact of the pension accounting policy change.
   
·
RWAs were £73 billion lower due to the Citizens disposal and Capital Resolution disposals and run-off. The increase in market risk RWAs in Q4 2015 reflected US dollar proceeds from the Citizens disposal.
 
 
 
Segment performance

 
 
Year ended 31 December 2015
 
PBB
 
CPB
       
Central
 
   
Ulster
 
Commercial
Private
RBS
   
Capital
Williams
 items &
Total
 
UK PBB
Bank RoI
 
Banking
Banking
 International
 
CIB
Resolution
& Glyn
other (1)
RBS
 
£m
£m
 
£m
£m
£m
 
£m
£m
£m
£m
£m
                         
Income statement
                       
Net interest income
4,152 
365 
 
1,997 
436 
303 
 
87 
365 
658 
404 
8,767 
Other non-interest income
1,048 
185 
 
1,257 
208 
64 
 
1,320 
37 
175 
(27)
4,267 
Total income - adjusted (2)
5,200 
550 
 
3,254 
644 
367 
 
1,407 
402 
833 
377 
13,034 
                         
Own credit adjustments
 
 
120 
175 
14 
309 
Loss on redemption of own debt
 
 
(263)
(263)
Strategic disposals
 
 
(38)
(119)
(157)
Total income
5,200 
550 
 
3,254 
644 
367 
 
1,527 
539 
833 
12,923 
Direct expenses - staff costs
(801)
(160)
 
(483)
(176)
(42)
 
(348)
(296)
(209)
(2,381)
(4,896)
                           - other costs
(272)
(85)
 
(238)
(35)
(16)
 
(122)
(202)
(52)
(3,438)
(4,460)
Indirect expenses
(1,965)
(182)
 
(1,080)
(307)
(98)
 
(997)
(1,041)
(98)
5,768 
Operating expenses - adjusted (3)
(3,038)
(427)
 
(1,801)
(518)
(156)
 
(1,467)
(1,539)
(359)
(51)
(9,356)
                         
Restructuring costs - direct
(38)
(12)
 
(52)
(7)
 
(44)
(380)
(28)
(2,370)
(2,931)
                                - indirect
(129)
(3)
 
(17)
(66)
(4)
 
(480)
(927)
1,626 
Litigation and conduct costs
(972)
13 
 
(51)
(12)
 
(378)
(2,105)
(63)
(3,568)
Write down of goodwill
 
(498)
 
(498)
                         
Operating expenses
(4,177)
(429)
 
(1,921)
(1,101)
(160)
 
(2,369)
(4,951)
(387)
(858)
(16,353)
                         
Profit/(loss) before impairment losses
1,023 
121 
 
1,333 
(457)
207 
 
(842)
(4,412)
446 
(849)
(3,430)
Impairment releases/(losses)
141 
 
(69)
(13)
 
725 
(15)
(54)
727 
                         
Operating profit/(loss)
1,030 
262 
 
1,264 
(470)
207 
 
(837)
(3,687)
431 
(903)
(2,703)
                         
Operating profit/(loss) - adjusted (2,3)
2,169 
264 
 
1,384 
113 
211 
 
(55)
(412)
459 
272 
4,405 
Additional information
                       
Return on equity (4)
11.7%
10.6%
 
9.8%
(27.7%)
18.5%
 
(11.1%)
nm
nm
nm
(4.7%)
Return on equity - adjusted (2,3,4)
26.2%
10.6%
 
10.9%
4.9%
18.9%
 
(2.0%)
nm
nm
nm
11.0%
Cost:income ratio
80%
78%
 
59%
171%
44%
 
155%
nm
46%
nm
127%
Cost:income ratio - adjusted (2,3)
58%
78%
 
55%
80%
43%
 
104%
nm
43%
nm
72%
Total assets (£bn)
143.9 
21.3 
 
133.5 
17.0 
23.1 
 
215.3 
201.5 
24.1 
35.7 
815.4 
Funded assets (£bn)
143.9 
21.2 
 
133.5 
17.0 
23.1 
 
103.3 
53.4 
24.1 
33.4 
552.9 
Net loans and advances to customers (£bn)
119.8 
16.7 
 
91.3 
11.2 
7.3 
 
16.1 
23.6 
20.0 
2.0 
308.0 
Risk elements in lending (£bn)
2.7 
3.5 
 
1.9 
0.1 
0.1 
 
3.4 
0.5 
12.2 
Impairment provisions (£bn)
(1.8)
(1.9)
 
(0.7)
(0.1)
 
(2.3)
(0.3)
(7.1)
Customer deposits (£bn)
137.8 
13.1 
 
88.9 
23.1 
21.3 
 
5.7 
26.0 
24.1 
6.0 
346.0 
Risk-weighted assets (RWAs) (£bn)
33.3 
19.4 
 
72.3 
8.7 
8.3 
 
33.1 
49.0 
9.9 
8.6 
242.6 
RWA equivalent (£bn)
35.5 
20.4 
 
77.6 
8.7 
8.3 
 
33.4 
50.3 
10.4 
8.8 
253.4 
Employee numbers (FTEs - thousands)
22.4 
2.5 
 
5.8 
1.9 
0.7 
 
1.3 
1.4 
4.6 
50.9 
91.5 
                         
For the notes to this table refer to page 29. nm = not meaningful
                     
 
 
 
Segment performance

 
Quarter ended 31 December 2015
 
PBB
 
CPB
       
Central
 
   
Ulster
 
Commercial
Private
RBS
   
Capital
Williams
 items &
Total
 
UK PBB
Bank RoI
 
Banking
Banking
 International
 
CIB
Resolution
& Glyn
other (1)
RBS
 
£m
£m
 
£m
£m
£m
 
£m
£m
£m
£m
£m
                         
Income statement
                       
Net interest income
1,030 
85 
 
512 
108 
78 
 
28 
165 
150 
2,162 
Other non-interest income
224 
31 
 
285 
50 
17 
 
224 
(239)
43 
87 
722 
                         
Total income adjusted (2)
1,254 
116 
 
797 
158 
95 
 
252 
(233)
208 
237 
2,884 
Own credit adjustments
 
 
(66)
(5)
(44)
(115)
Loss on redemption of own debt
 
 
(263)
(263)
Strategic disposals
 
 
(24)
(22)
                         
Total income
1,254 
116 
 
797 
158 
95 
 
186 
(262)
208 
(68)
2,484 
Direct expenses - staff costs
(199)
(40)
 
(124)
(43)
(12)
 
(63)
(54)
(58)
(479)
(1,072)
                            - other costs
(82)
(28)
 
(80)
(7)
(5)
 
(50)
(54)
(24)
(1,123)
(1,453)
Indirect expenses
(596)
(49)
 
(380)
(109)
(24)
 
(251)
(286)
(25)
1,720 
                         
Operating expenses - adjusted (3)
(877)
(117)
 
(584)
(159)