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 August 4, 2017
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: 
 
 
 
 
 
 
Interim Results 2017
 
The Royal Bank of Scotland Group plc
Interim Results 2017
Contents
Page
Introduction
2
Highlights
3
Summary consolidated results
11
Analysis of results
13
Segment performance
20
Statutory results
 
Condensed consolidated income statement (unaudited)
53
Condensed consolidated statement of comprehensive income (unaudited)
54
Condensed consolidated balance sheet (unaudited)
55
Condensed consolidated statement of changes in equity (unaudited)
56
Condensed consolidated cash flow (unaudited)
58
Notes
59
Independent review report to The Royal Bank of Scotland Group plc
93
Risk factors
94
Forward-looking statements
97
Statement of directors’ responsibilities
99
Additional information
 
Share information
 
100
Financial calendar
100
Appendix 1 – Capital and risk management
 
Appendix 2 – Segmental income statement reconciliations
 
RBS\MIB\00000057\Secret
Contacts
Analyst enquiries:
Matt Waymark
Investor Relations
+44 (0) 207 672 1758
Media enquiries:
RBS Press Office
 
+44 (0) 131 523 4205
 
 
 
Analyst and investor presentation
Fixed income
Web cast and dial in details
Date:
Friday 4 August 2017
Friday 4 August 2017
www.rbs.com/results
Time:
9:30 am UK time
2:30 pm UK time
International – +44 1452 568 172
Conference ID:
59333436
59285614
UK Free Call – 0800 694 8082
US Toll Free – 1 866 966 8024
 
Available on www.rbs.com/results
Interim Results 2017 and background slides.
A financial supplement containing income statement, balance sheet and segment performance information for the nine quarters ended 30 June 2017.
Pillar 3 supplement at 30 June 2017.
 
Introduction
 
In this document, ‘RBSG plc’ or the ‘parent company’ refers to The Royal Bank of Scotland Group plc, and ‘RBS’ or the ‘Group’ refers to RBSG plc and its subsidiaries.
 
Financial information contained in this document does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006 (‘the Act’). The statutory accounts for the year ended 31 December 2016 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 Williams & Glyn refers to the business formerly intended to be divested as a separate legal entity, which continues to be reported as a separate operating segment. 
 
Condensed consolidated financial statements
The unaudited condensed consolidated financial statements for the half year ended 30 June 2017 comprise the following sections of this document:
Financial information in the segmental performance section on pages 20 to 52 except for risk-weighted assets (RWAs), RWAs after capital deductions (RWAes), the related metrics, return on equity (ROE), adjusted return on equity and employee numbers.
Statutory results on pages 53 to 92 comprising the condensed consolidated income statement, condensed consolidated statement of comprehensive income, condensed consolidated balance sheet, condensed consolidated statement of changes in equity, condensed consolidated cash flow statement and the related Notes 1 to 16.
Appendix 1 Capital and risk management except for those items indicated as not within the scope of the independent review.
 
The above sections are within the scope of the independent review performed by Ernst & Young LLP (EY). Refer to the Independent review report to The Royal Bank of Scotland Group plc on page 93 for further information.
 
Key operating indicators
As described in Note 1 on page 59, RBS prepares its financial statements in accordance with IFRS as issued by the IASB which constitutes a body of generally accepted accounting principles (GAAP). This document contains a number of adjusted or alternative performance measures, also known as non-GAAP financial measures. These measures exclude certain items which management believe are not representative of the underlying performance of the business and which distort period-on-period comparison. These measures include:
‘Adjusted’ measures of financial performance, principally operating performance before: own credit adjustments; gain or loss on redemption of own debt; strategic disposals; restructuring costs; litigation and conduct costs and write down of goodwill (refer to Appendix 2 for reconciliations of the statutory to adjusted basis);
Performance, funding and credit metrics such as ‘return on tangible equity’, ‘adjusted return on tangible equity’ and related RWA equivalents incorporating the effect of capital deductions (RWAes), total assets excluding derivatives (funded assets), net interest margin (NIM) adjusted for items designated at fair value through profit or loss (non-statutory NIM), cost:income ratio, loan:deposit ratio and REIL/impairment provision ratios. These are internal metrics used to measure business performance;
Personal & Business Banking (PBB) franchise results, combining the reportable segments of UK Personal & Business Banking (UK PBB) and Ulster Bank RoI, Commercial & Private Banking (CPB) franchise results, combining the reportable segments of Commercial Banking, Private Banking and RBS International (RBSI); and
Cost savings progress and 2017 target calculated using operating expenses excluding litigation and conduct costs, restructuring costs, write down of goodwill and the VAT recoveries.
 
 
Highlights
 
RBS reported an operating profit before tax of £1,951 million for H1 2017 and an attributable profit(1) of £939 million. An operating profit before tax of £1,238 million and an attributable profit of £680 million were reported in Q2 2017.
 
Across our Personal & Business Banking (PBB), Commercial & Private Banking (CPB) and NatWest Markets (NWM) businesses, RBS reported an adjusted operating profit(2) of £2,678 million, an increase of £608 million, or 29%, compared with H1 2016. Adjusted return on equity across PBB, CPB and NatWest Markets was 14.1% compared with 10.9% in H1 2016.
 
Common Equity Tier 1 ratio increased by 70 basis points in the quarter to 14.8%, and remains ahead of our 13.0% target.
 
Half year ended
Quarter ended
 
30 June
30 June
 
30 June
31 March
30 June
Key metrics and ratios
2017 
2016 
 
2017
2017 
2016
Attributable profit/(loss)
£939m
(£2,045m)
 
£680m
£259m
(£1,077m)
Operating profit/(loss)
£1,951m
(£274m)
 
£1,238m
£713m
(£695m)
Operating profit - adjusted (2)
£3,061m
£1,156m
 
£1,690m
£1,371m
£716m
Net interest margin
2.18%
2.18%
 
2.13%
2.24%
2.21%
Cost:income ratio (3)
69.8%
97.7%
 
64.4%
76.1%
117.2%
Cost:income ratio - adjusted (3,4,5)
53.1%
71.4%
 
50.7%
55.8%
66.6%
Earnings/(loss) per share
 
 
 
 
 
 
  - basic
7.9p
(17.6p)
 
5.7p
2.2p
(9.3p)
  - basic fully diluted
7.9p
(17.6p)
 
5.7p
2.2p
(9.3p)
  - adjusted (4,5)
16.4p
(5.5p)
 
9.2p
7.1p
2.6p
  - adjusted fully diluted(4,5,8)
16.3p
(5.5p)
 
9.2p
7.1p
2.6p
Return on tangible equity (6,7)
5.6%
(10.3%)
 
8.0%
3.1%
(11.0%)
Return on tangible equity - adjusted (4,5,7)
11.5%
(3.2%)
 
12.9%
9.7%
3.2%
Average tangible equity (6)
£33,705m
£39,870m
 
£33,974m
£33,357m
£39,283m
Average number of ordinary shares
 
 
 
 
 
 
  outstanding during the period (millions)
11,817 
11,639 
 
11,841 
11,793 
11,673 
Average number of ordinary shares
 
 
 
 
 
 
  outstanding during the period - fully diluted (millions) (8)
11,897 
11,680 
 
11,923 
11,872 
11,714 
 
 
 
 
 
 
 
PBB, CPB & NatWest Markets
 
 
 
 
 
 
Total income - adjusted (4)
                  £6,297m
               £5,801m
 
                   £3,143m
                 £3,154m
£2,986m
Operating profit - adjusted (2)
                  £2,678m 
                £2,070m
 
                   £1,352m
                 £1,326m
£1,047m
Return on tangible equity - adjusted (4,5,6)
                    14.1%
                    10.9%
 
                       14.3%
                     13.8%
11.0%
 
 
 
 
 
30 June
31 March
31 December
Balance sheet related key metrics and ratios
2017 
2017 
2016 
Tangible net asset value (TNAV) per ordinary share (7)
300p
297p
296p
Tangible net asset value (TNAV) per ordinary share - fully diluted (7)
298p
295p
294p
Liquidity coverage ratio (LCR) (9,10)
145%
129%
123%
Liquidity portfolio
£178bn
£160bn
£164bn
Net stable funding ratio (NSFR) (11)
123%
120%
121%
Loan:deposit ratio (12,13)
91%
93%
91%
Short-term wholesale funding (12,14)
£18bn
£16bn
£14bn
Wholesale funding (12,14)
£70bn
£67bn
£59bn
Common Equity Tier 1 (CET1) ratio
14.8%
14.1%
13.4%
Risk-weighted assets (RWAs)
£215.4bn
£221.7bn
£228.2bn
CRR leverage ratio (15)
5.1%
5.0%
5.1%
UK leverage ratio (16)
5.8%
5.7%
5.6%
Tangible equity (7)
£35,682m
£35,186m
£34,982m
Number of ordinary shares in issue (millions) (17)
11,876 
11,842 
11,823 
Number of ordinary shares in issue (millions) - fully diluted (8,17)
11,956 
11,925 
11,906 
 
Notes:
(1)
Attributable to ordinary shareholders.
(2)
Operating profit before tax excluding own credit adjustments, (loss)/gain on redemption of own debt, strategic disposals, restructuring, litigation and conduct costs.
(3)
Operating lease depreciation included in income (H1 2017 - £72 million; Q2 2017 - £36 million, H1 2016 - £76 million; Q1 2017 - £36 million and Q2 2016 - £38 million).
(4)
Excluding own credit adjustments, (loss)/gain on redemption of own debt and strategic disposals.
(5)
Excluding restructuring costs and litigation and conduct costs.
(6)
Calculated using profit/(loss) for the period attributable to ordinary shareholders.
(7)
Tangible equity is equity attributable to ordinary shareholders less intangible assets.
(8)
Includes the effect of dilutive share options and convertible securities. Dilutive shares on an average basis for H1 2017 were 80 million shares (Q2 2017 – 81 million; H1 2016 – 41 million; Q1 2017 - 79 million; Q2 2016 – 41 million) and as at 30 June 2017 were 80 million (31 March 2017 – 83 million; 31 December 2016 – 83 million).
(9)
On 1 October 2015 the LCR became the Prudential Regulation Authority’s (PRA) primary regulatory liquidity standard; UK banks are required to meet a minimum standard of 90% from 1 January 2017, 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 those of other institutions.
(10)
The LCR of 145% at 30 June 2017 excludes the impact of the litigation settlement with the FHFA in respect of claims relating to RBS issuance and underwriting of RMBS in the US, as announced on 12 July 2017. The estimated impact of the settlement on the LCR is a 6% reduction to 139%.
(11)
NSFR for all periods have been calculated using RBS’s current interpretations of the revised BCBS guidance on NSFR issued in late 2014. Therefore, reported NSFR will change over time with regulatory developments. Due to differences in interpretation, RBS’s ratio may not be comparable with those of other financial institutions.
(12)
Excludes repurchase agreements and stock lending.
(13)
Includes disposal groups.
(14)
Excludes derivative collateral.
(15)
Based on end-point Capital Requirements Regulation (CRR) Tier 1 capital and leverage exposure under the CRR Delegated Act.
(16)
Based on end-point CRR Tier 1 capital and UK leverage exposures reflecting the post EU referendum measures announced by the Bank of England in the third quarter of 2016.
(17)
Includes 17 million treasury shares (31 March 2017 – 28 million; 31 December 2016 - 39 million).
 
Highlights
 
Key points
In H1 2017, RBS reported an attributable profit of £939 million, 5.6% return on tangible equity, and increased adjusted operating profit across its core PBB, CPB and NatWest Markets businesses by 29.4% compared with H1 2016. The CET1 ratio remains ahead of target at 14.8%, a 140 basis points increase in the first half. In addition, RBS has made good progress against its stated ambition for the year, as set out in the full year result’s announcement in February 2017. Across our core businesses we committed to grow income, cut costs and use less capital, and have made substantive progress against each:
Core adjusted income increased by £496 million, or 8.6%, compared with H1 2016. NatWest Markets income increased by 43.9% to £980 million, navigating markets well compared to a more difficult H1 2016. Across PBB and CPB income increased by 3.8% supported by increased lending;
Core adjusted operating expenses reduced by £151 million, or 4.2%, compared with H1 2016. This represents 31% of our overall cost reduction in H1 2017 and we retain our expectation that around half of the full year reduction will be across the core businesses. Cost:income ratio across the core businesses improved from 61.6% to 54.3%, with operating JAWS of 12.7%; and
Excluding volume growth, RWAs reduced by £8.6 billion across the core businesses in H1 2017 and we remain committed to achieving a reduction of at least £20 billion by the end of 2018.
 
In addition, we committed to continue to make progress on resolving our legacy issues and have made significant progress in the first half:
Capital Resolution RWAs reduced by £7.9 billion in H1 2017 to £26.6 billion and, excluding RBS’s stake in Alawwal Bank (£7.4 billion at 30 June 2017), are now in the £15-£20 billion range we guided to for the end of 2017;
In H1 2017, settlement was reached with the Federal Housing Finance Agency (FHFA) in the US and we also incurred a further provision in relation to settling the 2008 rights issue shareholder litigation; and
On 26 July, it was announced that an alternative remedies package, in respect of RBS’s remaining State Aid obligation regarding Williams & Glyn, has now been agreed in principle between HM Treasury (HMT) and the EC Commissioner responsible for competition.
 
H1 2017 RBS Performance Summary
RBS reported an attributable profit of £939 million for H1 2017 compared with a loss of £2,045 million in H1 2016 which included payment of the final Dividend Access Share (DAS) dividend of £1,193 million.
Adjusted income of £6,843 million was £1,294 million, or 23.3%, higher than H1 2016 reflecting strong income growth across the core PBB, CPB and NatWest Markets businesses and a £154 million gain in respect of IFRS volatility compared with a loss of £668 million in H1 2016.
The net interest margin (NIM) was stable on H1 2016 at 2.18%. A 9 basis point reduction across PBB and CPB, associated with asset margin pressure and higher liquidity requirements, has been broadly offset by the benefit of a reduction in low yielding Capital Resolution and centrally held assets, down from 12% of total interest earning assets to 5%.
Excluding VAT recoveries of £51 million in H1 2017 and £227 million in H1 2016, adjusted operating expenses reduced by £494 million, or 11.7%, compared with H1 2016. The adjusted cost:income ratio for H1 2017 was 53.1% compared with 71.4% in H1 2016.
Restructuring costs were £790 million in H1 2017, an increase of £160 million compared with H1 2016, and included a charge of £217 million relating to the reduction of our property portfolio.
Litigation and conduct costs of £396 million include a £151 million charge in respect of the settlement with the FHFA and a £25 million charge relating to the settlement of the UK 2008 rights issue shareholder litigation.
A net impairment loss of £116 million, 7 basis points of gross customer loans, compared with a loss of £409 million in H1 2016, with the reduction principally reflecting a £264 million shipping impairment in H1 2016. REIL represented 2.8% of gross customer loans compared with 3.5% at 30 June 2016 and 2.9% at 31 March 2017.
A gain of £156 million was recognised in relation to the disposal of RBS’s stake in Vocalink.
PBB and CPB net loans and advances have increased by 4.1% on an annualised basis in H1 2017 principally driven by mortgage growth within UK PBB.
H1 2017 lending growth has been achieved while remaining within our risk appetite. Personal mortgage lending represented 49% of net loans and advances, compared with 47% as at 31 December 2016, whilst personal unsecured and commercial real estate were flat over the first half at 4% and 8% respectively. Overall LTV across our mortgage portfolio was stable at 58%.
 
Highlights
 
Tangible net asset value (TNAV) per share of 300p increased by 4p, compared with 31 December 2016, principally reflecting the H1 2017 attributable profit.
 
PBB, CPB and NatWest Markets adjusted operating performance
 
 
 
 Across our three customer facing businesses, PBB, CPB and NatWest Markets, adjusted operating profit of £2,678 million was £608 million, or 29.4%, higher than H1 2016.
 
 UK PBB adjusted operating profit of £1,270 million was £205 million, or 19.2%, higher than H1 2016. Total income of £2,755 million was £140 million, or 5.4%, higher driven by increased lending, with net loans and advances 9.9% higher at £138.5 billion.
 
 Ulster Bank RoI adjusted operating profit of £90 million was £32 million, or 26.2%, lower than H1 2016 principally reflecting a lower net impairment release and reduced income on free funds.
 
 Commercial Banking adjusted operating profit of £781 million was £118 million, or 17.8%, higher than H1 2016 primarily reflecting reduced expenses associated with lower headcount and an intangible asset write-down in H1 2016. In addition income was £51 million, or 3.0%, higher at £1,750 million driven by customer deposit growth and re-pricing benefits across lending and deposits.
 
 Private Banking adjusted operating profit of £96 million was £23 million, or 31.5%, higher than H1 2016 driven by a £38 million, or 14.8%, reduction in adjusted operating expenses principally reflecting cost reduction initiatives.
 
 RBS International adjusted operating profit of £100 million reduced by £6 million, or 5.7%, compared with H1 2016 driven by a £22 million, or 32.4%, increase in adjusted operating expenses principally reflecting increased regulatory costs in relation to ring-fencing.
 
NatWest Markets adjusted income of £980 million was £299 million, or 43.9%, higher than H1 2016. An adjusted operating profit of £341 million compared with £41 million in H1 2016.
 
 
Capital Resolution, Williams & Glyn and Central items adjusted operating performance
Capital Resolution adjusted operating loss of £135 million was £848 million lower than H1 2016 principally reflecting materially lower disposal losses and impairment charges in H1 2017 and a £282 million, or 68.0%, reduction in adjusted operating expenses to £133 million. RWAs of £26.6 billion were £15.7 billion, or 37.1%, lower than H1 2016.
Williams & Glyn adjusted operating profit increased by £37 million, or 18.8%, to £234 million driven by a £39 million, or 19.8%, reduction in adjusted operating expenses reflecting a substantial reduction in headcount.
Central items adjusted operating profit of £284 million, compared with a loss of £128 million in H1 2016, included a £51 million VAT recovery (H1 2016 - £227 million) and a £154 million gain in respect of IFRS volatility (H1 2016 - £668 million loss).
 
Q2 2017 RBS Performance Summary
An attributable profit of £680 million compared with a loss of £1,077 million in Q2 2016 and a profit of £259 million in Q1 2017. The Q2 2016 loss included litigation and conduct costs of £1,284 million.
An adjusted operating profit of £1,690 million was £974 million higher than Q2 2016 and was £319 million above Q1 2017 principally reflecting an IFRS volatility gain of £172 million, compared with a loss of £18 million in Q1 2017.
Across our three customer facing businesses, PBB, CPB and NatWest Markets, adjusted operating profit of £1,352 million was £305 million, or 29.1%, higher than Q2 2016. Adjusted RoTE was 14.3% compared with 11.0% in Q2 2016.
Q2 2017 NIM of 2.13% was 8 basis points lower than Q2 2016 principally reflecting the impact of asset margin pressure and mix impacts across the core businesses. Compared with Q1 2017, NIM reduced by 11 basis points to 2.13%, with the majority of the reduction driven by a conscious build-up in liquidity as we manage for litigation and conduct costs, including FHFA, and accelerate MREL and other wholesale funding plans into H1 2017. In addition, conditions in the UK mortgage market have become more competitive, contributing to a 9 basis point reduction in UK PBB NIM.
Net loans and advances across PBB and CPB increased by £1.8 billion in the quarter to £277.7 billion driven by mortgage growth in UK PBB.
 
Highlights
 
Building a stronger RBS
RBS is progressing with its plan to build a strong, simple, fair bank for customers and shareholders.
The CET1 ratio remains ahead of our 13% target at 14.8%, a 140 basis point increase on Q4 2016 driven by a £12.8 billion reduction in RWAs and the £939 million attributable profit.
RWAs decreased by £12.8 billion compared with Q4 2016 principally reflecting £7.9 billion of disposals and run-off in Capital Resolution and planned RWA reductions in the core businesses. Excluding volume growth, core RWAs reduced by £8.6 billion comprising £0.7 billion in PBB, £4.4 billion in CPB and £3.5 billion in NatWest Markets.
During H1 2017, RBS has issued a Sterling equivalent of £3.6 billion (€1.5 billion and $3.0 billion) of senior holding company (RBSG) debt which it expects to be eligible to meet its ‘Minimum Requirement for Own Funds and Eligible Liabilities’ (MREL). Total estimated ‘Loss Absorbing Capital’ (LAC) is now £54.9 billion, or 25.5% of RWAs. In addition, RBS successfully completed its first covered bond issuance in over five years comprising €1.25 billion 7 year and £1.25 billion three year tranches.
During H1 2017, RBS successfully redeemed £4.1 billion Sterling equivalent of legacy capital securities through calls and repurchase. RBS has decided not to exercise the current call option on the non-cumulative US Dollar preference share series U and Euro Preference Shares Series 3. RBS has instead prioritised calling nine other legacy Tier 1 instruments with higher economic benefit. Further details are available in the Capital, liquidity and funding risk section on page 3.
Leverage ratio was stable on Q4 2016 at 5.1%.
Risk elements in lending (REIL) of £9.3 billion were £1.0 billion lower than 31 December 2016 and represented 2.8% of gross customer loans, compared with 3.1% at 31 December 2016 and 3.5% as at 30 June 2016. Excluding REIL in Capital Resolution and Ulster Bank RoI, REIL were £4.0 billion or 1.3% of the respective gross customer loans.
As at 30 June 2017, there has been no material change to the surplus ratio of assets to liabilities in the Main Scheme of The Royal Bank of Scotland Group Pension Fund which at 31 December was c.115% under IAS valuation principles.
RBS has continued to utilise the Bank of England’s Term Funding Scheme with £9 billion drawn since 31 December 2016, taking total RBS participation to £14 billion as at 30 June 2017.
On 15 June 2017, Moody’s announced that they had upgraded their senior debt rating of The Royal Bank of Scotland Group plc (RBS Group) by one notch to Baa3 from Ba1. As a result, all three ratings agencies have now given RBS Group an investment grade senior debt rating.
 
Building the number one bank for customer service, trust and advocacy in the UK
RBS continued to deliver strong support for both household and business customers. Within UK PBB, gross new mortgage lending was £14.5 billion, with market share of new mortgages at approximately 12% supporting growth in stock share to approximately 9.1%, up from 8.8% at 31 December 2016. Positive momentum continued across business banking lending with net balances up 4%, excluding transfers of £0.6 billion from Commercial Banking as at 30 June 2017, compared with H1 2016.
RBS continued to enhance the capability of its mobile app, with a corresponding increase in customer usage. We now have 5.0 million customers regularly using the app, up 19% on FY 2016. In the final month of H1 2017 customers logged into the app an average of 58 times a second and sent close to ten million payments. RBS remains the only UK bank to allow customers to use the app to withdraw money from a cash machine without needing to carry a debit card, with customers now using the ‘Get Cash’ service over 200,000 times a month.
We continued to improve our product and service delivery channels to support our lending and income growth targets. In mortgages, while in the past a mortgage renewal would have required an appointment at a branch or a phone call, Royal Bank and NatWest customers can now renew online in a matter of minutes, with close to 19,000 customers renewing online in H1 2017. In addition, for new customers we have piloted a paperless mortgage process which has cut the time taken to issue a firm offer in half, to around ten days.
During H1 2017, RBS launched NatWest Invest, our new digital investment service, which offers NatWest personal and private customers the opportunity to select their own investment online, from a range of five personal portfolio funds.
NatWest Markets has reviewed ways to minimise disruption to the business and continue to serve its customers well in the event of any loss of EU passporting. Should the outcome of the current EU separation negotiations make it necessary, NatWest Markets is ensuring our existing RBS N.V. banking licence in the Netherlands is operationally ready.
 
Highlights
 
Customer
RBS remains committed to achieving its target of being number one bank for customer service, trust and advocacy by 2020.
 
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 an NPS. Commercial Banking NPS is up 4 points from H1 2016 at 22, statistically ahead of the rest of the Commercial Banking market. We still have significant work to do to improve customer experience across some of our other businesses and brands.
 
 
 
 
Q2 2016
Q1 2017
Q2 2017
Personal Banking
NatWest (England & Wales)(1)
12
15
13
Royal Bank of Scotland (Scotland)(1)
(7)
(13)
(21)
Ulster Bank (Northern Ireland)(2)
(16)
(15)
(8)
Ulster Bank (Republic of Ireland)(2)
(11)
(8)
(5)
Business Banking
NatWest (England & Wales)(3)
4
(3)
(8)
Royal Bank of Scotland (Scotland)(3)
(4)
(7)
(12)
Business & Commercial
Ulster Bank (Northern Ireland)(4)
3
(6)
(5)
Ulster Bank (Republic of Ireland)(5)
N/A
N/A
13
Commercial Banking(6)
18
21
22
 
 
Highlights
 
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 NatWest in England & Wales continues to improve and has exceeded its 2017 target of 57. Trust in RBS in Scotland has improved since last year, but is behind target trajectory. This is primarily due to ongoing reputational and legacy issues that the bank continues to work to resolve.
 
 
 
Q2 2016
Q1 2017
Q2 2017
Customer trust(7)
NatWest (England & Wales)
48
55
58
Royal Bank of Scotland (Scotland)
23
28
27
 
Notes:
(1)
Source: GfK FRS 6 month rolling data. Latest base sizes: NatWest (England & Wales) (3365) Royal Bank of Scotland (Scotland) (510). Based on the question: "How likely is it that you would recommend (brand) to a relative, friend or colleague in the next 12 months for current account banking?“ Base: Claimed main banked current account customers.
(2)
Source: Coyne Research 12 month rolling data. Latest base sizes: Ulster Bank NI (309) Ulster Bank RoI (273) 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, YE Q2 2017. Based on interviews with businesses with an annual turnover up to £2 million. Latest base sizes: NatWest England & Wales (1228), RBS Scotland (401). Question: “How likely would you be to recommend (bank)”. Base: Claimed main bank. Data weighted by region and turnover to be representative of businesses in Great Britain.
(4)
Source: Charterhouse Research Business Banking Survey, YE Q2 2017. Based on interviews with businesses with an annual turnover up to £1 billion. Base size: 383. Question: “How likely would you be to recommend (bank)”. Base: Claimed main bank. Data weighted by region and turnover to be representative of businesses in Northern Ireland.
(5)
Source: Red C SME survey based on interviews with businesses with an estimated annual turnover of €2-25m (6-monthly study only). Latest sample size: Ulster Bank (252).
(6)
Source: Charterhouse Research Business Banking Survey, YE Q2 2017. Commercial £2m+ in GB (RBSG sample size, excluding don’t knows: 913). Question: “How likely would you be to recommend (bank)”. Base: Claimed main bank. Data weighted by region and turnover to be representative of businesses in Great Britain.
(7)
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 (942), RBS Scotland (206).
 
 
 
Highlights
 
Capital reorganisation
Following a resolution at the parent company’s 2017 Annual General Meeting, on 15 June 2017 we announced completion of the legal capital reduction process to cancel the share premium account and capital redemption reserve whose combined balances were £30.3 billion. As a result, the parent company’s retained earnings increased by an equal amount. There has been no change in the interests of ordinary and preference shareholders.
 
IFRS 9 (1)
RBS continues to work towards the implementation of IFRS 9 on 1 January 2018.  In terms of shareholders equity, RBS’s current estimate of the opening balance sheet adjustment, if applied on 1 July 2017, is to increase credit impairment provisions by £0.5 billion before tax.  Separately, there is an increase in asset values of £1.0 billion before tax in respect of changes on classification and measurement.  This results in a net increase in shareholders equity, after tax, of £0.4 billion.  As at end Q2 2017, this would have equated to an increase in tangible net asset value per share of approximately 3 pence per share
In terms of CET1 capital, under the current rules, the increase in credit impairment provisions is fully offset by a reduction in the regulatory expected loss deduction, so is anticipated to have no CET1 capital impact.  The increase in asset values of £1.0 billion noted above is partially offset by tax and an expected additional prudential valuation deduction driving an overall increase in CET1 capital of some £0.6 billion.  As at end Q2 2017, this would have equated to an increase in the CET1 ratio of approximately 30 basis points.
RBS will continue to calibrate and refine its models and methodologies during 2017 and 2018 which may impact IFRS 9 at adoption on 1 January 2018; changes will also follow from disposals, changes in the portfolio composition, economic or credit conditions. For further information on the implementation of IFRS 9 refer to pages 308 to 313 of the 2016 Annual Report and Accounts.
 
Progress on 2017 targets
RBS remains committed to achieving its priority targets for 2017.
 
Strategy goal
2017 target
Q2 2017 Progress
Strength and sustainability
Maintain bank CET1 ratio of 13%
CET1 ratio of 14.8%; up 70 basis points from Q1 2017 and 140 basis points from Q4 2016
Customer experience
Significantly increase NPS or maintain No.1 in chosen customer segments
Our Commercial Banking franchise remains a clear market leader. We still have significant work to do to improve customer experience across some of our other businesses and brands
Simplifying the bank
Reduce operating expenses by at least £750 million (2)
Operating expenses down £494 million, or 11.7%, excluding VAT recoveries; 66% of the total full year target
Supporting growth
Net 3% growth on total PBB and CPB loans to customers
Net customer loans in PBB and CPB are up 4.1% on an annualised basis for the year to date; 69% of the total full year target
Employee engagement
Improve employee engagement
Employee engagement improved by 4 points in H1 2017
 
Notes:
(1)
The expectations and trends discussed in this section represent management’s current expectations and are subject to change, including as a result of the factors described in this document and in the “Risk Factors” on pages 432 to 463 of the Annual Report and Accounts 2016. These statements constitute forward-looking statements; refer to Forward-looking statements in this announcement.
(2)
Cost saving target and progress 2017 calculated using operating expenses excluding restructuring costs, litigation and conduct costs, write down of goodwill and VAT recoveries.
 
 
 
RBS – Interim results 2017
 
 
Highlights
 
Williams & Glyn
On 26 July, RBS announced that it had been informed by HM Treasury (HMT) that, following the consultation process carried out by the European Commission (EC) and a market testing exercise carried out by HMT, an alternative remedies package has now been agreed in principle between HMT and the EC Commissioner responsible for competition.
This revised package is focused on the following two remedies to promote competition in the market for banking services to small and medium enterprises (“SMEs”) in the UK.
 
A £425 million Capability and Innovation Fund, to be administered by an independent body, that will grant funding to a range of competitors in the UK banking and financial technology sectors; and
 
 
An Incentivised Switching Scheme which will provide £275 million of funding for eligible challenger banks to help them incentivise SME customers of the business previously described as Williams & Glyn to switch their accounts and loans from RBS paid in the form of “dowries” to the receiving bank. An additional £75 million will be made available by RBS to cover customers’ costs of switching.
 
This revised package will be submitted to the EC’s College of Commissioners for approval and if agreed will form the basis of a new term sheet in relation to RBS’s remaining State Aid commitments. It is expected to come into effect during H2 2017, upon which RBS will no longer be obliged to achieve separation and divestment of the business previously described as Williams & Glyn by 31 December 2017.
A £750 million provision was recognised in RBS’s 2016 Annual Results in relation to the previously proposed package of measures. An incremental charge of £50 million has been recognised in Q2 2017 in relation to the revised package and its implementation costs, taking the total provision to £800 million.
RBS will incur running costs for the duration of the scheme, which are estimated at around £35 million and will be substantially incurred before the end of 2019. Furthermore, under the terms of the revised package, should the uptake within the Incentivised Switching Scheme not be sufficient, RBS could be required to make a further contribution, capped at £50 million.
 
 
Outlook (1)
We retain the 2017 full year financial guidance and medium term financial outlook we provided in the 2016 Annual Results document. In addition, and subject to providing substantially for remaining significant legacy issues in 2017, our expectation remains that we will be profitable in 2018.
Excluding RBS’s stake in Alawwal Bank, we now expect that Capital Resolution RWAs will be at the lower end of our previous £15-£20 billion guidance for end 2017. We anticipate that Capital Resolution disposal losses will be substantially higher in H2 2017, at around £0.7 billion.
In Q3 2017 we expect to recognise a debt sale gain of approximately £160 million in UK PBB.
 
 
 
 
Note:
(1) 
The targets, expectations and trends discussed in this section represent management’s current expectations and are subject to change, including as a result of the factors described in this document and in the “Risk Factors” on pages 432 to 463 of the Annual Report and Accounts 2016. These statements constitute forward-looking statements; refer to Forward-looking statements in this announcement.
 
Summary consolidated income statement for the period ended 30 June 2017
 
 
Half year ended
 
Quarter ended
 
30 June
30 June
 
30 June
31 March
30 June
 
2017
2016
 
2017
2017
2016
 
£m
£m
 
£m
£m
£m
Net interest income
4,472 
4,333 
 
2,238 
2,234 
2,177 
 
 
 
 
 
 
 
Own credit adjustments
(73)
450 
 
(44)
(29)
194 
(Loss)/gain on redemption of own debt
(7)
(130)
 
(9)
(130)
Strategic disposals
156 
195 
 
156 
201 
Other operating income
2,371 
1,216 
 
1,366 
1,005 
558 
 
 
 
 
 
 
 
Non-interest income
2,447 
1,731 
 
1,469 
978 
823 
 
 
 
 
 
 
 
Total income
6,919 
6,064 
 
3,707 
3,212 
3,000 
 
 
 
 
 
 
 
Restructuring costs
(790)
(630)
 
(213)
(577)
(392)
Litigation and conduct costs
(396)
(1,315)
 
(342)
(54)
(1,284)
Other costs
(3,666)
(3,984)
 
(1,844)
(1,822)
(1,833)
 
 
 
 
 
 
 
Operating expenses
(4,852)
(5,929)
 
(2,399)
(2,453)
(3,509)
 
 
 
 
 
 
 
Profit/(loss) before impairment losses
2,067 
135 
 
1,308 
759 
(509)
Impairment losses
(116)
(409)
 
(70)
(46)
(186)
 
 
 
 
 
 
 
Operating profit/(loss) before tax
1,951 
(274)
 
1,238 
713 
(695)
Tax charge
(727)
(340)
 
(400)
(327)
(260)
 
 
 
 
 
 
 
Profit/(loss) for the period
1,224 
(614)
 
838 
386 
(955)
 
 
 
 
 
 
 
Attributable to:
 
 
 
 
 
 
Non-controlling interests
29 
30 
 
18 
11 
Other owners
256 
208 
 
140 
116 
114 
Dividend access share
1,193 
 
Ordinary shareholders
939 
(2,045)
 
680 
259 
(1,077)
 
 
 
 
 
 
 
Notable items memo
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted basis
 
 
 
 
 
 
Total income - adjusted (1)
6,843 
5,549 
 
3,604 
3,239 
2,735 
Operating expenses - adjusted (2)
(3,666)
(3,984)
 
(1,844)
(1,822)
(1,833)
Operating profit - adjusted (1,2)
3,061 
1,156 
 
1,690 
1,371 
716 
 
 
 
 
 
 
 
Within adjusted total income
 
 
 
 
 
 
IFRS volatility in Central items (3)
154 
(668)
 
172 
(18)
(312)
FX (losses)/gains in Central items
(108)
253 
 
(56)
(52)
201 
Capital Resolution disposal losses
(103)
(53)
 
(53)
(50)
(57)
Unwind of securitisations in the property portfolio
(105)
 
(105)
 
 
 
 
 
 
 
Within adjusted operating expenses
 
 
 
 
 
 
VAT recovery in Central items
51 
227 
 
51 
227 
 
 
 
 
 
 
 
Within restructuring costs
 
 
 
 
 
 
Property exit costs
(217)
 
18 
(235)
Williams & Glyn restructuring costs
(58)
(345)
 
(46)
(12)
(187)
 
 
 
 
 
 
 
Within impairment (losses)/releases
 
 
 
 
 
 
Capital Resolution impairment releases/(losses)
78 
(263)
 
33 
45 
(67)
Capital Resolution shipping portfolio impairment releases/(losses)
21 
(264)
 
17 
(38)
Ulster Bank RoI impairment releases/(losses)
11 
27 
 
(13)
24 
14 
Commercial Banking impairment losses
(94)
(103)
 
(33)
(61)
(89)
 
Notes:
(1)
Excluding own credit adjustments, (loss)/gain on redemption of own debt and strategic disposals.
(2)
Excluding restructuring costs and litigation and conduct costs.
(3)
IFRS volatility relates to loans which are economically hedged but for which hedge accounting is not permitted under IFRS.
 
Details of other comprehensive income are provided on page 54.
 
Summary consolidated balance sheet as at 30 June 2017
 
 
30 June
31 March
31 December
 
2017
2017
2016
 
£m
£m
£m
 
 
 
 
Cash and balances at central banks
86,807 
83,160 
74,250 
Net loans and advances to banks (1)
20,685 
20,513 
17,278 
Net loans and advances to customers (1)
326,059 
326,733 
323,023 
Reverse repurchase agreements and stock borrowing
40,030 
45,451 
41,787 
Debt securities and equity shares
86,687 
77,347 
73,225 
Other assets
28,855 
26,019 
22,112 
 
 
 
 
Funded assets
589,123 
579,223 
551,675 
Derivatives
193,531 
204,052 
246,981 
 
 
 
 
Total assets
782,654 
783,275 
798,656 
 
 
 
 
Bank deposits (2)
38,965 
40,276 
33,317 
Customer deposits (2)
359,882 
351,498 
353,872 
Repurchase agreements and stock lending
43,038 
44,966 
32,335 
Debt securities in issue
31,997 
28,163 
27,245 
Subordinated liabilities
14,724 
15,514 
19,419 
Derivatives
184,161 
196,224 
236,475 
Provisions for liabilities and charges
11,227 
11,619 
12,836 
Other liabilities
48,611 
45,504 
33,753 
 
 
 
 
Total liabilities
732,605 
733,764 
749,252 
Non-controlling interests
844 
805 
795 
Owners’ equity
49,205 
48,706 
48,609 
 
 
 
 
Total liabilities and equity
782,654 
783,275 
798,656 
 
 
 
 
Contingent liabilities and commitments
143,493 
148,324 
150,691 
 
Notes:
(1)
Excludes reverse repurchase agreements and stock borrowing.
(2)
Excludes repurchase agreements and stock lending.
 
Analysis of results
 
 
Half year ended
 
Quarter ended
 
30 June
30 June
 
30 June
31 March
30 June
 
2017 
2016 
 
2017 
2017 
2016 
Net interest income
£m
£m
 
£m
£m
£m
 
 
 
 
 
 
 
Net interest income
 
 
 
 
 
 
RBS
4,472 
4,333 
 
2,238 
2,234 
2,177 
 
 
 
 
 
 
 
  - UK Personal & Business Banking
2,231 
2,109 
 
1,120 
1,111 
1,090 
  - Ulster Bank RoI
206 
198 
 
101 
105 
93 
  - Commercial Banking
1,141 
1,067 
 
574 
567 
531 
  - Private Banking
226 
226 
 
114 
112 
113 
  - RBS International
161 
151 
 
81 
80 
76 
  - NatWest Markets
42 
43 
 
13 
29 
24 
  - Capital Resolution
24 
168 
 
(9)
33 
82 
  - Williams & Glyn
333 
324 
 
168 
165 
162 
  - Central items & other
108 
47 
 
76 
32 
 
 
 
 
 
 
 
Average interest-earning assets (IEA)
 
 
 
 
 
 
RBS
413,598 
399,751 
 
421,981 
405,122 
396,118 
 
 
 
 
 
 
 
  - UK Personal & Business Banking
151,659 
138,192 
 
153,714 
149,581 
140,591 
  - Ulster Bank RoI
24,858 
24,233 
 
25,288 
24,424 
24,288 
  - Commercial Banking
131,807 
117,312 
 
132,719 
130,885 
119,768 
  - Private Banking
18,068 
16,441 
 
18,533 
17,597 
16,622 
  - RBS International
23,997 
21,436 
 
25,034 
22,949 
21,798 
  - NatWest Markets
17,021 
11,745 
 
16,853 
17,192 
11,923 
  - Capital Resolution
15,959 
29,962 
 
15,156 
16,771 
29,157 
  - Williams & Glyn
25,334 
23,764 
 
25,495 
25,170 
24,172 
  - Central items & other
4,895 
16,666 
 
9,189 
553 
7,799 
 
 
 
 
 
 
 
Yields, spreads and margins of the banking business
 
 
 
 
 
 
Gross yield on interest-earning assets
 
 
 
 
 
 
  of the banking business (1,2)
2.63%
2.85%
 
2.56%
2.70%
2.87%
Cost of interest-bearing liabilities of banking business (1)
(0.67%)
(1.00%)
 
(0.65%)
(0.69%)
(1.00%)
 
 
 
 
 
 
 
Interest spread of the banking business (1,3)
1.96%
1.85%
 
1.91%
2.01%
1.87%
Benefit from interest-free funds
0.22%
0.33%
 
0.22%
0.23%
0.34%
 
 
 
 
 
 
 
Net interest margin (4)
 
 
 
 
 
 
RBS
2.18%
2.18%
 
2.13%
2.24%
2.21%
 
 
 
 
 
 
 
  - UK Personal & Business Banking
2.97%
3.07%
 
2.92%
3.01%
3.12%
  - Ulster Bank RoI
1.67%
1.64%
 
1.60%
1.74%
1.54%
  - Commercial Banking
1.75%
1.83%
 
1.73%
1.76%
1.78%
  - Private Banking
2.52%
2.76%
 
2.47%
2.58%
2.73%
  - RBS International
1.35%
1.42%
 
1.30%
1.41%
1.40%
  - NatWest Markets
0.50%
0.74%
 
0.31%
0.68%
0.81%
  - Capital Resolution
0.30%
1.13%
 
(0.24%)
0.80%
1.13%
  - Williams & Glyn
2.65%
2.74%
 
2.64%
2.66%
2.70%
 
For the notes to this table refer to the following page.
 
 
Analysis of results
 
 
 
Half year ended
 
Quarter ended
 
30 June
30 June
 
30 June
31 March
30 June
Third party customer rates (5)
2017 
2016 
 
2017 
2017 
2016 
Third party customer asset rate
 
 
 
 
 
 
  - UK Personal & Business Banking
3.54%
3.96%
 
3.50%
3.57%
3.96%
  - Ulster Bank RoI (6)
2.37%
2.20%
 
2.28%
2.47%
2.07%
  - Commercial Banking
2.66%
2.85%
 
2.65%
2.67%
2.82%
  - Private Banking
2.70%
3.00%
 
2.68%
2.71%
2.97%
  - RBS International
2.73%
3.14%
 
2.72%
2.75%
3.02%
Third party customer funding rate
 
 
 
 
 
 
  - UK Personal & Business Banking
(0.18%)
(0.54%)
 
(0.18%)
(0.17%)
(0.46%)
  - Ulster Bank RoI (6)
(0.36%)
(0.56%)
 
(0.31%)
(0.40%)
(0.53%)
  - Commercial Banking
(0.13%)
(0.36%)
 
(0.11%)
(0.14%)
(0.36%)
  - Private Banking
(0.07%)
(0.22%)
 
(0.07%)
(0.07%)
(0.20%)
  - RBS International
(0.02%)
(0.18%)
 
(0.01%)
(0.03%)
(0.13%)
 
Notes:
(1)
For the purpose of calculating gross yields and interest spread, interest receivable has been decreased by £77 million (Q2 2017 - £42 million; Q1 2017 - £35 million) and interest payable has decreased by £77 million (Q2 2017 - £42 million; Q1 2017 – £35 million) in respect of negative interest relating to both financial assets and financial liabilities that attracted negative interest.
(2)
Gross yield is the interest earned on average interest-earning assets as a percentage of average interest-earning assets.
(3)
Interest spread is the difference between the gross yield and interest paid on average interest-bearing liabilities as a percentage of average interest-bearing liabilities.
(4)
Net interest margin is net interest income as a percentage of average interest-earning assets.
(5)
Net interest margin includes Treasury allocations and interest on intercompany borrowings, which are excluded from third party customer rates.
(6)
Ulster Bank Ireland DAC manages its funding and liquidity requirements locally. Its liquid asset portfolios and non-customer related funding sources are included within its net interest margin, but excluded from its third party asset and liability rates.
 
 
Analysis of results
 
 
 
 
 
 
 
 
 
 
 
 
Half year ended
 
Half year ended
 
30 June 2017
 
30 June 2016
 
Average
 
 
 
Average
 
 
 
balance
Interest
Rate
 
balance
Interest
Rate
Average balance sheet
£m
£m
%
 
£m
£m
%
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
Loans and advances to banks
70,191 
81 
0.23 
 
66,179 
115 
0.35 
Loans and advances to customers
296,421 
5,114 
3.48 
 
287,575 
5,364 
3.75 
Debt securities
46,986 
190 
0.82 
 
45,997 
177 
0.77 
 
 
 
 
 
 
 
 
Interest-earning assets
 
 
 
 
 
 
 
  - banking business (1,2)
413,598 
5,385 
2.63 
 
399,751 
5,656 
2.85 
  - trading business (3)
116,600 
 
 
 
132,839 
 
 
 
 
 
 
 
 
 
 
Non-interest earning assets
235,615 
 
 
 
338,903 
 
 
 
 
 
 
 
 
 
 
Total assets
765,813 
 
 
 
871,493 
 
 
 
 
 
 
 
 
 
 
Memo: Funded assets
539,196 
 
 
 
535,848 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
Deposits by banks
16,905 
31 
0.37 
 
4,437 
12 
0.54 
Customer accounts
227,730 
290 
0.26 
 
237,126 
575 
0.49 
Debt securities in issue
23,883 
254 
2.14 
 
21,742 
298 
2.76 
Subordinated liabilities
15,944 
317 
4.01 
 
19,837 
442 
4.48 
Internal funding of trading business
(9,776)
21 
(0.43)
 
(17,508)
(4)
0.05 
 
 
 
 
 
 
 
 
Interest-bearing liabilities
 
 
 
 
 
 
 
  - banking business (1,2)
274,686 
913 
0.67 
 
265,634 
1,323 
1.00 
  - trading business (3)
126,164 
 
 
 
141,714 
 
 
 
 
 
 
 
 
 
 
Non-interest-bearing liabilities
 
 
 
 
 
 
 
  - demand deposits
99,029 
 
 
 
84,660 
 
 
  - other liabilities
216,181 
 
 
 
325,071 
 
 
Owner's equity
49,753 
 
 
 
54,414 
 
 
 
 
 
 
 
 
 
 
Total liabilities and owner's equity
765,813 
 
 
 
871,493 
 
 
 
Notes:
(1)
For the purpose of calculating gross yields and interest spread, interest receivable has been decreased by £77 million (H1 2016 - £36 million) and interest payable has decreased by £77 million (H1 2016 - £36 million) in respect of negative interest relating to both financial assets and financial liabilities that attracted negative interest.
(2)
Interest income includes amounts (unwind of discount) recognised on impaired loans and receivables. The average balances of such loans are included in average loans and advances to banks and loans and advances to customers.
(3)
Interest receivable and interest payable on trading assets and liabilities are included in income from trading activities.
 
 
Analysis of results
 
 
Key points
Net interest income of £4,472 million increased by £139 million, or 3.2%, compared with H1 2016 principally reflecting higher volumes in UK PBB, up £122 million or 5.8%, and increased deposit volumes and re-pricing benefits in Commercial Banking, up £74 million or 6.9%. Partially offsetting, Capital Resolution reduced by £144 million in line with the planned shrinkage of the balance sheet.
The net interest margin (NIM) was stable on H1 2016 at 2.18%. A 9 basis point reduction across PBB and CPB, associated with asset margin pressure and higher liquidity requirements, has been broadly offset by the benefit of a reduction in low yielding Capital Resolution and centrally held assets, down from 12% of total interest earning assets to 5%.
 
UK PBB declined by 10 basis points to 2.97% driven by lower mortgage margins and reduced current account hedge yield, partially offset by savings re-pricing benefits from actions taken in 2016.

 
Ulster Bank RoI NIM of 1.67% was 3 basis points higher than H1 2016 reflecting a combination of improved deposit and loan margins, one off income adjustments in H1 2017 and deleveraging measures in 2016 which have reduced the concentration of low yielding non-performing loans.
 
 
In Commercial Banking, active re-pricing of assets and deposits has been offset by wider asset margin pressure in a lower rate environment causing net interest margin to fall by 8 basis points to 1.75%. 
 
 
Private Banking fell 24 basis points to 2.52% reflecting the competitive market and lower rate environment.
 
 
RBS International NIM of 1.35% was 7 basis points lower as margin pressures outweigh mitigating pricing actions.
 
 
Structural hedges of £126 billion generated a benefit of £651 million through net interest income for H1 2017.
Compared with Q1 2017, NIM reduced by 11 basis points to 2.13%, with the majority of the reduction driven by a conscious build-up in liquidity as we manage for litigation and conduct costs, including FHFA, and accelerate MREL and other wholesale funding plans into H1 2017. In addition, conditions in the UK mortgage market have become more competitive, contributing to a 9 basis point reduction in UK PBB NIM. Front book mortgage NIM was around 40 basis points lower than the back book. SVR balances were around 11% of total mortgage balances, broadly in line with Q1 2017.
NIM was 8 basis points lower than Q2 2016 principally reflecting asset margin pressure and mix impacts across the core businesses.
 
 
 
 
 
 
 
 
 
Half year ended
Quarter ended
 
30 June
30 June
 
30 June
31 March
30 June
2017
2016
 
2017
2017 
2016
Non-interest income
£m
£m
 
£m
£m
£m
 
 
 
 
 
 
 
Net fees and commissions
1,218 
1,284 
 
613 
605 
630 
Income from trading activities
957 
(267)
 
529 
428 
(157)
Own credit adjustments (OCA)
(73)
450 
 
(44)
(29)
194 
(Loss)/gain on redemption of own debt
(7)
(130)
 
(9)
(130)
Strategic disposals
156 
195 
 
156 
201 
Other operating income
196 
199 
 
224 
(28)
85 
 
 
 
 
 
 
 
Total non-interest income
2,447 
1,731 
 
1,469 
978 
823 
 
Key points
● 
Non-interest income of £2,447 million increased by £716 million, or 41.4%, compared with H1 2016.
 
Across PBB and CPB, non-interest income reduced by £23 million, or 1.7%, to £1,349 million.
 
NatWest Markets non-interest income increased by £115 million, or 14.8%, to £890 million reflecting strong underlying income growth partially offset by a £185 million adverse movement in own credit adjustment.
 
Capital Resolution non-interest income was a loss of £126 million compared with £340 million in H1 2016, which included a £330 million funding valuation adjustment. An own credit adjustment loss of £22 million compared with a gain of £184 million in H1 2016.
 
Central items non-interest income was a gain of £250 million compared with a loss of £163 million largely reflecting a £154 million gain in respect of IFRS volatility compared with a £668 million loss in H1 2016.
● 
Income from trading activities increased by £1,224 million compared with H1 2016 largely reflecting a £154 million IFRS volatility gain, compared with a £668 million loss in H1 2016, increased NatWest Markets income and a £330 million funding valuation adjustment in Capital Resolution in H1 2016.
 
 
Analysis of results
 
 
 
Half year ended
 
Quarter ended
 
30 June
30 June
 
30 June
31 March
30 June
2017
2016
 
2017
2017
2016
Operating expenses
£m
£m
 
£m
£m
£m
 
 
 
 
 
 
 
Staff costs
2,041 
2,329 
 
1,017 
1,024 
1,127 
Premises and equipment
602 
630 
 
292 
310 
315 
Other administrative expenses
678 
625 
 
358 
320 
179 
Restructuring costs (see below)
790 
630 
 
213 
577 
392 
Litigation and conduct costs
396 
1,315 
 
342 
54 
1,284 
 
 
 
 
 
 
 
Administrative expenses
4,507 
5,529 
 
2,222 
2,285 
3,297 
Depreciation and amortisation
337 
352 
 
169 
168 
174 
Write down of other intangible assets
48 
 
38 
 
 
 
 
 
 
 
Operating expenses
4,852 
5,929 
 
2,399 
2,453 
3,509 
 
 
 
 
 
 
 
Adjusted operating expenses (1)
3,666 
3,984 
 
1,844 
1,822 
1,833 
 
 
 
 
 
 
 
Restructuring costs comprise:
 
 
 
 
 
 
  - staff expenses
406 
366 
 
115 
291 
245 
  - premises, equipment, depreciation and amortisation
250 
24 
 
241 
15 
  - other
134 
240 
 
89 
45 
132 
 
 
 
 
 
 
 
 
790 
630 
 
213 
577 
392 
 
 
 
 
 
 
 
Staff costs as a % of total income
29.5%
38.4%
 
27.4%
31.9%
37.6%
Cost:income ratio (2)
69.8%
97.7%
 
64.4%
76.1%
117.2%
Cost:income ratio - adjusted (2,3)
53.1%
71.4%
 
50.7%
55.8%
66.6%
Employee numbers (FTE - thousands)
75.0 
89.2 
 
75.0 
76.2 
89.2 
 
Notes:
(1)
Excluding restructuring costs and litigation and conduct costs.
(2)
Operating lease depreciation included in income (H1 2017 - £72 million; Q2 2017 - £36 million; H1 2016 - £76 million; Q1 2017 - £36 million and Q2 2016 - £38 million).
(3)
Excluding restructuring costs, litigation and conduct costs, own credit adjustments, (loss)/gain on redemption of own debt and strategic disposals.
 
Key points
● 
Total operating expenses of £4,852 million were £1,077 million, or 18.2%, lower than H1 2016 reflecting a £919 million reduction in litigation and conduct costs and a £318 million, or 8.0%, reduction in adjusted operating expenses, partially offset by a £160 million increase in restructuring costs.
● 
Excluding VAT recoveries of £51 million in H1 2017 and £227 million in H1 2016, adjusted operating expenses reduced by £494 million, or 11.7%, compared with H1 2016 and we remain on track to achieve a £750 million reduction for the full year. The core businesses accounted for £151 million, or 31%, of the reduction with the remainder largely in Capital Resolution, down £282 million or 68.0%.
● 
Staff costs of £2,041 million, were £288 million, or 12.4%, lower than H1 2016 underpinned by a 14,200, or 15.9%, reduction in headcount.
● 
Restructuring costs of £790 million included an £217 million charge relating to the reduction in our property portfolio, a £134 million charge in Capital Resolution, primarily in respect of Asia-Pacific restructuring, a £73 million net settlement relating to the RBS Netherlands pension scheme and a £50 million provision in respect of the revised package of remedies regarding Williams & Glyn.
Litigation and conduct costs of £396 million included a £151 million charge in respect of settlement with the FHFA and a £25 million charge relating to the settlement of the UK 2008 rights issue shareholder litigation.
● 
Q2 2017 adjusted operating expenses increased by £22 million compared with Q1 2017 principally reflecting the £51 million VAT release in the previous quarter. Across the core businesses, adjusted operating expenses reduced by £47 million.
 
 
Analysis of results
 
 
Half year ended
 
Quarter ended
 
30 June
30 June
 
30 June
31 March
30 June
2017
2016
 
2017
2017
2016
Impairment losses/(releases)
£m
£m
 
£m
£m
£m
 
 
 
 
 
 
 
Loan impairment losses/(releases)
 
 
 
 
 
 
  - individually assessed
50 
358 
 
42 
172 
  - collectively assessed
103 
43 
 
65 
38 
27 
  - latent
(1)
11 
 
(5)
(10)
 
 
 
 
 
 
 
Total loan impairment losses
152 
412 
 
68 
84 
189 
Securities
(36)
(3)
 
(38)
(3)
 
 
 
 
 
 
 
Total impairment losses
116 
409 
 
70 
46 
186 
 
 
 
 
 
 
30 June 
31 March 
31 December 
Credit metrics (1)
2017 
2017 
2016 
 
 
 
 
Gross customer loans
£330,004m
£330,843m
£327,478m
Loan impairment provisions
£3,945m
£4,110m
£4,455m
Risk elements in lending (REIL)
£9,296m
£9,726m
£10,310m
Provisions as a % of REIL
42%
42%
43%
REIL as a % of gross customer loans
2.8%
2.9%
3.1%
Provisions as a % of gross customer loans
1.2%
1.2%
1.4%
 
Note:
(1)
Includes disposal groups and excludes reverse repos.
 
Key points
● 
A net impairment loss of £116 million, 7 basis points of gross customer loans, compared with a loss of £409 million in H1 2016.
● 
Capital Resolution reported a net impairment release of £78 million in H1 2017 compared with a loss of £263 million in H1 2016 which included a £264 million charge in respect of the shipping portfolio.
Across the core businesses, net impairment losses increased by £39 million to £168 million, 11 basis points of gross customer loans, compared with H1 2016. UK PBB net impairment losses increased by £32 million to £72 million, 10 basis points of gross customer loans, largely reflecting a reduction in impairment releases. Ulster Bank RoI reported a net impairment release of £11 million compared with £27 million in H1 2016. Commercial Banking net impairment losses of £94 million, 19 basis points of gross customer loans, compared with a loss of £103 million in H1 2016.
REIL reduced by £2,493 million, compared with H1 2016, to £9,296 million reflecting Capital Resolution run-down and a portfolio sale in Ulster Bank RoI, partially offset by an increase in the shipping portfolio, foreign exchange movements and the implementation of a revised mortgage methodology in Ulster Bank RoI. REIL represented 2.8% of gross customer loans compared with 3.5% at 30 June 2016 and 3.1% at 31 December 2016.
Excluding Capital Resolution and Ulster Bank RoI, REIL were £4.0 billion, or 1.3% of the respective gross customer loans.
 
 
Analysis of results
 
Capital and leverage ratios
 
 
 
End-point CRR basis (1)
 
30 June 
31 December 
 
2017 
2016 
Risk asset ratios
 
 
 
CET1
14.8 
13.4 
Tier 1
16.7 
15.2 
Total
20.0 
19.2 
 
 
 
Capital
£m
£m
 
 
 
Tangible equity
35,682 
34,982 
 
 
 
Expected loss less impairment provisions
(1,226)
(1,371)
Prudential valuation adjustment
(854)
(532)
Deferred tax assets
(877)
(906)
Own credit adjustments
(142)
(304)
Pension fund assets
(186)
(208)
Cash flow hedging reserve
(575)
(1,030)
Other deductions
52 
(8)
 
 
 
Total deductions
(3,808)
(4,359)
 
 
 
CET1 capital
31,874 
30,623 
AT1 capital
4,041 
4,041 
 
 
 
Tier 1 capital
35,915 
34,664 
Tier 2 capital
7,107 
9,161 
 
 
 
Total regulatory capital
43,022 
43,825 
 
 
 
Risk-weighted assets
 
 
 
 
 
Credit risk
 
 
  - non-counterparty
157,300 
162,200 
  - counterparty
17,800 
22,900 
Market risk
16,500 
17,400 
Operational risk
23,800 
25,700 
 
 
 
Total RWAs
215,400 
228,200 
 
 
 
Leverage (2)
 
 
 
 
 
Cash and balances at central banks
86,800 
74,200 
Derivatives
193,500 
247,000 
Loans and advances
346,800 
340,300 
Reverse repos
40,000 
41,800 
Other assets
115,600 
95,400 
 
 
 
Total assets
782,700 
798,700 
Derivatives
 
 
  - netting and variation margin
(193,400)
(241,700)
  - potential future exposures
56,700 
65,300 
Securities financing transactions gross up
1,900 
2,300 
Undrawn commitments
53,100 
58,600 
Regulatory deductions and other adjustments
800 
100 
 
 
 
CRR leverage exposure
701,800 
683,300 
 
 
 
Tier 1 capital
35,915 
34,664 
 
 
 
CRR leverage ratio %
5.1 
5.1 
 
 
 
UK leverage exposure (3)
618,700 
614,600 
 
 
 
UK leverage ratio % (3)
5.8 
5.6 
 
Notes:
(1)
CRR as implemented by the PRA in the UK, with effect from 1 January 2014. All regulatory adjustments and deductions to CET1 have been applied in full with the exception of unrealised gains on available-for-sale securities which have 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.
(3)
Based on end-point CRR Tier 1 capital and UK leverage exposures reflecting the post EU referendum measures announced by the Bank of England in the third quarter of 2016.
 
Segment performance
 
Half year ended 30 June 2017
 
PBB
 
CPB
 
 
 
 
Central
 
 
 
Ulster
 
Commercial
Private
RBS
 
NatWest
Capital
Williams
 items &
Total
 
UK PBB
Bank RoI
 
Banking
Banking
International
 
Markets
Resolution
& Glyn (1)
other (2)
RBS
 
£m
£m
 
£m
£m
£m
 
£m
£m
£m
£m
£m
Income statement
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
2,231 
206 
 
1,141 
226 
161 
 
42 
24 
333 
108 
4,472 
Other non-interest income
524 
90 
 
609 
95 
34 
 
938 
(104)
84 
101 
2,371 
Total income - adjusted (3)
2,755 
296 
 
1,750 
321 
195 
 
980 
(80)
417 
209 
6,843 
Own credit adjustments
(3)
 
 
(48)
(22)
(73)
Loss on redemption of own debt
 
 
(7)
(7)
Strategic disposals
 
 
156 
156 
Total income
2,755 
293 
 
1,750 
321 
195 
 
932 
(102)
417 
358 
6,919 
Direct expenses - staff costs
(329)
(96)
 
(245)
(74)
(23)
 
(297)
(26)
(96)
(855)
(2,041)
                           - other costs
(121)
(24)
 
(111)
(12)
(7)
 
(99)
(19)
(20)
(1,212)
(1,625)
Indirect expenses
(963)
(97)
 
(519)
(132)
(60)
 
(242)
(88)
(42)
2,143 
Operating expenses - adjusted (4)
(1,413)
(217)
 
(875)
(218)
(90)
 
(638)
(133)
(158)
76 
(3,666)
Restructuring costs - direct
(23)
(24)
 
(40)
 
(30)
(130)
(543)
(790)
                                 - indirect
(137)
(19)
 
(77)
(14)
(4)
 
(73)
(4)
328 
Litigation and conduct costs
(13)
(33)
 
(4)
 
(34)
(272)
(40)
(396)
Operating expenses
(1,586)
(293)
 
(996)
(232)
(94)
 
(775)
(539)
(158)
(179)
(4,852)
Operating profit/(loss) before impairment (losses)/releases
1,169 
--
 
754 
89 
101 
 
157 
(641)
259 
179 
2,067 
Impairment (losses)/releases
(72)
11 
 
(94)
(7)
(5)
 
(1)
78 
(25)
(1)
(116)
Operating profit/(loss)
1,097 
11 
 
660 
82 
96 
 
156 
(563)
234 
178 
1,951 
Operating profit/(loss) - adjusted (3,4)
1,270 
90 
 
781 
96 
100 
 
341 
(135)
234 
284 
3,061 
Additional information
 
 
 
 
 
 
 
 
 
 
 
 
Return on equity (5)
27.8%
0.8%
 
8.2%
7.7%
13.1%
 
2.3%
nm
22.2%
nm
5.6%
Return on equity - adjusted (3,4,5)
32.4%
6.8%
 
10.1%
9.3%
13.7%
 
7.2%
nm
22.2%
nm
11.5%
Cost:income ratio (6)
57.6%
100.0%
 
55.1%
72.3%
48.2%
 
83.2%
nm
37.9%
nm
69.8%
Cost:income ratio - adjusted (3,4,6)
51.3%
73.3%
 
47.9%
67.9%
46.2%
 
65.1%
nm
37.9%
nm
53.1%
Total assets (£bn)
161.6 
24.9 
 
151.9 
19.6 
24.7 
 
230.9 
102.2 
26.0 
40.9 
782.7 
Funded assets (£bn) (7)
161.6 
24.8 
 
151.9 
19.6 
24.7 
 
117.0 
24.7 
26.0 
38.8 
589.1 
Net loans and advances to customers (£bn)
138.5 
19.5 
 
98.1 
12.8 
8.8 
 
17.7 
10.1 
20.4 
0.2 
326.1 
Risk elements in lending (£bn)
1.8 
3.5 
 
1.6 
0.1 
0.1 
 
-  
1.8 
0.3 
0.1 
9.3 
Impairment provisions (£bn)
(1.2)
(1.2)
 
(0.7)
-  
-  
 
-  
(0.6)
(0.2)
-  
(3.9)
Customer deposits (£bn)
149.8 
16.9 
 
100.9 
26.1 
25.5 
 
8.1 
7.2 
24.9 
0.5 
359.9 
Risk-weighted assets (RWAs) (£bn)
32.9 
18.0 
 
76.2 
9.0 
9.4 
 
31.7 
26.6 
9.4 
2.2 
215.4 
RWA equivalent (£bn) (5)
35.8 
19.1 
 
79.5 
9.0 
9.4 
 
33.4 
31.7 
9.9 
2.5 
230.3 
Employee numbers (FTEs - thousands) (8)
17.7 
2.9 
 
5.2 
1.7 
0.8 
 
5.5 
0.2 
4.1 
36.9 
75.0 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the notes to this table refer to page 24. nm = not meaningful
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment performance
 
Quarter ended 30 June 2017
 
PBB
 
CPB
 
 
 
 
Central
 
 
 
Ulster
 
Commercial
Private
RBS
 
NatWest
Capital
Williams
 items &
Total
 
UK PBB
Bank RoI
 
Banking
Banking
International
 
Markets
Resolution
& Glyn (1)
other (2)
RBS
 
£m
£m
 
£m
£m
£m
 
£m
£m
£m
£m
£m
Income statement
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
1,120 
101 
 
574 
114 
81 
 
13 
(9)
168 
76 
2,238 
Other non-interest income
258 
49 
 
311 
47 
16 
 
459 
(19)
43 
202 
1,366 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total income adjusted (3)
1,378 
150 
 
885 
161 
97 
 
472 
(28)
211 
278 
3,604 
Own credit adjustments
(2)
 
 
(28)
(15)
(44)
Loss on redemption of own debt
 
 
(9)
(9)
Strategic disposals
 
 
156 
156 
Total income
1,378 
148 
 
885 
161 
97 
 
444 
(43)
211 
426 
3,707 
Direct expenses - staff costs
(166)
(47)
 
(120)
(36)
(11)
 
(142)
(10)
(43)
(442)
(1,017)
                           - other costs
(57)
(12)
 
(56)
(5)
(4)
 
(48)
(10)
(9)
(626)
(827)
Indirect expenses
(474)
(50)
 
(251)
(64)
(32)
 
(127)
(44)
(22)
1,064 
Operating expenses - adjusted (4)
(697)
(109)
 
(427)
(105)
(47)
 
(317)
(64)
(74)
(4)
(1,844)
Restructuring costs - direct
(3)
(5)
 
(1)
 
(10)
(60)
(134)
(213)
Restructuring costs - indirect
(26)
(4)
 
(17)
(3)
(1)
 
(25)
12 
64 
Litigation and conduct costs
(9)
(33)
 
(1)
 
(3)
(266)
(30)
(342)
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses
(735)
(151)
 
(446)
(108)
(48)
 
(355)
(378)
(74)
(104)
(2,399)
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating profit/(loss) before impairment (losses)/releases
643 
(3)
 
439 
53 
49 
 
89 
(421)
137 
322 
1,308 
Impairment (losses)/releases
(40)
(13)
 
(33)
(4)
 
(1)
33 
(14)
(70)
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating profit/(loss)
603 
(16)
 
406 
49 
51 
 
88 
(388)
123 
322 
1,238 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating profit/(loss) - adjusted (3,4)
641 
28 
 
425 
52 
52 
 
154 
(59)
123 
274 
1,690 
Additional information
 
 
 
 
 
 
 
 
 
 
 
 
Return on equity (5)
30.8%
(2.4%)
 
10.7%
9.6%
14.0%
 
2.9%
nm
23.5%
nm
8.0%
Return on equity - adjusted (3,4,5)
32.8%
4.3%
 
11.4%
10.3%
14.3%
 
6.6%
nm
23.5%
nm
12.9%
Cost:income ratio (6)
53.3%
102.0%
 
48.3%
67.1%
49.5%
 
80.0%
nm
35.1%
nm
64.4%
Cost:income ratio - adjusted (3,4,6)
50.6%
72.7%
 
46.1%
65.2%
48.5%
 
67.2%
nm
35.1%
nm
50.7%
Total assets (£bn)
161.6 
24.9 
 
151.9 
19.6 
24.7 
 
230.9 
102.2 
26.0 
40.9 
782.7 
Funded assets (£bn) (7)
161.6 
24.8 
 
151.9 
19.6 
24.7 
 
117.0 
24.7 
26.0 
38.8 
589.1 
Net loans and advances to customers (£bn)
138.5 
19.5 
 
98.1 
12.8 
8.8 
 
17.7 
10.1 
20.4 
0.2 
326.1 
Risk elements in lending (£bn)
1.8 
3.5 
 
1.6 
0.1 
0.1 
 
1.8 
0.3 
0.1 
9.3 
Impairment provisions (£bn)
(1.2)
(1.2)
 
(0.7)
 
(0.6)
(0.2)
(3.9)
Customer deposits (£bn)
149.8 
16.9 
 
100.9 
26.1 
25.5 
 
8.1 
7.2 
24.9 
0.5 
359.9 
Risk-weighted assets (RWAs) (£bn)
32.9 
18.0 
 
76.2 
9.0 
9.4 
 
31.7 
26.6 
9.4 
2.2 
215.4 
RWA equivalent (£bn) (5)
35.8 
19.1 
 
79.5 
9.0 
9.4 
 
33.4 
31.7 
9.9 
2.5 
230.3 
Employee numbers (FTEs - thousands) (8)
17.7 
2.9 
 
5.2 
1.7 
0.8 
 
5.5 
0.2 
4.1 
36.9 
75.0 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the notes to this table refer to page 24. nm = not meaningful.
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment performance
 
Half year ended 30 June 2016
 
PBB
 
CPB
 
 
 
 
Central
 
 
 
Ulster
 
Commercial
Private
RBS
 
NatWest
Capital
Williams
items &
Total
 
UK PBB
Bank RoI
 
Banking
Banking
International
 
Markets
Resolution
& Glyn (1)
other (2)
RBS
 
£m
£m
 
£m
£m
£m
 
£m
£m
£m
£m
£m
 
 
 
 
 
 
 
 
 
 
 
 
 
Income statement
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
2,109 
198 
 
1,067 
226 
151 
 
43 
168 
324 
47 
4,333 
Other non-interest income
506 
92 
 
632 
105 
34 
 
638 
(473)
87 
(405)
1,216 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total income - adjusted (3)
2,615 
290 
 
1,699 
331 
185 
 
681 
(305)
411 
(358)
5,549 
Own credit adjustments
 
 
137 
184 
126 
450 
Loss on redemption of own debt
 
 
(130)
(130)
Strategic disposals
 
 
(51)
246 
195 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total income
2,615 
293 
 
1,699 
331 
185 
 
818 
(172)
411 
(116)
6,064 
Direct expenses - staff costs
(361)
(97)
 
(265)
(77)
(22)
 
(131)
(62)
(125)
(1,189)
(2,329)
                           - other costs
(162)
(13)
 
(111)
(23)
(8)
 
(21)
(64)
(33)
(1,220)
(1,655)
Indirect expenses
(987)
(85)
 
(557)
(156)
(38)
 
(488)
(289)
(39)
2,639 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses - adjusted (4)
(1,510)
(195)
 
(933)
(256)
(68)
 
(640)
(415)
(197)
230 
(3,984)
Restructuring costs - direct
(51)
(24)
 
(1)
(1)
(1)
 
(10)
(12)
(45)
(485)
(630)
                                - indirect
(60)
(1)
 
(40)
(19)
(2)
 
(23)
(25)
170 
Litigation and conduct costs
(421)
(92)
 
(10)
(2)
 
(56)
(26)
(708)
(1,315)
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses
(2,042)
(312)
 
(984)
(278)
(71)
 
(729)
(478)
(242)
(793)
(5,929)
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating profit/(loss) before impairment (losses)/releases
573 
(19)
 
715 
53 
114 
 
89 
(650)
169 
(909)
135 
Impairment (losses)/releases
(40)
27 
 
(103)
(2)
(11)
 
(263)
(17)
(409)
Operating profit/(loss)
533 
 
612 
51 
103 
 
89 
(913)
152 
(909)
(274)
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating profit/(loss) - adjusted (3,4)
1,065 
122 
 
663 
73 
106 
 
41 
(983)
197 
(128)
1,156 
 
 
 
 
 
 
 
 
 
 
 
 
 
Additional information
 
 
 
 
 
 
 
 
 
 
 
 
Return on equity (5)
11.9%
0.6%
 
8.1%
5.1%
15.4%
 
0.8%
nm
14.3%
nm
(10.3%)
Return on equity - adjusted (3,4,5)
25.5%
9.3%
 
8.9%
7.6%
15.9%
 
(0.5%)
nm
18.6%
nm