Report of Foreign Private Issuer

 

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

 

24 October 2019

 

Commission file number: 001-10306

 

 

 Form 6-K

 

The Royal Bank of Scotland Group plc

 

 

Gogarburn

PO Box 1000

Edinburgh EH12 1HQ

Scotland

United Kingdom

 

(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-             

 

This report on Form 6-K, except for any information contained on any websites linked or documents referred to in this report, shall be deemed incorporated by reference into the company’s Registration Statement on Form F-3 (File No. 333-222022) and to be a part thereof from the date on which this report is filed, to the extent not superseded by documents or reports subsequently filed or furnished

 


 

 

Forward-looking statements

Cautionary statement regarding forward-looking statements

Certain sections in this document contain ‘forward-looking statements’ as that term is defined in the United States Private Securities Litigation Reform Act of 1995, such as statements that include the words ‘expect’, ‘estimate’, ‘project’, ‘anticipate’, ‘commit’, ‘believe’, ‘should’, ‘intend’, ‘plan’, ‘could’, ‘probability’, ‘risk’, ‘Value-at-Risk (VaR)’, ‘target’, ‘goal’, ‘objective’, ‘may’, ‘endeavour’, ‘outlook’, ‘optimistic’, ‘prospects’ and similar expressions or variations on these expressions.

 

In particular, this document includes forward-looking statements relating, but not limited to: future profitability and performance, including financial performance targets such as return on tangible equity; cost savings and targets, including cost:income ratios; litigation and government and regulatory investigations, including the timing and financial and other impacts thereof; the implementation of the Alternative Remedies Package; the continuation of the Group’s balance sheet reduction programme, including the reduction of risk-weighted assets (RWAs) and the timing thereof; capital and strategic plans and targets; capital, liquidity and leverage ratios and requirements, including CET1 Ratio, RWA equivalents (RWAe), Pillar 2 and other regulatory buffer requirements, minimum requirement for own funds and eligible liabilities, and other funding plans; funding and credit risk profile; capitalisation; portfolios; net interest margin; customer loan and income growth; the level and extent of future impairments and write-downs, including with respect to goodwill; restructuring and remediation costs and charges; the Group’s exposure to political risk, economic risk, climate change risk, operational risk, conduct risk, cyber and IT risk and credit rating risk and to various types of market risks, including interest rate risk, foreign exchange rate risk and commodity and equity price risk; customer experience including our Net Promotor Score (NPS); employee engagement and gender balance in leadership positions.

 

Limitations inherent to forward-looking statements

These statements are based on current plans, estimates, targets and projections, and are subject to significant inherent risks, uncertainties and other factors, both external and relating to the Group’s strategy or operations, which may result in the Group being unable to achieve the current targets, predictions, expectations and other anticipated outcomes expressed or implied by such forward-looking statements. In addition, certain of these disclosures are dependent on choices relying on key model characteristics and assumptions and are subject to various limitations, including assumptions and estimates made by management. By their nature, certain of these disclosures are only estimates and, as a result, actual future gains and losses could differ materially from those that have been estimated. Accordingly, undue reliance should not be placed on these statements. Forward-looking statements speak only as of the date we make them and we expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Group’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

 

Important factors that could affect the actual outcome of the forward-looking statements

We caution you that a large number of important factors could adversely affect our results or our ability to implement our strategy, cause us to fail to meet our targets, predictions, expectations and other anticipated outcomes or affect the accuracy of forward-looking statements we describe in this document, including in the risk factors and other uncertainties set out in the Group’s 2018 Annual Report on Form 20-F, RBS Group’s Interim Results for H1 2019 on Form 6-K and other materials filed with, or furnished to, the US Securities and Exchange Commission, and other risk factors and uncertainties discussed in this document. These include the significant risks for the Group presented by: operational and IT resilience risk (including in respect of: the Group being subject to cyberattacks; operational risks inherent in the Group’s business; exposure to third party risks including as a result of outsourcing and its use of new technologies and innovation, as well as related regulatory and market changes; the Group’s operations being highly dependent on its IT systems; the Group relying on attracting, retaining and developing senior management and skilled personnel and maintaining good employee relations; the Group’s risk management framework; and reputational risk), economic and political risk (including in respect of: prevailing uncertainty on the terms of the UK’s withdrawal from the European Union; the Group’s plans for continuity of business impacted by the UK’s expected departure from the EU; increased political and economic risks and uncertainty in the UK and global markets; climate change and the transition to a low carbon economy; HM Treasury’s ownership of RBSG and the possibility that it may exert a significant degree of influence over the Group; continued low interest rates and changes in foreign currency exchange rates), financial resilience risk (including in respect of: the Group’s ability to meet targets and make discretionary capital distributions to shareholders; the highly competitive markets in which the Group operates; deterioration in borrower and counterparty credit quality;  the ability of the Group to meet prudential regulatory requirements for capital and MREL, or to manage its capital effectively; the ability of the Group to access adequate sources of liquidity and funding; changes in the credit ratings of RBSG, any of its subsidiaries or any of its respective debt securities; the Group’s ability to meet requirements of regulatory stress tests; possible losses or the requirement to maintain higher levels of capital as a result of limitations or failure of various models; sensitivity of the Group’s financial statements to underlying accounting policies, judgements, assumptions and estimates; changes in applicable accounting policies or rules; the value or effectiveness of any credit protection purchased by the Group; the level and extent of future impairments and write-downs, including with respect to goodwill; and the application of UK statutory stabilisation or resolution powers) and legal, regulatory and conduct risk (including in respect of: the Group’s businesses being subject to substantial regulation and oversight; the Group complying with regulatory requirements in respect of its ongoing compliance with the UK ring-fencing regime and ensuring operational continuity in resolution; legal, regulatory and governmental actions and investigations (including the final number of PPI claim and their amounts); the replacement of LIBOR, EURIBOR and other benchmark rates; heightened regulatory and governmental scrutiny (including by competition authorities); implementation of the Alternative Remedies Package and the costs related thereto; and changes in tax legislation).

 

The forward-looking statements contained in this document speak only as at the date hereof, and the Group does not assume or undertake any obligation or responsibility to update any forward-looking statement to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

 

The information, statements and opinions contained in this document do not constitute a public offer under any applicable legislation or an offer to sell or solicit of any offer to buy any securities or financial instruments or any advice or recommendation with respect to such securities or other financial instruments.

 

1

RBS – Q3 2019 Results

 


 

 

Introduction

Presentation of information

In this document, ‘RBSG plc’ refers to The Royal Bank of Scotland Group plc, and ‘RBS’ or ‘RBS Group’ refers to RBSG plc and its subsidiaries.

Any information contained on any websites linked or report references in this report is for information only and shall not be deemed to be incorporated by reference in this report.

 

RBS filed a Form 6-K on 30 April 2019 to restate or represent certain disclosures in RBS Group’s annual report on Form 20-F for the year ended 31 December 2018, filed on 28 February 2019, in connection with the re-segmentation completed in Q1 2019 and effective from 1 January 2019 and changes in reporting standard IAS12 ‘Income taxes’ effective from 1 January 2019.

 

Non-IFRS financial information

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 measures, also known as non-GAAP or non-IFRS financial measures. These measures are adjusted for certain items which management believe are not representative of the underlying performance of the business and which distort period-on-period comparison. These non-IFRS financial measures are not measures within the scope of IFRS and are not a substitute for IFRS financial measures. Refer to the Appendix, “Non-IFRS financial measures”,  for further information and calculations of non-IFRS financial measures included throughout this document, and, where relevant, the most directly comparable IFRS financial measures.

2

RBS – Q3 2019 Results

 


 

 

The Royal Bank of Scotland Group plc

Q3 2019 Interim Management Statement

 

RBS reported an operating loss before tax of £8 million, which included a £900 million provision in respect of Payment Protection Insurance (PPI), compared with an operating profit of £961 million in Q3 2018.

 

Return on tangible equity was (3.8)% for Q3 2019 and 7.0% excluding the PPI charge.

Income was broadly stable across the retail and commercial businesses compared with Q2 2019, excluding notable items.

Group income was impacted by a particularly challenging quarter in NatWest Markets (NWM).

RBS reported an attributable loss of £315 million for Q3 2019.

Supporting our customers through continued lending growth

UK Personal Banking (UK PB) gross new mortgage lending was £8.6 billion in Q3 2019 compared with £6.7 billion in Q2 2019.

Commercial Banking net lending of £101.5 billion was £0.1 billion higher than Q2 2019. Across Business Banking, SME & Mid-Corporate, and Specialised business, lending continues to increase, with year to date growth of £1.6 billion.

We continue to achieve net lending growth across UK PB, Ulster Bank RoI, Commercial and Private Banking at attractive returns; net loans to customers increased by 3.2% on an annualised basis for the year to date, exceeding our 2-3% net loan growth target.

Q3 2019 net impairment loss of £213 million equates to 26 basis points of gross customer loans, compared with 31 basis points in Q3 2018. The cost of risk remains below our view of a normalised long term loss rate of 30-40 basis points.

 

Continuing competitive market

Income decreased by £739 million, or 20.3%, compared with Q3 2018. Across the retail and commercial businesses, income decreased by 3.1% compared with Q3 2018 excluding notable items.

Net interest margin (NIM) of 1.75% was 3 basis points lower than Q2 2019. Bank NIM of 1.97% was 5 basis points lower than Q2 2019 primarily reflecting the contraction of the yield curve and competitive pressures in the mortgage business as front book margins, whilst higher than Q2 2019, remain lower than back book margins.

NWM had a challenging quarter with core income of £184 million, lower by £147 million, or 44.4%, than Q3 2018. Rates income in particular was impacted by a deterioration in economic sentiment for the global economy and a fall in bond yields. This, together with legacy items culminated in an operating loss of £193 million for the quarter.

Total costs increased by £257 million compared with Q3 2018. Costs, excluding strategic, litigation and conduct costs, decreased by £20 million in comparison to Q3 2018, with a £193 million cost reduction achieved for the year to date. We remain on track to achieve our £300 million target for full year 2019.

 

Capital generation

CET1 ratio of 15.7% included a 50 basis point reduction in respect of the PPI charge.

RWAs increased by £1.0 billion in Q3 2019 to £189.5 billion, principally reflecting an increase in NWM. In line with previous guidance, we expect to end the year with RWAs of around £185-190 billion.

 

2019 and 2020 outlook – unchanged(1)

We retain the outlook provided in the 2019 Interim Results.

 

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 the “Risk Factors” section on pages 265 to 275 of the 2018 Annual Report on Form 20-F and as updated by the summary “Risk Factors” on pages 46 and 47 of the 2019 Interim Results on Form 6-K. These statements constitute forward-looking statements. Refer to Forward-looking statements in this announcement.

 

3

RBS – Q3 2019 Results

 


 

 

Business performance summary

 

Nine months ended

 

Quarter ended

 

30 September

30 September

 

30 September

30 June

30 September

Performance key metrics and ratios

2019

2018

 

2019

2019

2018

Operating profit/(loss) before tax

£2,686m

£2,787m

 

(£8m)

£1,681m

£961m

Profit attributable to ordinary shareholders

£1,723m

£1,336m

 

(£315m)

£1,331m

£448m

Bank net interest margin (RBS NIM excluding NWM) (1) 

2.02%

2.10%

 

1.97%

2.02%

2.04%

Bank average interest earning assets (RBS excluding NWM) (1) 

£410bn

£408bn

 

£416bn

£410bn

£416bn

Cost:income ratio (1) 

67.5%

69.1%

 

92.9%

52.6%

66.7%

Loan impairment rate (1) 

22bps

16bps

 

26bps

30bps

31bps

Earnings per share

 

 

 

 

 

 

  - basic

14.3p

11.1p

 

(2.6p)

11.0p

3.7p

  - basic fully diluted

14.2p

11.1p

 

(2.6p)

11.0p

3.7p

Return on tangible equity (1) 

6.8%

5.3%

 

(3.8%)

15.8%

5.4%

Average tangible equity

£34bn

£34bn

 

£33bn

£34bn

£33bn

Average number of ordinary shares

 

 

 

 

 

 

  outstanding during the period (millions)

 

 

 

 

 

 

  - basic

12,064

11,998

 

12,075

12,069

12,034

  - fully diluted (2) 

12,099

12,053

 

12,106

12,104

12,083

 

 

30 September

30 June

31 December

Balance sheet key metrics and ratios

2019

2019

2018

Total assets

£776.5bn

£729.9bn

£694.2bn

Funded assets (1) 

£600.7bn

£584.3bn

£560.9bn

Loans to customers - amortised cost

£319.5bn

£310.6bn

£305.1bn

Impairment provisions

£3.3bn

£3.2bn

£3.3bn

Customer deposits

£369.7bn

£361.6bn

£360.9bn

 

 

 

 

Liquidity coverage ratio (LCR)

148%

154%

158%

Liquidity portfolio

£193bn

£203bn

£198bn

Net stable funding ratio (NSFR) (3) 

140%

140%

141%

Loan:deposit ratio (1) 

86%

86%

85%

Total wholesale funding

£78bn

£78bn

£74bn

Short-term wholesale funding

£19bn

£19bn

£15bn

 

 

 

 

Common Equity Tier (CET1) ratio

15.7%

16.0%

16.2%

Total capital ratio

20.5%

20.9%

21.8%

Pro forma CET 1 ratio, pre dividend accrual (4) 

15.9%

17.1%

16.9%

Risk-weighted assets (RWAs)

£189.5bn

£188.5bn

£188.7bn

CRR leverage ratio

5.0%

5.2%

5.4%

UK leverage ratio

5.7%

5.9%

6.2%

 

 

 

 

Tangible net asset value (TNAV) per ordinary share

272p

290p

287p

Tangible net asset value (TNAV) per ordinary share - fully diluted (1,2) 

272p

289p

286p

Tangible equity

£32,930m

£35,036m

£34,566m

Number of ordinary shares in issue (millions)

12,094

12,091

12,049

Number of ordinary shares in issue (millions) - fully diluted (2,5) 

12,124

12,124

12,088

 

Notes:

(1)    Refer to the Appendix for details of basis of preparation and reconciliation of non-IFRS financial and performance measures.

(2)    Includes the effect of dilutive share options and convertible securities. Dilutive shares on an average basis for Q3 2019 were 31 million shares and for nine months ended 30 September 2019 were 35 million shares; (Q2 2019 - 35 million shares, Q3 2018 - 49 million shares; nine months ended 30 September 2018 - 55 million shares), and as at 30 September 2019 were 30 million shares (30 June 2019 - 33 million shares; 31 December 2018 - 39 million shares).

(3)    NSFR reported in line with CRR2 regulations finalised in June 2019.

(4)    The pro forma CET 1 ratio at 30 September 2019 excluded a charge of £362 million (3p per share) for a foreseeable dividend. 30 June 2019 excluded a charge of £241 million (2p per share) for the interim dividend, a special dividend of £1,449 million (12p per share) and a foreseeable dividend related to interim profits of £363 million (3p per share). 31 December 2018 excluded a charge of £422 million (3.5p per share) for the final dividend and £904 million (7.5p per share) for the special dividend paid following the Annual General Meeting held on 25 April 2019.

(5)    Includes 16 million treasury shares (30 June 2019 - 17 million shares; 31 December 2018 - 8 million shares).

                                   

Re-segmentation

Refer to Note 1 for details of re-segmentation effective from 1 January 2019 and re-stated comparatives.

 

Non-IFRS financial measures

This document contains a number of non-IFRS financial measures and performance metrics not defined under IFRS. For details of the basis of preparation and reconciliations where appropriate refer to the Appendix.

4

RBS – Q3 2019 Results

 


 

 

 

Summary consolidated income statement for the period ended 30 September 2019

 

 

Nine months ended

 

Quarter ended

 

30 September

30 September

 

30 September

30 June

30 September

 

2019

2018*

 

2019

2019

2018*

 

£m

£m

 

£m

£m

£m

Net interest income

6,010

6,480

 

2,006

1,971

2,154

Own credit adjustments

(58)

59

 

(12)

(3)

20

Strategic disposals

1,035

-

 

-

1,035

-

Other non-interest income

3,033

3,805

 

909

1,077

1,468

Non-interest income

4,010

3,864

 

897

2,109

1,488

Total income

10,020

10,344

 

2,903

4,080

3,642

Litigation and conduct costs

(810)

(1,190)

 

(750)

(55)

(389)

Strategic costs

(844)

(649)

 

(215)

(434)

(299)

Other expenses

(5,144)

(5,337)

 

(1,733)

(1,673)

(1,753)

Operating expenses

(6,798)

(7,176)

 

(2,698)

(2,162)

(2,441)

Profit before impairment losses

3,222

3,168

 

205

1,918

1,201

Impairment losses

(536)

(381)

 

(213)

(237)

(240)

Operating profit/(loss) before tax

2,686

2,787

 

(8)

1,681

961

Tax (charge)/credit

(395)

(1,090)

 

(201)

22

(381)

Profit/(loss) for the period

2,291

1,697

 

(209)

1,703

580

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

Ordinary shareholders

1,723

1,336

 

(315)

1,331

448

Other owners

307

355

 

105

102

110

Non-controlling interests

261

6

 

1

270

22

 

Notable items within total income

 

 

 

 

 

 

Alawwal bank merger gain in NatWest Markets

444

-

 

-

444

-

FX recycling gain in Central items & other

290

-

 

-

290

-

Legacy liability release in Central items & other

256

-

 

-

256

-

Insurance indemnity

-

272

 

-

-

272

   of which:

 

 

 

 

 

 

         NatWest Markets

-

165

 

-

-

165

         Central items & other

-

107

 

-

-

107

IFRS volatility in Central items & other (1) 

(34)

(34)

 

(51)

21

77

UK PB debt sale gain

18

26

 

16

-

-

FX gains/(losses) in Central items & other

22

(7)

 

2

-

(11)

Commercial Banking fair value and disposal (loss)/gain

(17)

179

 

-

(15)

(13)

NatWest Markets legacy business disposal (loss)/gain

(35)

(43)

 

(8)

(23)

14

 

 

 

 

 

 

 

Notable items within operating expenses

 

 

 

 

 

 

Push payment fraud costs

(25)

-

 

(7)

(18)

-

Litigation and conduct costs

(810)

(1,190)

 

(750)

(55)

(389)

   of which:

 

 

 

 

 

 

          US RMBS

169

(823)

 

162

7

(21)

          PPI

(900)

(200)

 

(900)

-

(200)

 

*Restated. Refer to Note 2 for further details.

 

Note:

(1)

IFRS volatility relates to loans which are economically hedged but for which hedge accounting is not permitted under IFRS.

 

5

RBS – Q3 2019 Results

 


 

 

Business performance summary

Personal & Ulster

UK Personal Banking

 

Quarter ended

 

 

As at

 

30 September

30 June

30 September

 

 

30 September

30 June

31 December

 

2019

2019

2018

 

 

2019

2019

2018

 

£m

£m

£m

 

 

£bn

£bn

£bn

Total income

1,224

1,202

1,257

 

Net loans to customers -

 

 

 

Operating expenses

(1,601)

(594)

(819)

 

 amortised cost

154.6

151.9

148.9

Impairment losses

(131)

(69)

(66)

 

Customer deposits

147.9

147.5

145.3

Operating profit

(508)

539

372

 

RWAs

37.5

37.0

34.3

Return on equity

(26.8%)

26.5%

19.4%

 

 

 

 

 

Net interest margin

2.44%

2.51%

2.65%

 

 

 

 

 

Cost:income ratio

130.8%

49.4%

65.2%

 

 

 

 

 

Loan impairment rate

34bps

18bps

18bps

 

 

 

 

 

 

 

UK PB has 6.8 million regular mobile app users and 8.8 million digitally active customers, representing 73% of active current account customers. Total digital sales volumes increased by 25% compared with Q3 2018, now representing 51% of all sales. 58% of personal unsecured loan sales, 68% of credit card accounts and 53% of current accounts opened were via the digital channel.

Total income was £33 million, or 2.6%, lower than Q3 2018, impacted by an IFRS 9 accounting change for interest in suspense recoveries of £8 million offset in impairments, and a £16 million increase in debt sale gains. Excluding these items, income was £41 million, or 3.3%, lower than Q3 2018 reflecting lower overall mortgage margins. Net interest margin decreased by 7 basis points compared with Q2 2019 reflecting the lower yield curve, impacting deposit margins and mortgage margin pressure as front book margins, whilst higher than Q2 2019, remain lower than back book margin.

Operating expenses of £1,601 million, were £782 million or 95.5%, higher compared with Q3 2018. Excluding strategic, litigation and conduct costs, operating expenses increased by £26 million, or 4.5%, compared with Q3 2018 reflecting increased fraud costs due to a revised customer refund approach for authorised push payment scams, annual pay award and increased technology and innovation costs, partially offset by a 6% reduction in headcount.

Litigation and conduct costs include a £900 million charge in respect of PPI claims following greater than predicted complaints volumes in the lead up to the 29 August 2019 deadline.

Impairment losses were £65 million higher than Q3 2018 reflecting lending growth, lower debt sale recoveries and IFRS 9 modelling adjustments. Underlying defaults have increased slightly since Q3 2018, however the trend is starting to flatten following risk appetite tightening. The uplift in impairment losses relative to Q2 2019 includes an additional charge in respect of increased economic uncertainty and IFRS 9 modelling adjustments.

Compared with Q2 2019, net loans to customers increased by £2.7 billion as a result of strong gross new mortgage lending of £8.6 billion in the quarter, with market flow share of approximately 12%, supporting a stock share of approximately 10%. Personal advances increased by £0.2 billion and cards balances increased by £0.1 billion with cards growth supported by the re-entry to the 0% balance transfer market in Q2 2019.

RWAs increased by £0.5 billion compared with Q2 2019, reflecting strong lending growth across all products.

 

6

RBS – Q3 2019 Results

 


 

 

Business performance summary

Personal & Ulster

Ulster Bank RoI

 

 

Quarter ended

 

 

As at

 

30 September

30 June

30 September

 

 

30 September

30 June

31 December

 

2019

2019

2018

 

 

2019

2019

2018

 

£m

£m

£m

 

 

£bn

£bn

£bn

Total income

145

138

151

 

Net loans to customers -

 

 

 

Operating expenses

(131)

(145)

(167)

 

 amortised cost

19.0

19.0

18.8

Impairment

 

 

 

 

Customer deposits

18.8

19.0

18.0

  releases/(losses)

17

10

(60)

 

RWAs

13.3

14.2

14.7

Operating profit/(loss)

31

3

(76)

 

 

 

 

 

Return on equity

5.8%

0.6%

(12.7%)

 

 

 

 

 

Net interest margin

1.55%

1.62%

1.72%

 

 

 

 

 

Cost:income ratio

90.3%

105.1%

110.6%

 

 

 

 

 

Loan impairment rate

(35)bps

(20)bps

118bps

 

 

 

 

 

 

 

 

Ulster Bank RoI continues to deliver digital enhancements, including paperless processes that simplify the everyday banking experience for customers. 70% of active personal current account customers are now choosing to bank through digital channels, with mobile payments and transfers 29% higher compared with Q3 2018.

Total income was £6 million, or 4.0% (€8 million, or 4.7%), lower than Q3 2018 primarily reflecting the sale of a portfolio of non-performing loans (NPL) and an IFRS 9 accounting change for interest in suspense recoveries of £5 million (€6 million). Net interest margin decreased by 7 basis points compared with Q2 2019 mainly due to the IFRS 9 accounting change which took effect late in Q2 2019.

Operating expenses of £131 million (€146 million) were £36 million, or 21.6% (€42 million, or 22.3%), lower compared with Q3 2018. Excluding strategic, conduct and litigation costs, operating expenses decreased by £9 million, or 7.1% ( €12 million, or 8.3%), compared with Q3 2018 due to the timing of project costs, reduced pension costs and the impact of other cost saving initiatives, partially offset by higher levies.

A net impairment release of £17 million (€19 million) in Q3 2019 principally reflects the net impact of an improvement in the performance of the non-performing loan portfolio and NPL deleveraging, partly offset by a charge for economic uncertainty.

Net loans to customers remained stable at £19.0 billion. In Euro terms, net loans to customer increased by €0.2 billion to €21.4 billion, compared with Q2 2019, primarily driven by growth in the commercial loan portfolio.

On 8 October 2019 Ulster Bank Ireland DAC confirmed the sale of a portfolio of non-performing mortgages of approximately £0.7 billion (€0.8 billion). This sale is consistent with our strategic objective to build a strong and sustainable bank and to reduce the percentage of non-performing loans on our balance sheet. The affected loans remain on the bank’s balance sheet at 30 September 2019 and will be de-recognised during 2020.

 

7

RBS – Q3 2019 Results

 


 

 

Business performance summary

Commercial & Private Banking

Commercial Banking

 

Quarter ended

 

 

As at

 

30 September

30 June

30 September

 

 

30 September

30 June

31 December

 

2019

2019

2018

 

 

2019

2019

2018

 

£m

£m

£m

 

 

£bn

£bn

£bn

Total income

1,077

1,083

1,096

 

Net loans to customers -

 

 

 

Operating expenses

(638)

(622)

(583)

 

 amortised cost

101.5

101.4

101.4

Impairment losses

(108)

(197)

(107)

 

Customer deposits

135.7

133.4

134.4

Operating profit

331

264

406

 

RWAs

77.0

77.8

78.4

Return on equity

8.4%

6.2%

9.6%

 

 

 

 

 

Net interest margin

1.90%

1.97%

2.00%

 

 

 

 

 

Cost:income ratio

57.9%

56.1%

51.8%

 

 

 

 

 

Loan impairment rate

42bps

77bps

41bps

 

 

 

 

 

 

Total income was £19 million, or 1.7%, lower than Q3 2018 as lower asset volumes and deposit income were partially offset by £13 million of fair value and disposal losses in Q3 2018. Net interest margin decreased by 7 basis points compared with Q2 2019 due to lower deposit funding benefits.

Operating expenses of £638 million increased by £55 million or 9.4% compared with Q3 2018. Excluding strategic, litigation and conduct costs, operating expenses increased by £24 million, or 4.5%, compared with Q3 2018 due to additional authorised push payment fraud costs in line with new industry practice, combined with higher remediation, innovation and technology spend.

Impairment losses of £108 million, which included charges in respect of increased economic uncertainty and IFRS 9 modelling adjustments, were in line with Q3 2018 but were £89 million lower than Q2 2019.

Net loans to customers increased by £0.1 billion compared with Q2 2019. Lending across Business Banking, SME & Mid-Corporate and Specialised business increased by £0.1 billion in comparison to Q2 2019, with year to date growth of £1.6 billion.

RWAs decreased by £0.8 billion compared with Q2 2019 due to active capital management and business transfers of £0.3 billion.

Private Banking

 

Quarter ended

 

 

As at

 

30 September

30 June

30 September

 

 

30 September

30 June

31 December

 

2019

2019

2018

 

 

2019

2019

2018

 

£m

£m

£m

 

 

£bn

£bn

£bn

Total income

198

191

195

 

Net loans to customers

 

 

 

Operating expenses

(119)

(115)

(110)

 

   - amortised cost

15.2

14.7

14.3

Impairment

 

 

 

 

 

 

 

 

 releases/(losses)

2

(1)

(1)

 

Customer deposits

28.2

28.0

28.4

Operating profit

81

75

84

 

RWAs

10.0

9.7

9.4

Return on equity

16.8%

15.9%

17.3%

 

AUMs

22.5

21.9

19.8

Net interest margin

2.35%

2.44%

2.54%

 

Assets Under

 

 

 

Cost:income ratio

60.1%

60.2%

56.4%

 

  Administration (1)

7.1

7.0

6.6

 

 

 

 

 

Total Assets Under

 

 

 

 

 

 

 

 

  Management and

 

 

 

 

 

 

 

 

  Administration (AUMA)

29.6

28.9

26.4

Note:

(1)

Private Banking manages assets under management portfolios on behalf of UK PB and RBSI. Prior to Q4 2018, the assets under management portfolios of UK PB and RBSI were not included. Private Banking receives a management fee from UK PB and clients of RBSI in respect of providing this service.

 

Total income was £3 million, or 1.5%, higher than Q3 2018, as volume growth and one-off benefits related to hedging income gains were partially offset by lower deposit income. Net interest margin decreased by 9 basis points compared with Q2 2019 primarily due to lower deposit funding benefits.

Operating expenses of £119 million were £9 million or 8.2%, higher compared with Q3 2018. Excluding strategic, litigation and conduct costs, operating expenses were £1 million, or 0.9%, lower than Q3 2018 due to a reduction in back office operations costs.

Net loans to customers increased by £0.5 billion in comparison to Q2 2019, mainly due to mortgage lending.

Total assets under management in Private Banking increased by £0.6 billion, or 2.7%, in comparison with Q2 2019 reflecting investment performance of £0.4 billion and net new business inflows of £0.2 billion.

Total assets under management and administration overseen by Private Banking increased by £0.7 billion, or 2.4%, compared with Q2 2019 reflecting investment performance of £0.5 billion and net new business inflows of £0.2 billion.

     

8

RBS – Q3 2019 Results

 


 

 

Business performance summary

RBS International

 

Quarter ended

 

 

As at

 

30 September

30 June

30 September

 

 

30 September

30 June

31 December

 

2019

2019

2018

 

 

2019

2019

2018

 

£m

£m

£m

 

 

£bn

£bn

£bn

Total income

150

159

155

 

Net loans to customers -

 

 

 

Operating expenses

(62)

(60)

(60)

 

 amortised cost

13.8

13.6

13.3

Impairment losses

-

2

(3)

 

Customer deposits

29.1

28.1

27.5

Operating profit

88

101

92

 

RWAs

6.5

6.9

6.9

Return on equity

26.0%

30.8%

26.9%

 

 

 

 

 

Net interest margin

1.55%

1.68%

1.73%

 

 

 

 

 

Cost:income ratio

41.3%

37.7%

38.7%

 

 

 

 

 

 

 

The Institutional Banking electronic platform, eQ, is receiving positive Net Promoter Score (NPS) ratings and within our local banking business,  321, or 68%, of approved savings account applications by customers were paperless or required no signatures in Q3 2019, an increase of 34% in comparison to Q2 2019.

Total income was £5 million, or 3.2%, lower than Q3 2018 reflecting deposit pricing initiatives and lower funding income. Net interest margin decreased by 13 basis points compared with Q2 2019 principally due to the impact of US rate movements on our Institutional Banking business and increased central bank balances.

Operating expenses of £62 million were £2 million or 3.3%, higher compared with Q3 2018. Excluding strategic costs, operating expenses were flat on Q3 2018 as lower back office operations costs were offset by headcount increases associated with becoming a standalone bank. 

Net loans to customers increased by £0.2 billion compared with Q2 2019 due to activity in the Institutional Banking sector, and continues to show year on year growth. Customer deposits increased by £1.0 billion compared with Q2 2019 due to activity across all customer sectors.

 

 

NatWest Markets(1)

 

Quarter ended

 

 

As at

 

30 September

30 June

30 September

 

 

30 September

30 June

31 December

 

2019

2019

2018

 

 

2019

2019

2018

 

£m

£m

£m

 

 

£bn

£bn

£bn

Total income

150

686

569

 

Funded Assets

142.7

133.4

111.4

 of which: Core income excluding

 

 

 

 

RWAs

43.8

41.4

44.9

                 own credit adjustments

184

325

331

 

 

 

 

 

 of which: Legacy income

(23)

366

218

 

 

 

 

 

 of which: Own credit adjustments

(11)

(5)

20

 

 

 

 

 

Operating expenses

(348)

(344)

(478)

 

 

 

 

 

Impairment releases/(losses)

5

20

(4)

 

 

 

 

 

Operating (loss)/profit

(193)

362

87

 

 

 

 

 

Return on equity

(8.7%)

4.4%

1.8%

 

 

 

 

 

Cost:income ratio

232.0%

50.1%

84.0%

 

 

 

 

 

 

Note:

(1)    The NatWest Markets operating segment should not be assumed to be the same as the NatWest Markets Plc legal entity or group. NatWest Markets Plc entity includes the Central items & other segment but excludes NatWest Markets N.V. for statutory reporting.

Total income decreased by £419 million to £150 million compared with Q3 2018, primarily reflecting insurance indemnity recoveries in the prior year and lower core income in Q3 2019. Core income of £184 million decreased by £147 million, or 44.4%, compared with Q3 2018. The reduction was due to challenging market conditions, principally affecting Rates income, most significantly during August. Rates income was impacted due to elevated hedging costs caused by reduced liquidity and wider bid-offer spreads, as the market experienced sustained curve flattening across global fixed income markets.

Operating expenses of £348 million were £130 million or 27.2%, lower compared with Q3 2018. Excluding strategic, litigation and conduct costs, operating expenses increased by £10 million, or 3.7%, compared with Q3 2018 reflecting an elevated level of provision release in the prior year, costs associated with becoming a standalone bank and investment in NatWest Markets N.V..

RWAs increased by £2.4 billion in the quarter largely due to the requirement to hold higher capital on derivative assets driven by market moves in August and September.

 

9

RBS – Q3 2019 Results

 


 

 

Central items & other

 

Quarter ended

 

 

30 September

30 June

30 September

 

 

 

 

2019

2019

2018

 

 

 

 

£m

£m

£m

 

 

 

Central items not allocated

162

337

(4)

 

 

 

 

 

Central items not allocated represent a gain of £162 million in the quarter, principally reflecting reimbursement of £162 million under indemnification agreements relating to residential mortgage-backed securities. Operating expenses of (£201) million were £425 million, lower compared with Q3 2018. Excluding strategic, litigation and conduct costs, operating expenses decreased by £70 million reflecting one-off releases and innovation and other costs that were held centrally in Q3 2018 but are now allocated to the franchises. Across RBS, costs reduced by £20 million compared with Q3 2018.

 

 

10

RBS – Q3 2019 Results

 


 

 

Segment performance

 

Nine months ended 30 September 2019

 

Personal & Ulster

 

Commercial & Private

 

 

Central

 

UK Personal

Ulster

 

Commercial

Private

RBS

NatWest

items &

Total

 

Banking

Bank RoI

 

Banking

Banking

International

Markets

other (1) 

RBS

 

£m

£m

 

£m

£m

£m

£m

£m

£m

Income statement

 

 

 

 

 

 

 

 

 

Net interest income

3,118

302

 

2,127

391

361

(184)

(105)

6,010

Non-interest income

553

125

 

1,115

191

99

890

60

3,033

Own credit adjustments

-

1

 

-

-

-

(58)

(1)

(58)

Strategic disposals

-

-

 

-

-

-

444

591

1,035

Total income

3,671

428

 

3,242

582

460

1,092

545

10,020

Direct expenses

 

 

 

 

 

 

 

 

 

  - staff costs

(470)

(159)

 

(568)

(122)

(89)

(508)

(816)

(2,732)

  - other costs

(259)

(70)

 

(229)

(52)

(37)

(128)

(1,637)

(2,412)

Indirect expenses

(1,032)

(131)

 

(863)

(145)

(40)

(246)

2,457

-

Strategic costs

 

 

 

 

 

 

 

 

 

  - direct

(8)

(12)

 

(37)

-

(9)

(104)

(674)

(844)

  - indirect

(143)

(19)

 

(153)

(30)

(6)

(37)

388

-

Litigation and conduct costs

(918)

(21)

 

(50)

(2)

-

(3)

184

(810)

Operating expenses

(2,830)

(412)

 

(1,900)

(351)

(181)

(1,026)

(98)

(6,798)

Operating profit before impairment (losses)/releases

841

16

 

1,342

231

279

66

447

3,222

Impairment (losses)/releases

(312)

38

 

(310)

5

3

41

(1)

(536)

Operating profit

529

54

 

1,032

236

282

107

446

2,686

Additional information

 

 

 

 

 

 

 

 

 

Return on equity (2

7.8%

3.4%

 

8.7%

16.7%

28.5%

(2.2%)

nm

6.8%

Cost:income ratio (2

77.1%

96.3%

 

57.2%

60.3%

39.3%

94.0%

nm

67.5%

Total assets (£bn)

176.7

26.1

 

166.6

22.6

31.2

318.3

35.0

776.5

Funded assets (£bn)

176.7

26.0

 

166.6

22.6

31.2

142.7

34.9

600.7

Net loans to customers - amortised cost (£bn)

154.6

19.0

 

101.5

15.2

13.8

9.1

6.3

319.5

Loan impairment rate (2) 

27bps

(26)bps

 

40bps

nm

nm

nm

nm

22bps

Impairment provisions (£bn)

(1.3)

(0.6)

 

(1.2)

-

-

(0.1)

(0.1)

(3.3)

Impairment provisions - stage 3 (£bn)

(0.7)

(0.6)

 

(0.9)

-

-

(0.1)

-

(2.3)

Customer deposits (£bn)

147.9

18.8

 

135.7

28.2

29.1

3.3

6.7

369.7

Risk-weighted assets (RWAs) (£bn)

37.5

13.3

 

77.0

10.0

6.5

43.8

1.4

189.5

RWA equivalent (RWAes) (£bn)

38.4

13.6

 

78.1

10.0

6.6

48.9

1.7

197.3

Employee numbers (FTEs - thousands)

21.0

3.0

 

10.4

1.9

1.8

5.1

22.5

65.7

Average interest earning assets (£bn)

165.3

25.2

 

145.8

21.5

29.3

35.1

nm

445.1

Net interest margin

2.52%

1.60%

 

1.95%

2.44%

1.65%

(0.70%)

nm

1.81%

Third party customer asset rate

3.26%

2.28%

 

3.17%

2.92%

1.73%

nm

nm

nm

Third party customer funding rate

(0.38%)

(0.16%)

 

(0.43%)

(0.44%)

(0.14%)

nm

nm

nm

                             

For the notes to this table, refer to page 15. nm = not meaningful.

11

RBS – Q3 2019 Results

 


 

 

Segment performance

 

Nine months ended 30 September 2018

 

Personal & Ulster

 

Commercial & Private

 

 

Central

 

 

UK Personal

Ulster

 

Commercial

Private

RBS

NatWest

items &

Total

 

Banking

Bank RoI

 

Banking

Banking

International

Markets

other (1) 

RBS

 

£m

£m

 

£m

£m

£m

£m

£m

£m

Income statement

 

 

 

 

 

 

 

 

 

Net interest income

3,222

334

 

2,131

385

343

82

(17)

6,480

Non-interest income

586

129

 

1,355

192

96

1,149

298

3,805

Own credit adjustments

-

-

 

-

-

-

59

-

59

Total income

3,808

463

 

3,486

577

439

1,290

281

10,344

Direct expenses

 

 

 

 

 

 

 

 

 

  - staff costs

(532)

(149)

 

(554)

(122)

(77)

(429)

(927)

(2,790)

  - other costs

(186)

(76)

 

(178)

(44)

(45)

(176)

(1,842)

(2,547)

Indirect expenses

(1,050)

(133)

 

(891)

(157)

(56)

(292)

2,579

-

Strategic costs

 

 

 

 

 

 

 

 

 

  - direct

(14)

1

 

(28)

-

(2)

(106)

(500)

(649)

  - indirect

(122)

(8)

 

(65)

(11)

(4)

(21)

231

-

Litigation and conduct costs

(206)

(54)

 

(7)

(1)

10

(125)

(807)

(1,190)

Operating expenses

(2,110)

(419)

 

(1,723)

(335)

(174)

(1,149)

(1,266)

(7,176)

Operating profit/(loss) before impairment (losses)/releases

1,698

44

 

1,763

242

265

141

(985)

3,168

Impairment (losses)/releases

(197)

(34)

 

(142)

(2)

-

(8)

2

(381)

Operating profit/(loss)

1,501

10

 

1,621

240

265

133

(983)

2,787

Additional information

 

 

 

 

 

 

 

 

 

Return on equity (2) 

27.3%

0.5%

 

13.2%

16.3%

26.0%

0.2%

nm

5.3%

Cost:income ratio (2) 

55.4%

90.5%

 

48.1%

58.1%

39.6%

89.1%

nm

69.1%

Total assets (£bn)

171.7

25.3

 

167.9

21.4

29.0

253.3

51.3

719.9

Funded assets (£bn)

171.7

25.3

 

167.9

21.4

29.0

120.9

51.1

587.3

Net loans to customers - amortised cost (£bn)

149.2

19.2

 

102.3

14.2

13.0

8.0

(0.1)

305.8

Loan impairment rate (2) 

17bps

22bps

 

18bps

nm

nm

nm

nm

16bps

Impairment provisions (£bn)

(1.1)

(1.2)

 

(1.3)

(0.1)

-

(0.2)

-

(3.9)

Impairment provisions - stage 3 (£bn)

(0.7)

(1.0)

 

(1.1)

-

-

(0.1)

-

(2.9)

Customer deposits (£bn)

144.8

17.9

 

135.0

27.2

26.9

2.6

6.2

360.6

Risk-weighted assets (RWAs) (£bn)

34.1

16.5

 

80.3

9.5

6.9

46.5

0.7

194.5

RWA equivalent (RWAes) (£bn)

35.5

16.6

 

83.8

9.5

6.9

49.9

1.0

203.2

Employee numbers (FTEs - thousands)

22.3

3.1

 

10.6

1.9

1.7

4.9

24.1

68.6

Average interest earning assets (£bn)

160.3

24.7

 

144.9

20.3

27.4

27.0

nm

435.2

Net interest margin

2.69%

1.81%

 

1.96%

2.53%

1.67%

0.41%

nm

1.99%

Third party customer asset rate

3.37%

2.40%

 

2.97%

2.87%

2.38%

nm

nm

nm

Third party customer funding rate

(0.30%)

(0.21%)

 

(0.26%)

(0.21%)

(0.10%)

nm

nm

nm

                         

For the notes to this table, refer to page 15. nm = not meaningful.

12

RBS – Q3 2019 Results

 


 

 

Segment performance

 

Quarter ended 30 September 2019

 

Personal & Ulster

 

Commercial & Private

 

 

Central

 

 

UK Personal

Ulster

 

Commercial

Private

RBS

NatWest

items &

Total

 

Banking

Bank RoI

 

Banking

Banking

International

Markets

other (1) 

RBS

 

£m

£m

 

£m

£m

£m

£m

£m

£m

Income statement

 

 

 

 

 

 

 

 

 

Net interest income

1,034

102

 

703

130

119

(62)

(20)

2,006

Non-interest income

190

43

 

374

68

31

223

(20)

909

Own credit adjustments

-

-

 

-

-

-

(11)

(1)

(12)

Total income

1,224

145

 

1,077

198

150

150

(41)

2,903

Direct expenses

 

 

 

 

 

 

 

 

 

  - staff costs

(157)

(53)

 

(194)

(40)

(30)

(159)

(258)

(891)

  - other costs

(95)

(22)

 

(74)

(17)

(14)

(42)

(578)

(842)

Indirect expenses

(357)

(43)

 

(294)

(49)

(13)

(81)

837

-

Strategic costs

 

 

 

 

 

 

 

 

 

  - direct

(12)

(3)

 

(5)

-

(4)

(55)

(136)

(215)

  - indirect

(68)

(9)

 

(67)

(13)

(1)

(7)

165

-

Litigation and conduct costs

(912)

(1)

 

(4)

-

-

(4)

171

(750)

Operating expenses

(1,601)

(131)

 

(638)

(119)

(62)

(348)

201

(2,698)

Operating (loss)/profit before impairment (losses)/releases

(377)

14

 

439

79

88

(198)

160

205

Impairment (losses)/releases

(131)

17

 

(108)

2

-

5

2

(213)

Operating (loss)/profit

(508)

31

 

331

81

88

(193)

162

(8)

Additional information

 

 

 

 

 

 

 

 

 

Return on equity (2) 

(26.8%)

5.8%

 

8.4%

16.8%

26.0%

(8.7%)

nm

(3.8%)

Cost:income ratio (2) 

130.8%

90.3%

 

57.9%

60.1%

41.3%

232.0%

nm

92.9%

Total assets (£bn)

176.7

26.1

 

166.6

22.6

31.2

318.3

35.0

776.5

Funded assets (£bn)

176.7

26.0

 

166.6

22.6

31.2

142.7

34.9

600.7

Net loans to customers - amortised cost (£bn)

154.6

19.0

 

101.5

15.2

13.8

9.1

6.3

319.5

Loan impairment rate (2) 

34bps

(35)bps

 

42bps

nm

nm

nm

nm

26bps

Impairment provisions (£bn)

(1.3)

(0.6)

 

(1.2)

-

-

(0.1)

(0.1)

(3.3)

Impairment provisions - stage 3 (£bn)

(0.7)

(0.6)

 

(0.9)

-

-

(0.1)

-

(2.3)

Customer deposits (£bn)

147.9

18.8

 

135.7

28.2

29.1

3.3

6.7

369.7

Risk-weighted assets (RWAs) (£bn)

37.5

13.3

 

77.0

10.0

6.5

43.8

1.4

189.5

RWA equivalent (RWAes) (£bn)

38.4

13.6

 

78.1

10.0

6.6

48.9

1.7

197.3

Employee numbers (FTEs - thousands)

21.0

3.0

 

10.4

1.9

1.8

5.1

22.5

65.7

Average interest earning assets (£bn)

168.1

26.2

 

146.7

22.0

30.4

38.6

nm

454.4

Net interest margin

2.44%

1.55%

 

1.90%

2.35%

1.55%

(0.64%)

nm

1.75%

Third party customer asset rate

3.22%

2.23%

 

3.11%

2.87%

1.69%

nm

nm

nm

Third party customer funding rate

(0.38%)

(0.15%)

 

(0.43%)

(0.43%)

(0.15%)

nm

nm

nm

                     

For the notes to this table, refer to page 15. nm = not meaningful. 

13

RBS – Q3 2019 Results

 


 

 

Segment performance

 

Quarter ended 30 June 2019

 

 

Personal & Ulster

 

Commercial & Private

 

 

Central

 

 

UK Personal

Ulster

 

Commercial

Private

RBS

NatWest

items &

Total

 

Banking

Bank RoI

 

Banking

Banking

International

Markets

other (1) 

RBS

 

£m

£m

 

£m

£m

£m

£m

£m

£m

Income statement

 

 

 

 

 

 

 

 

 

Net interest income

1,032

102

 

716

129

125

(91)

(42)

1,971

Non-interest income

170

35

 

367

62

34

338

71

1,077

Own credit adjustments

-

1

 

-

-

-

(5)

1

(3)

Strategic disposals

-

-

 

-

-

-

444

591

1,035

Total income

1,202

138

 

1,083

191

159

686

621

4,080

Direct expenses

 

 

 

 

 

 

 

 

 

  - staff costs

(155)

(54)

 

(184)

(41)

(31)

(176)

(264)

(905)

  - other costs

(90)

(22)

 

(80)

(17)

(10)

(38)

(511)

(768)

Indirect expenses

(297)

(41)

 

(260)

(45)

(13)

(76)

732

-

Strategic costs

 

 

 

 

 

 

 

 

 

  - direct

4

(4)

 

(12)

-

(3)

(31)

(388)

(434)

  - indirect

(49)

(5)

 

(50)

(10)

(3)

(17)

134

-

Litigation and conduct costs

(7)

(19)

 

(36)

(2)

-

(6)

15

(55)

Operating expenses

(594)

(145)

 

(622)

(115)

(60)

(344)

(282)

(2,162)

Operating profit/(loss) before impairment (losses)/releases

608

(7)

 

461

76

99

342

339

1,918

Impairment (losses)/releases

(69)

10

 

(197)

(1)

2

20

(2)

(237)

Operating profit

539

3

 

264

75

101

362

337

1,681

Additional information

 

 

 

 

 

 

 

 

 

Return on equity (2) 

26.5%

0.6%

 

6.2%

15.9%

30.8%

4.4%

nm

15.8%

Cost:income ratio (2) 

49.4%

105.1%

 

56.1%

60.2%

37.7%

50.1%

nm

52.6%

Total assets (£bn)

173.9

26.4

 

165.6

21.9

30.4

278.9

32.8

729.9

Funded assets (£bn)

173.9

26.4

 

165.6

21.9

30.4

133.4

32.7

584.3

Net loans to customers - amortised cost (£bn)

151.9

19.0

 

101.4

14.7

13.6

9.3

0.7

310.6

Loan impairment rate (2) 

18bps

(20)bps

 

77bps

nm

nm

nm

nm

30bps

Impairment provisions (£bn)

(1.2)

(0.7)

 

(1.2)

-

-

(0.1)

-

(3.2)

Impairment provisions - stage 3 (£bn)

(0.7)

(0.6)

 

(0.9)

-

-

(0.1)

-

(2.3)

Customer deposits (£bn)

147.5

19.0

 

133.4

28.0

28.1

2.8

2.8

361.6

Risk-weighted assets (RWAs) (£bn)

37.0

14.2

 

77.8

9.7

6.9

41.4

1.5

188.5

RWA equivalent (RWAes) (£bn)

38.1

14.5

 

79.3

9.7

7.0

46.1

1.8

196.5

Employee numbers (FTEs - thousands)

21.3

3.1

 

10.5

1.9

1.8

5.0

23.0

66.6

Average interest earning assets (£bn)

164.8

25.3

 

146.1

21.2

29.8

34.4

nm

444.8

Net interest margin

2.51%

1.62%

 

1.97%

2.44%

1.68%

(1.05%)

nm

1.78%

Third party customer asset rate

3.25%

2.29%

 

3.18%

2.89%

1.79%

nm

nm

nm

 

Third party customer funding rate

(0.38%)

(0.15%)

 

(0.42%)

(0.45%)

(0.13%)

nm

nm

nm

 

                                   

For the notes to this table, refer to page 15. nm = not meaningful. 

14

RBS – Q3 2019 Results

 


 

 

Segment performance

 

Quarter ended 30 September 2018

 

 

Personal & Ulster

 

Commercial & Private

 

 

Central

 

 

UK Personal

Ulster

 

Commercial

Private

RBS

NatWest

items &

Total

 

Banking

Bank RoI

 

Banking

Banking

International

Markets

other (1) 

RBS

 

£m

£m

 

£m

£m

£m

£m

£m

£m

Income statement

 

 

 

 

 

 

 

 

 

Net interest income

1,083

110

 

731

133

124

15

(42)

2,154

Non-interest income

174

41

 

365

62

31

534

261

1,468

Own credit adjustments

-

-

 

-

-

-

20

-

20

Total income

1,257

151

 

1,096

195

155

569

219

3,642

Direct expenses

 

 

 

 

 

 

 

 

 

  - staff costs

(172)

(51)

 

(180)

(39)

(26)

(120)

(299)

(887)

  - other costs

(69)

(31)

 

(64)

(16)

(12)

(61)

(613)

(866)

Indirect expenses

(342)

(45)

 

(294)

(52)

(19)

(91)

843

-

Strategic costs

 

 

 

 

 

 

 

 

 

  - direct

-

(1)

 

(8)

1

(2)

(78)

(211)

(299)

  - indirect

(37)

(2)

 

(21)

(4)

(1)

(15)

80

-

Litigation and conduct costs

(199)

(37)

 

(16)

-

-

(113)

(24)

(389)

Operating expenses

(819)

(167)

 

(583)

(110)

(60)

(478)

(224)

(2,441)

Operating profit/(loss) before impairment (losses)/releases

438

(16)

 

513

85

95

91

(5)

1,201

Impairment (losses)/releases

(66)

(60)

 

(107)

(1)

(3)

(4)

1

(240)

Operating profit/(loss) 

372

(76)

 

406

84

92

87

(4)

961

Additional information

 

 

 

 

 

 

 

 

 

Return on equity (2) 

19.4%

(12.7%)

 

9.6%

17.3%

26.9%

1.8%

nm

5.4%

Cost:income ratio (2) 

65.2%

110.6%

 

51.8%

56.4%

38.7%

84.0%

nm

66.7%

Total assets (£bn)

171.7

25.3

 

167.9

21.4

29.0

253.3

51.3

719.9

Funded assets (£bn)

171.7

25.3

 

167.9

21.4

29.0

120.9

51.1

587.3

Net loans to customers - amortised cost (£bn)

149.2

19.2

 

102.3

14.2

13.0

8.0

(0.1)

305.8

Loan impairment rate (2) 

18bps

118bps

 

41bps

nm

nm

nm

nm

31bps

Impairment provisions (£bn)

(1.1)

(1.2)

 

(1.3)

(0.1)

-

(0.2)

-

(3.9)

Impairment provisions - stage 3 (£bn)

(0.7)

(1.0)

 

(1.1)

-

-

(0.1)

-

(2.9)

Customer deposits (£bn)

144.8

17.9

 

135.0

27.2

26.9

2.6

6.2

360.6

Risk-weighted assets (RWAs) (£bn)

34.1

16.5

 

80.3

9.5

6.9

46.5

0.7

194.5

RWA equivalent (RWAes) (£bn)

35.5

16.6

 

83.8

9.5

6.9

49.9

1.0

203.2

Employee numbers (FTEs - thousands)

22.3

3.1

 

10.6

1.9

1.7

4.9

24.1

68.6

Average interest earning assets (£bn)

162.3

25.4

 

144.9

20.8

28.4

26.7

nm

443.1

Net interest margin

2.65%

1.72%

 

2.00%

2.54%

1.73%

0.22%

nm

1.93%

Third party customer asset rate

3.35%

2.42%

 

3.04%

2.91%

2.29%

nm

nm

nm

 

Third party customer funding rate

(0.31%)

(0.20%)

 

(0.28%)

(0.26%)

(0.11%)

nm

nm

nm

 

                                   

 

Notes:

(1)    Central items include unallocated transactions, including volatile items under IFRS, items related to Alawwal bank merger and RMBS related charges.

(2)    Refer to the Appendix for details of basis of preparation and reconciliation of non-IFRS performance measures where relevant.

15

RBS – Q3 2019 Results

 


 

 

Business performance summary

Capital and leverage ratios

 

End-point CRR basis

 

30 September

30 June

31 December

Capital adequacy ratios

2019

2019

2018

CET1 (%)

15.7

16.0

16.2

Tier 1 (%)