0001654954-19-008771.txt : 20190802 0001654954-19-008771.hdr.sgml : 20190802 20190802074319 ACCESSION NUMBER: 0001654954-19-008771 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20190802 FILED AS OF DATE: 20190802 DATE AS OF CHANGE: 20190802 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ROYAL BANK OF SCOTLAND GROUP PLC CENTRAL INDEX KEY: 0000844150 STANDARD INDUSTRIAL CLASSIFICATION: COMMERCIAL BANKS, NEC [6029] IRS NUMBER: 000000000 STATE OF INCORPORATION: X0 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-10306 FILM NUMBER: 19994450 BUSINESS ADDRESS: STREET 1: GOGARBURN STREET 2: PO BOX 1000 CITY: EDINBURGH, SCOTLAND STATE: X0 ZIP: EH12 1HQ BUSINESS PHONE: 441315568555 MAIL ADDRESS: STREET 1: GOGARBURN STREET 2: PO BOX 1000 CITY: EDINBURGH, SCOTLAND STATE: X0 ZIP: EH12 1HQ 6-K 1 a6653h.htm INTERIM RESULTS 2019 - PART 1 OF 2 Blueprint
 
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 02, 2019
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 2019
 
 
 
 
 
 
 
 
 

 
 
rbs.com
The Royal Bank of Scotland Group plc
Interim Results for the period ending 30 June 2019
 
RBS reported an operating profit before tax of £2,694 million, an attributable profit of £2,038 million and a return on tangible equity of 12.1% for H1 2019.
Excluding items associated with the Alawwal bank merger, as announced on 17 June 2019, H1 2019 return on tangible equity was 7.5%.
Q2 2019 operating profit before tax was £1,681 million with an attributable profit of £1,331 million and return on tangible equity of 15.8%.
RBS announces an interim ordinary dividend of 2p and a special dividend of 12p, representing £1.7 billion being returned to shareholders.
 
Supporting our customers through continued lending growth
UK Personal Banking (UK PB) gross new mortgage lending was £14.3 billion in H1 2019. Commercial Banking grew lending by £1.5 billion across SME & Mid-Corporates, Specialised business and Business Banking, while we continue to see large corporates delay financing reflecting Brexit uncertainty. NatWest Markets (NWM) helped customers raise c.£140 billion in debt capital markets in H1 2019(1).
We continue to target net lending growth across UK PB, Ulster Bank RoI, Commercial Banking and Private Banking at attractive returns. Net loans to customers increased by 2.5% on an annualised basis, increasing from £283.4 billion to £287.0 billion.
H1 2019 net impairment loss of £323 million, 21 basis points of gross customer loans, increased by £182 million compared with H1 2018 primarily reflecting a small number of single name charges in Commercial Banking. The cost of risk remains below our view of a normalised long term loss rate of 30-40 basis points.
Cost reduction of £173 million was achieved in H1 2019.
 
Continuing competitive market
Income decreased by 1.7% compared with H1 2018 excluding NWM, Central items and notable items.
Bank net interest margin (NIM) of 2.02% was 5 basis points lower than Q1 2019 primarily reflecting competitive pressures in the mortgage business and the contraction of the yield curve. Commercial Banking NIM remained broadly stable in Q2 2019.
 
Capital generation
CET1 ratio of 16.0% which, excluding the impact of the Alawwal bank merger and the dividend accrual, represents underlying capital generation of c.15 basis points in Q2 2019.
RWAs decreased by £2.3 billion in Q2 2019 as a result of a reduction due to the Alawwal bank merger, partially offset by increases in NWM and UK PB.
 
2019 outlook – unchanged(2)
We retain the outlook we provided in the 2018 Annual Report and Accounts. We anticipate a further £1.2 billion of FX recycling gains in H2 2019 upon the transfer of ownership of NWM N.V. to NWM Plc, subject to regulatory approval, which is capital and TNAV neutral.
 
2020 outlook(2)
Given current market conditions, continued economic and political uncertainty and the contraction of the yield curve, it is very unlikely that we will achieve our target return on tangible equity of more than 12% and cost:income ratio of less than 50% in 2020. These remain our strategic targets and we believe they are achievable in the medium term.
 
Notes:
(1)
NatWest Markets has acted as Active Bookrunner for Issuers across Corporate, FI and SSA sectors, helping them to raise c. £140 billion in debt capital markets in H1 2019.
(2)
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 253 to 263 of the 2018 Annual Report and Accounts and pages 46 and 47 of this document. These statements constitute forward-looking statements. Refer to Forward-looking statements in this announcement.
 
Business performance summary
 
 
 
 
 
 
 
 
 
Half year ended
 
Quarter ended
 
30 June
30 June
 
30 June
31 March
30 June
Performance key metrics and ratios (1)
2019 
2018 
 
2019 
2019 
2018 
Operating profit before tax
£2,694m
£1,826m
 
£1,681m
£1,013m
£613m
Profit attributable to ordinary shareholders
£2,038m
£888m
 
£1,331m
£707m
£96m
Net interest margin (NIM) (1)
1.83%
2.02%
 
1.78%
1.89%
2.01%
Bank net interest margin (RBS NIM excluding NWM) (1)
2.04%
2.13%
 
2.02%
2.07%
2.11%
Average interest earning assets
£440bn
£431bn
 
£445bn
£436bn
£435bn
Cost:income ratio (1)
57.2%
70.4%
 
52.6%
63.4%
80.0%
Earnings per share
 
 
 
 
 
 
  - basic
16.9p
7.4p
 
11.0p
5.9p
0.8p
  - basic fully diluted
16.8p
7.4p
 
11.0p
5.8p
0.8p
Return on tangible equity (1)
12.1%
5.3%
 
15.8%
8.3%
1.1%
Average tangible equity
£34bn
£34bn
 
£34bn
£34bn
£34bn
Average number of ordinary shares
 
 
 
 
 
 
 outstanding during the period (millions)
 
 
 
 
 
 
   - basic
12,058 
11,980 
 
12,069 
12,047 
12,003 
  - fully diluted (2)
12,096 
12,039 
 
12,104 
12,087 
12,062 
 
 
 
 
 
 
 
 
30 June
31 March
31 December
Balance sheet related key metrics and ratios (1)
2019
2019 
2018
Total assets
£729.9bn
£719.1bn
£694.2bn
Funded assets (1)
£584.3bn
£585.1bn
£560.9bn
Loans to customers - amortised cost
£310.6bn
£306.4bn
£305.1bn
Impairment provisions
£3.2bn
£3.1bn
£3.3bn
Loan impairment rate (1)
30bps
11bps
2bps
Customer deposits
£361.6bn
£355.2bn
£360.9bn
 
 
 
 
Liquidity coverage ratio (LCR)
154%
153%
158%
Liquidity portfolio
£203bn
£190bn
£198bn
Net stable funding ratio (NSFR) (3)
140%
137%
141%
Loan:deposit ratio (1)
86%
86%
85%
Total wholesale funding
£78bn
£77bn
£74bn
Short-term wholesale funding
£19bn
£19bn
£15bn
 
 
 
 
Common Equity Tier (CET1) ratio
16.0%
16.2%
16.2%
Total capital ratio
20.9%
21.1%
21.8%
Pro forma CET 1 ratio, pre dividend accrual (4)
17.1%
16.3%
16.9%
Risk-weighted assets (RWAs)
£188.5bn
£190.8bn
£188.7bn
CRR leverage ratio
5.2%
5.2%
5.4%
UK leverage ratio
5.9%
6.0%
6.2%
 
 
 
 
Tangible net asset value (TNAV) per ordinary share
290p
289p
287p
Tangible net asset value (TNAV) per ordinary share - fully diluted (1,2)
289p
288p
286p
Tangible equity
£35,036m
£34,962m
£34,566m
Number of ordinary shares in issue (millions) (5)
12,091 
12,090 
12,049 
Number of ordinary shares in issue (millions) - fully diluted (2,5)
12,124 
12,129 
12,088 
 
Notes:
(1)
Refer to Appendix 2 for details of basis of preparation and reconciliation of non-IFRS financial and performance measures where relevant.
(2)
Includes the effect of dilutive share options and convertible securities. Dilutive shares on an average basis for H1 2019 were 38 million shares and for Q2 2019 were 35 million shares; (Q1 2019 - 40 million shares, H1 2018 - 59 million shares; Q2 2018 - 59 million shares), and as at 30 June 2019 were 33 million shares (31 March 2019 - 39 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 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 final dividend related to interim profits of £363 million (3p per share). 31 March 2019 excluded a charge of £241 million (2p per share) for the Q1 2019 foreseeable dividend. 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 17 million treasury shares (31 March 2019 - 24 million shares; 31 December 2018 - 8 million shares).
 
Re-segmentation
Effective from 1 January 2019, Business Banking has been transferred from UK Personal and Business Banking (UK PBB) to Commercial Banking as the nature of the business, including distribution channels, products and customers, are more closely aligned to the Commercial Banking business. Concurrent with the transfer, UK PBB has been renamed UK Personal Banking (UK PB) and the previous franchise combining UK PBB (now UK PB) and Ulster Bank RoI has been renamed Personal & Ulster. Comparatives have been re-stated.
 
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 of, refer to Appendix 2 of this document.
 
 
Summary consolidated income statement for the period ended 30 June 2019
 
 
 
 
 
 
 
 
Half year ended
 
Quarter ended
 
30 June
30 June
 
30 June
31 March
30 June
 
2019 
2018 
 
2019 
2019 
2018 
 
£m
£m
 
£m
£m
£m
Net interest income
4,004 
4,326 
 
1,971 
2,033 
2,180 
 
 
 
 
 
 
 
Own credit adjustments
(46)
39 
 
(3)
(43)
18 
Strategic disposals
1,035 
 
1,035 
Other non-interest income
2,124 
2,337 
 
1,077 
1,047 
1,202 
 
 
 
 
 
 
 
Non-interest income
3,113 
2,376 
 
2,109 
1,004 
1,220 
 
 
 
 
 
 
 
Total income
7,117 
6,702 
 
4,080 
3,037 
3,400 
 
 
 
 
 
 
 
Litigation and conduct costs
(60)
(801)
 
(55)
(5)
(782)
Strategic costs
(629)
(350)
 
(434)
(195)
(141)
Other expenses
(3,411)
(3,584)
 
(1,673)
(1,738)
(1,801)
 
 
 
 
 
 
 
Operating expenses
(4,100)
(4,735)
 
(2,162)
(1,938)
(2,724)
 
 
 
 
 
 
 
Profit before impairment losses
3,017 
1,967 
 
1,918 
1,099 
676 
Impairment losses
(323)
(141)
 
(237)
(86)
(63)
 
 
 
 
 
 
 
Operating profit before tax
2,694 
1,826 
 
1,681 
1,013 
613 
Tax charge
(194)
(709)
 
22 
(216)
(396)
 
 
 
 
 
 
 
Profit for the period
2,500 
1,117 
 
1,703 
797 
217 
 
 
 
 
 
 
 
Attributable to:
 
 
 
 
 
 
Ordinary shareholders
2,038 
888 
 
1,331 
707 
96 
Other owners
202 
245 
 
102 
100 
144 
Non-controlling interests
260 
(16)
 
270 
(10)
(23)
 
 
 
 
 
 
 
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 
IFRS volatility in Central items & other(1)
17 
(111)
 
21 
(4)
17 
UK PB debt sale gain
26 
 
FX gains in Central items & other
20 
 
20 
19 
Commercial Banking fair value and disposal (loss)/gain
(17)
192 
 
(15)
(2)
115 
NatWest Markets legacy business disposal
(27)
(57)
 
(23)
(4)
(41)
 
 
 
 
 
 
 
Notable items within operating expenses
 
 
 
 
 
 
Push payment fraud costs
(18)
 
(18)
 
 
Litigation and conduct costs
(60)
(801)
 
(55)
(5)
(782)
      of which: US RMBS
(802)
 
(803)
         of which: DoJ
(1,040)
 
(1,040)
                         Nomura
241 
 
241 
 
Note:
(1)
IFRS volatility relates to loans which are economically hedged but for which hedge accounting is not permitted under IFRS.
 
 
 
 
Income statement overview
 
Income
Total income increased by £415 million, or 6.2%, compared with H1 2018 principally due to a £444 million gain relating to the Alawwal bank merger completion, FX recycling gains of £290 million and a £256 million legacy liability release, partially offset by lower central Treasury income, reflecting increased MREL costs and lower structural hedge income. Excluding NatWest Markets, Central items and notable items, income decreased by 1.7% compared with H1 2018 reflecting continuing margin pressure.
 
Bank NIM of 2.04% was 9 basis points lower than H1 2018 primarily reflecting competitive pressures within the personal business, while in Commercial Banking NIM increased by 3 basis points.
 
Operating expenses
Operating expenses decreased by £635 million, or 13.4%, compared with H1 2018 primarily reflecting a £741 million reduction in litigation and conduct costs, principally due to the net RMBS charge in H1 2018, partially offset by a £279 million increase in strategic costs.
 
Other expenses reduced by £173 million compared with H1 2018, despite an additional £18 million of authorised push payment fraud costs in line with new industry practice. The majority of the reduction in expenses is in Central items and reflects one-off releases in H1 2019 and innovation and other costs that were held centrally in H1 2018 which are now allocated to the franchises. Headcount reduced by c.3,400, or 4.9%, compared with H1 2018.
 
Impairments
A net impairment loss of £323 million, 21 basis points of gross customer loans, increased by £182 million compared with H1 2018 primarily reflecting a small number of single name charges in Commercial Banking and lower recoveries in UK PB, resulting from debt sales in recent years.
 
Tax
The tax charge includes a £215 million deferred tax asset credit associated with the transfer of taxable losses from NatWest Markets Plc to RBS Plc under ring-fencing regulations.
 
Non-controlling interests
Includes a charge of £274 million in relation to the gain recognised on completion of the Alawwal bank merger.
 
 
 
Business performance summary
Building the best bank for customers in the UK and Republic of Ireland
 
Customer Advocacy and Trust Scores
Our brands are our main connection with customers. Each takes a clear and differentiated position with the aim of helping us strengthen our relationship with them. For this reason we track customer advocacy for our key brands using the net-promoter score (NPS) – a commonly-used metric in banking and other industries across the world.
 
We know that we still have much to do. Our recent programme of branch closures has had a detrimental impact on NPS, particularly for the Royal Bank of Scotland. Scores here are recovering in Personal Banking, and we are optimistic the same will happen in Business Banking. We are determined to make a difference with the things that matter most to our customers. We are fixing our core processes to get our service right first time more consistently while at the same time innovating to deliver better solutions.
 
The tables below show NPS and Trust scores for our key brands.
 
Personal Banking
 
Q1 2018
Q2 2018
Q3 2018
Q4 2018
Q1 2019
Q2 2019
NatWest
12
13
12
11
11
11
Royal Bank of Scotland
(14)
(21)
(22)
(17)
(14)
(10)
Ulster Bank Northern Ireland
(6)
(11)
(9)
(10)
(3)
1
Ulster Bank Republic of Ireland
(5)
(7)
(6)
(6)
(7)
(11)
 
Source: Ipsos MORI FRS 6 month rolling data. Latest base sizes: 3,111 for NatWest (England & Wales); 421 for Royal Bank of Scotland (Scotland). 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.
Source: Coyne Research 12 month rolling data. 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”. Latest base sizes: 254 Northern Ireland; 292 Republic of Ireland
 
Business Banking
 
Q1 2018
Q2 2018
Q3 2018
Q4 2018
Q1 2019
Q2 2019
NatWest
(10)
(6)
(5)
(9)
(8)
(9)
Royal Bank of Scotland
(22)
(23)
(29)
(36)
(36)
(36)
 
Source: MarketVue Business Banking from Savanta Q2 2019. Based on interviews with businesses with an annual turnover up to £2 million. Latest base sizes: 1098 for NatWest (England & Wales), 442 for Royal Bank of Scotland (Scotland). 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.
 
 
Commercial Banking
 
Q1 2018
Q2 2018
Q3 2018
Q4 2018
Q1 2019
Q2 2019
NatWest
23
22
21
21
20
20
Royal Bank of Scotland
10
17
21
20
18
21
 
Source: MarketVue Business Banking from Savanta Q2 2019. Based on interviews with businesses with an annual turnover over £2 million. Latest base sizes: 550 for NatWest (England & Wales), 89 for Royal Bank of Scotland (Scotland). 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.
 
 
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).
 
 
Q1 2018
Q2 2018
Q3 2018
Q4 2018
Q1 2019
Q2 2019
NatWest
59
58
64
56
60
61
Royal Bank of Scotland
15
27
25
27
28
38
 
 
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: 908 for NatWest (England & Wales), 188 for Royal Bank of Scotland (Scotland).
 
 
Business performance summary
Personal & Ulster
UK Personal Banking
 
 
 
 
Half year ended
 
Quarter ended
 
 
30 June
30 June
 
30 June
31 March
30 June
 
 
2019 
2018 
 
2019 
2019 
2018 
 
 
£m
£m
 
£m
£m
£m
Total income
 
2,447 
2,551 
 
1,202 
1,245 
1,253 
Operating expenses
 
(1,229)
(1,291)
 
(594)
(635)
(605)
Impairment losses
 
(181)
(131)
 
(69)
(112)
(63)
Operating profit
 
1,037 
1,129 
 
539 
498 
585 
Return on equity
 
25.6%
31.4%
 
26.5%
24.7%
33.0%
Net interest margin
 
2.57%
2.71%
 
2.51%
2.62%
2.68%
Cost:income ratio
 
50.2%
50.6%
 
49.4%
51.0%
48.3%
 
 
 
 
 
As at
 
 
 
 
 
30 June
31 March
31 December
 
 
 
 
 
2019 
2019 
2018 
 
 
 
 
 
£bn
£bn
£bn
Net loans to customers (amortised cost)
 
 
 
 
151.9 
150.6 
148.9 
Customer deposits
 
 
 
 
147.5 
145.7 
145.3 
RWAs
 
 
 
 
37.0 
35.8 
34.3 
Loan impairment rate
 
 
 
 
18bps
30bps
38bps
 
H1 2019 compared with H1 2018
UK PB now has 6.3 million regular mobile app users, with 74% of active current account customers being regular digital users. Total digital sales volumes increased by 19% representing 48% of all sales in H1 2019. 60% of personal unsecured loan sales were via the digital channel, 4% higher than H1 2018. 55% of current accounts opened in H1 2019 were via the digital channel, with digital volumes 56% higher.
Total income was £104 million, or 4.1%, lower impacted by a £24 million reduction in debt sale gains, £7 million lower annual insurance profit share and an IFRS 9 accounting change for interest in suspense recoveries of £14 million, offset in impairments. Excluding these items, income was £59 million, or 2.3%, lower reflecting continued competitive pressure impacting mortgage margins, partially offset by increased deposit income.
Excluding strategic, litigation and conduct costs, operating expenses were £33 million, or 2.8%, lower driven by decreased staff costs associated with a 9.0% reduction in headcount and one off releases, partially offset by increased fraud costs of £15 million due to a revised customer refund approach for authorised push payments scams, annual pay award and innovation costs.
Impairments were £50 million higher reflecting lower recoveries as a result of debt sales in recent years and IFRS 9 model adjustments. The underlying default charge has increased slightly compared with H1 2018 primarily due to higher loan volumes over the past two years. Default rates in H1 2019 remain broadly stable.
Net loans to customers increased by £4.2 billion, or 2.8%, as a result of strong gross new mortgage lending and lower redemptions. Gross new mortgage lending in H1 2019 was £14.3 billion with market flow share of approximately 12%, supporting a stock share of approximately 10%.
Customer deposits increased by £4.0 billion, or 2.8%, as growth continued across current accounts and savings.
RWAs increased by £5.0 billion, or 15.6%, primarily reflecting ongoing predictive loss model recalibrations, higher lending volumes and an increase in RWAs related to the property portfolio following the introduction of IFRS 16.
Q2 2019 compared with Q1 2019
Total income was £43 million, or 3.5%, lower due to decreased savings deposit margins from the lower yield curve and continued pressure on mortgage margins. Net interest margin was 11 basis points lower due to continued pressures from both mortgages and the lower yield curve impacting savings deposit margin.
Net loans to customers increased by £1.3 billion, or 0.9%, as a result of gross new lending of both mortgages and loans. Gross new mortgage lending in the quarter was £6.7 billion. Mortgage approval share was around 13% in Q2 2019 up from 11% in Q1 2019.
Q2 2019 compared with Q2 2018
Total income decreased by £51 million, or 4.1%, primarily reflecting lower mortgage margins.
Excluding strategic, litigation and conduct costs, operating expenses were £26 million, or 4.6%, lower driven by decreased staff costs associated with a 9.0% reduction in headcount and one off releases, partially offset by increased fraud costs of £10 million due to a revised customer refund approach for authorised push payments scams and annual pay award.
 
 
Business performance summary
Ulster Bank RoI
 
 
 
 
 
 
 
 
Half year ended
 
Quarter ended
 
30 June
30 June
 
30 June
31 March
30 June
 
2019 
2018 
 
2019 
2019 
2018 
 
€m
€m
 
€m
€m
€m
Total income
324 
355 
 
158 
166 
190 
Operating expenses
(322)
(285)
 
(166)
(156)
(140)
Impairment releases
24 
30 
 
11 
13 
39 
Operating profit
26 
100 
 
23 
89 
Return on equity
2.1%
7.0%
 
0.6%
3.8%
12.5%
Net interest margin
1.63%
1.85%
 
1.62%
1.65%
1.91%
Cost:income ratio
99.3%
80.8%
 
105.1%
93.8%
74.7%
 
 
 
 
As at
 
 
 
 
30 June
31 March
31 December
 
 
 
 
2019 
2019 
2018 
 
 
 
 
€bn
€bn
€bn
Net loans to customers (amortised cost)
 
 
 
21.2 
21.1 
21.0 
Customer deposits
 
 
 
21.3 
20.3 
20.1 
RWAs
 
 
 
15.8 
16.4 
16.4 
Loan impairment rate
 
 
 
(20)bps
(24)bps
(38)bps
 
H1 2019 compared with H1 2018
Ulster Bank RoI continues to deliver digital enhancements that improve and simplify the everyday banking experience for customers. The successful launch of paperless processes for everyday banking products has made it easier and quicker for customers to move from application to drawdown. 70% of Ulster Bank RoI’s active personal current account customers are choosing to bank through digital channels. Mobile payments and transfers increased by 30% compared with H1 18.
Total income was €31 million, or 8.7%, lower primarily reflecting a decrease in income associated with the sale of a portfolio of non-performing loans (NPL), an IFRS 9 accounting change for interest in suspense recoveries of €10 million and one-off benefits in Q2 2018.
Excluding strategic, litigation and conduct costs, operating expenses were €15 million, or 5.7%, higher largely reflecting the continued focus on strengthening the bank’s risk and compliance environment and higher levies.
The net impairment release of €24 million principally reflects the net impact of an improvement in the performance of the NPL portfolio, NPL deleveraging and a change in accounting treatment of interest in suspense.
Net loans to customers decreased by €0.4 billion, or 1.9%, primarily driven by the sale of a portfolio of non-performing loans of €0.6 billion in 2018. New lending of €1.6 billion is 48.2% higher, with strong growth across all key segments.
Customer deposits increased by €1.8 billion, or 9.2%, supporting an 11 percentage point reduction in the loan to deposit ratio to 100%.
Risk weighted assets decreased by €3.2 billion, or 16.8%, largely due to the sale of a portfolio of NPLs in 2018 and an improvement in credit metrics, reflecting a more positive economic environment.
Q2 2019 compared with Q1 2019
Total income was €8 million, or 4.8%, lower largely due to an €11 million one-off benefit following a restructure of interest rate swaps on free funds in Q1 2019. Net interest margin was 3 basis points lower, primarily due to an increase in cash placements. 
Net loans to customers increased by €0.1 billion, or 0.5%, while customer deposits increased by €1.0 billion, or 4.9%.
Q2 2019 compared with Q2 2018
Total income decreased by €32 million, or 16.8%, primarily reflecting a reduction in income associated with the NPL portfolio and non-recurring funding and asset sale income benefits in Q2 2018.
A net impairment release of €11 million principally reflects the net impact of improvement in the performance of the NPL portfolio, non-performing lending deleveraging and a change in the accounting treatment of interest in suspense.
 
 
Business performance summary
Commercial
Commercial Banking
 
 
 
 
 
 
 
 
 
 
Half year ended
 
Quarter ended
 
 
30 June
30 June
 
30 June
31 March
30 June
 
 
2019 
2018 
 
2019 
2019 
2018 
 
 
£m
£m
 
£m
£m
£m
Total income
 
2,165 
2,390 
 
1,083 
1,082 
1,232 
Operating expenses
 
(1,262)
(1,140)
 
(622)
(640)
(545)
Impairment losses
(202)
(35)
 
(197)
(5)
(23)
Operating profit
 
701 
1,215 
 
264 
437 
664 
Return on equity
 
8.8%
15.1%
 
6.2%
11.5%
16.4%
Net interest margin
 
1.98%
1.95%
 
1.97%
1.99%
1.98%
Cost:income ratio
 
56.9%
46.4%
 
56.1%
57.8%
43.0%
 
 
 
 
 
 
As at
 
 
 
 
 
 
30 June
31 March
31 December
 
 
 
 
 
2019 
2019 
2018 
 
 
 
 
 
£bn
£bn
£bn
Net loans to customer (amortised cost)
 
 
101.4 
100.8 
101.4 
Customer deposits
 
 
 
 
133.4 
131.8 
134.4 
RWAs
 
 
 
 
77.8 
78.1 
78.4 
Loan impairment rate
 
 
 
 
77bps
2bps
2bps
 
H1 2019 compared with H1 2018
The Bankline mobile app now has over 12,000 users, up from c.2,500 in Q1 2019, of which over 3,500 are daily users. Our customer support chatbot, Cora, now processes over 7,000 conversations a month, with consistently positive feedback. The improved lending journey continues to provide a decision in principle in under 24 hours for approximately 74% of loans.
Total income decreased by £225 million, or 9.4%, reflecting asset disposal and fair value gains of £192 million in H1 2018 in comparison to £17 million asset disposal and fair value losses in H1 2019 combined with lower non-interest income, partially offset by higher deposit income.
Excluding strategic, litigation and conduct costs, operating expenses were £13 million, or 1.2%, higher primarily reflecting an £11 million one-off item in Q1 2018, £11 million higher operating lease depreciation, increased remediation, innovation and technology spend, partially offset by £28 million lower back office operational costs.
Impairments were £167 million higher primarily reflecting a small number of single name charges and releases related to data quality improvements in the prior year.
Net loans to customers were £1.2 billion, or 1.2%, lower due to capital actions taken in H2 2018, business transfers of £0.9 billion and reductions relating to EU divestment, partially offset by growth of £1.3 billion across SME & Mid-Corporates, Specialised business and Business Banking. Net loans to customers remained stable in the first half of 2019 at £101.4 billion with reductions relating to EU divestment and Large Corporates & Institutions offset by growth of £1.5 billion across SME & Mid-Corporates, Specialised business and Business Banking.
Customer deposits decreased by £1.7 billion, due to business transfers of £1.0 billion to RBSI in H2 2018 and net outflows of £0.7 billion supporting a loan:deposit ratio of 76%.
RWAs decreased by £5.3 billion, or 6.4%, driven by active capital management in H2 2018 and business transfers of £1.9 billion, partially offset by model updates and underlying business growth.
Q2 2019 compared with Q1 2019
Total income remained stable at £1,083 million as balance growth was partially offset by £15 million of asset disposal and fair value losses in comparison with a £2 million loss in Q1 2019. Net interest margin was broadly stable, reducing by 2 basis points largely due to lower deposit funding benefits.
Excluding strategic, litigation and conduct costs, operating expenses were £50 million lower, due to a reduction in back office operational costs.
Impairments of £197 million increased by £192 million primarily reflecting a small number of single name charges in the second quarter.
Net loans to customers increased by £0.6 billion to £101.4 billion as growth across SME & Mid-Corporates, Specialised business and Business Banking was partially offset by £0.4 billion Large Corporates & Institutions Western European transfers to NatWest Markets and planned reductions in EU divestment.
Q2 2019 compared with Q2 2018
Total income decreased by £149 million, or 12.1%, reflecting asset disposal and fair value losses of £15 million compared to asset disposal and fair value gains of £115 million in Q2 2018 and lower non-interest income.
 
 
 
 
Business performance summary
Private Banking
 
 
 
 
 
 
 
 
 
 
Half year ended
 
Quarter ended
 
 
30 June
30 June
 
30 June
31 March
30 June
 
 
2019 
2018 
 
2019 
2019 
2018 
 
 
£m
£m
 
£m
£m
£m
Total income
 
384 
382 
 
191 
193 
198 
Operating expenses
 
(232)
(225)
 
(115)
(117)
(104)
Impairment releases/(losses)
 
(1)
 
(1)
Operating profit
 
155 
156 
 
75 
80 
94 
Return on equity
 
16.6%
15.8%
 
15.9%
17.1%
19.3%
Net interest margin
 
2.48%
2.53%
 
2.44%
2.52%
2.54%
Cost:income ratio
 
60.4%
58.9%
 
60.2%
60.6%
52.5%
 
 
 
 
 
As at
 
 
 
 
 
30 June
31 March
31 December
 
 
 
 
 
2019 
2019 
2018 
 
 
 
 
 
£bn
£bn
£bn
Net loans to customers (amortised cost)
 
 
 
 
14.7 
14.4 
14.3 
Customer deposits
 
 
 
 
28.0 
26.9 
28.4 
RWAs
 
 
 
 
9.7 
9.6 
9.4 
 
 
 
 
 
 
 
 
AUMs
 
 
 
 
21.9 
21.0 
19.8 
Assets Under Administration (1)
 
 
 
 
7.0 
6.8 
6.6 
Total Assets Under Management and Administration (AUMA)
 
 
 
 
28.9 
27.8 
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.
H1 2019 compared with H1 2018
Private Banking offers a service-led, digitally enabled experience for its clients with 74% of clients registered for digital banking, 85% of whom are active users. Coutts Connect, the social platform which allows clients to network and build working relationships, continues to attract users with a 10% increase in registered clients in the quarter. Over 1,500 clients are registered, with over 70% of conversations on a client to client basis.
Total income remained broadly stable as net interest income increased by £9 million due to deposit income benefits and asset and deposit volume growth, whilst non interest income reduced by £7 million due to movements in investment income one-offs.
Excluding strategic, litigation and conduct costs, operating expenses were £3 million lower reflecting decreased back office operational costs, partially offset by one-off non staff related costs.
Impairments were £4 million lower primarily due to data quality improvements and single name releases.
Net loans to customers increased by £0.9 billion, or 6.5%, primarily driven by mortgage lending.
Customer deposits increased by £1.6 billion, or 6.1%, as Q4 2018 inflows were maintained.
RWAs increased by £0.3 billion, or 3.2%, relative to 6.5% growth in net loans to customers.
Assets under management in Private Banking remained broadly stable. For the year to date, growth of £2.1 billion reflects positive investment performance of £1.9 billion following adverse market movements in Q4 2018 and net new business of £0.2 billion.
Total assets under management and administration overseen by Private Banking increased by £0.4 billion to £28.9 billion in comparison to H1 2018. For the year to date growth of £2.5 billion reflects £2.3 billion investment performance and net new business of £0.2 billion.
Q2 2019 compared with Q1 2019
Total income remained broadly stable as reduced deposit funding benefits were partially offset by balance growth and higher investment income. Net interest margin decreased by 8 basis points to 2.44% mainly due to lower deposit funding benefits.
Excluding strategic, litigation and conduct costs, operating expenses were £7 million lower due to a reduction in back office operational costs.
Impairments were £5 million higher due to single name releases in Q1 2019.
Net loans to customers increased by £0.3 billion driven by mortgage lending.
Assets under management in Private Banking increased by £0.9 billion driven by investment performance of £0.7 billion and net new business of £0.2 billion.
Total assets under management and administration overseen by Private Banking increased by £1.1 billion as a result of investment performance of £0.9 billion and net new business of £0.2 billion.
Q2 2019 compared with Q2 2018
Total income reduced by £7 million, or 3.5%, due to lower non interest income as a result of a £4 million one-off benefit in Q2 2018 related to MIFID II and a £3 million one-off investment income charge in Q2 2019.
 
 
Business performance summary
RBS International
 
 
 
 
 
 
 
 
 
 
Half year ended
 
Quarter ended
 
 
30 June
30 June
 
30 June
31 March
30 June
 
 
2019 
2018 
 
2019 
2019 
2018 
 
 
£m
£m
 
£m
£m
£m
Total income
 
310 
284 
 
159 
151 
147 
Operating expenses
 
(119)
(114)
 
(60)
(59)
(55)
Impairment releases
 
 
Operating profit
 
194 
173 
 
101 
93 
95 
Return on equity
 
29.7%
25.7%
 
30.8%
28.6%
27.9%
Net interest margin
 
1.69%
1.64%
 
1.68%
1.70%
1.72%
Cost:income ratio
 
38.4%
40.1%
 
37.7%
39.1%
37.4%
 
 
 
 
 
As at
 
 
 
 
 
30 June
31 March
31 December
 
 
 
 
 
2019 
2019 
2018 
 
 
 
 
 
£bn
£bn
£bn
Net loans to customers (amortised cost)
 
 
 
 
13.6 
13.3 
13.3 
Customer deposits
 
 
 
 
28.1 
27.6 
27.5 
RWAs
 
 
 
 
6.9 
7.0 
6.9 
 
H1 2019 compared with H1 2018
The migration of customers to the new Institutional Banking electronic platform is now complete, improving the customer experience, functionality and resilience of the platform. The Retail mobile banking app has seen a 9% increase in registrations in 2019 and 40% of Local Banking customers are now regular digital users. As part of the strategy to make RBS International an easier bank to deal with, it launched straight through processing for existing customers to open new savings accounts online. 66% of savings accounts opened since launch have used the process without need for paper or a signature.
Total income was £26 million, or 9.2%, higher driven by higher customer deposit margins, £12 million, and £5 million due to higher lending primarily in the Institutional Banking sector.
Operating expenses were £5 million, or 4.4% higher principally resulting from a £10 million litigation and conduct provision release in the prior year. Excluding strategic, litigation and conduct costs, operating expenses were £12 million, or 9.9%, lower driven by a reduction in back office costs.
A net impairment release of £3 million remained stable compared with prior year, reflecting a number of one-off releases.
Net loans to customers were £0.6 billion, or 4.6%, higher as a result of higher volumes in the Institutional Banking sector.
Customer deposits decreased £0.3 billion, or 1.1% as a result of lower short term inflows in Institutional Banking in H1 2019 compared with the prior year, partially offset by a £1.0 billion transfer from Commercial Banking in H2 2018 and underlying growth in the Funds sector in H1 2019.
RWAs were £0.1 billion, or 1.5%, higher as a result of increased lending balances.
H1 2019 return on equity of 29.7% compared with 25.7% in H1 2018.
Q2 2019 compared with Q1 2019
Total income was £8 million higher due to increased lending and funding income partially offset by lower non utilisation fees. Net interest margin is 2 basis points lower due to lower returns on investment of surplus deposits. 
Net loans to customers were £0.3 billion higher reflecting increased lending in the Institutional Banking sector.
Q2 2019 compared with Q2 2018
Total expenses were £5 million, or 9.1%, higher following a £9 million litigation and conduct release in Q2 2018 partially offset by lower remediation spend.
 
 
 
Business performance summary
NatWest Markets(1)
 
 
Half year ended
 
Quarter ended
 
 
30 June
30 June
 
30 June
31 March
30 June
 
 
2019 
2018 
 
2019 
2019 
2018 
 
 
£m
£m
 
£m
£m
£m
Total income
 
942  
721  
 
686  
256  
284  
  of which: Core income excluding own credit adjustments
702  
728  
 
325  
377  
316  
  of which: Legacy income
 
287  
(46)
 
366  
(79)
(50)
Own credit adjustments
 
(47)
39  
 
(5)
(42)
18  
Operating expenses
 
(678)
(671)
 
(344)
(334)
(322)
Impairment releases/(losses)
 
36  
(4)
 
20  
16  
(13)
Operating profit/(loss)
 
300  
46  
 
362  
(62)
(51)
Return on equity
 
1.0%
(0.5%)
 
4.4%
(2.4%)
(3.0%)
Cost:income ratio
 
72.0%
93.1%
 
50.1%
130.5%
113.4%
 
 
 
 
 
As at
 
 
 
 
 
30 June
31 March
31 December
 
 
 
 
 
2019 
2019 
2018 
 
 
 
 
 
£bn
£bn
£bn
Funded assets
 
 
 
 
133.4  
138.8  
111.4  
RWAs
 
 
 
 
41.4  
44.6  
44.9  
 
Note:
(1)
The NatWest Markets operating segment is not 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. Refer to NatWest Markets Plc and NatWest Markets N.V. interim results that were released on 2 August 2019 for further details.
 
H1 2019 compared with H1 2018
NatWest Markets continues to use technology to enhance the way it provides smart solutions to clients. For example, physical data centres are in the process of being moved to the cloud; new collaboration channels such as Symphony allows us to engage and transact with clients in new ways and machine learning across written customer communication helps us understand and eliminate common client problems.
Total income increased by £221 million, or 30.7%, to £942 million including a £444 million gain relating to the Alawwal bank merger completion. Income in the core business fell by £26 million, or 3.6%. Customer activity remained robust in difficult market conditions but the business was impacted by higher funding costs associated with becoming a standalone non ring-fenced bank. Own credit adjustments deteriorated by £86 million reflecting the tightening of credit spreads in H1 2019.
Excluding strategic, litigation and conduct costs, operating expenses continued to fall, down £25 million, or 4.0%, reflecting lower back office operations costs.
RWAs decreased by £8.7 billion reflecting the reduction in Alawwal bank RWAs from £5.8 billion to £1.1 billion and other legacy reductions. The remaining Alawwal bank RWAs reflect NWM Plc’s holding following the merger.
Q2 2019 compared with Q1 2019
Total income increased by £430 million primarily reflecting the Alawwal bank gain in legacy. Income in the core business fell by £52 million reflecting the impact of difficult market conditions.
RWAs decreased by £3.2 billion reflecting the Alawwal bank reduction, partially offset by an increase in the core business primarily due to increased credit risk as a result of customer activity in the banking book and the transfer of Western European clients from Commercial Banking.
Excluding strategic, litigation and conduct costs, operating expenses continued to fall, down £20 million in the quarter primarily due to lower back office operations costs.
Q2 2019 compared with Q2 2018
Total income increased by £402 million primarily reflecting the Alawwal gain in legacy. Income in the core business increased by £9 million, or 2.8% as customer activity remained robust in difficult market conditions, although Q2 2018 was impacted by some turbulence in European bond markets.
Excluding strategic, litigation and conduct costs, operating expenses continued to fall, down £15 million, or 4.9%, due to lower back office operations costs.
 
 
Business performance summary
 
 
 
 
 
 
 
Central items & other
 
 
 
 
 
 
 
 
 
Half year ended
 
Quarter ended
 
 
 
30 June
30 June
 
30 June
31 March
30 June
 
 
 
2019 
2018 
 
2019 
2019 
2018 
 
 
 
£m
£m
 
£m
£m
£m
 
Central items not allocated
 
284  
(979)
 
337  
(53)
(850)
 
 
 
 
 
 
 
 
 
 
Central items not allocated represented a gain of £284 million in H1 2019 primarily reflecting FX recycling gains of £290 million and a legacy liability release of £256 million, both relating to the Alawwal merger, partially offset by strategic costs of £315 million. Other expenses decreased by £124 million compared with H1 2018 primarily due to one-off releases in H1 2019 and innovation and other costs that were held centrally in 2018 that are now allocated to the franchises.
 
Impact of Alawwal bank merger
 
 
 
 
 
 
The impact on profit of the Alawwal bank merger is summarised below:
 
 
 
 
 
 
 
 
 
Segment
 
 
Legal entity
 
 
Central
 
 
 
 
 
NatWest
items &
 
 
 
 
 
Markets
other
RBS
 
RBS
NWM N.V.
 
£m
£m
£m
 
£m
£m
Alawwal bank merger gain
444  
444  
 
(12)
456  
Legacy liability release
256  
256  
 
256  
FX recycling gain
290  
290  
 
290  
Impact on non-interest income
444  
546  
990  
 
534  
456  
 
 
 
 
 
 
 
Impact on RBS profit before tax
 
 
990  
 
 
 
Tax credit
 
 
41  
 
 
 
Profit after tax
 
 
1,031  
 
 
 
 
 
 
 
 
 
 
Attributable to:
 
 
 
 
 
 
Ordinary shareholders
 
 
757  
 
 
 
Non-controlling interests
 
 
274  
 
 
 
45
 RBS – Interim Results 2019
 
 
Business performance summary
Capital and leverage ratios
 
 
The table below sets out the key Capital and Leverage ratios on an end-point basis.
End-point CRR basis (1)
 
30 June 
31 December 
 
2019 
2018 
Capital adequacy ratios
CET1
16.0 
16.2 
Tier 1
18.2 
18.4 
Total
20.9 
21.8 
 
 
 
Capital
£m
£m
 
 
 
Tangible equity
35,036 
34,566 
 
 
 
Expected loss less impairment provisions
(726)
(654)
Prudential valuation adjustment
(419)
(494)
Deferred tax assets
(869)
(740)
Own credit adjustments
(261)
(405)
Pension fund assets
(400)
(394)
Cash flow hedging reserve
(117)
191 
Foreseeable dividends
(2,053)
(1,326)
Other deductions
(105)
 
 
 
Total deductions
(4,845)
(3,927)
 
 
 
  CET1 capital
30,191 
30,639 
  AT1 capital
4,051 
4,051 
 
 
 
Tier 1 capital
34,242 
34,690 
Tier 2 capital
5,119 
6,483 
 
 
 
Total regulatory capital
39,361 
41,173 
 
 
 
Risk-weighted assets
 
 
 
 
 
Credit risk
137,100 
137,900 
Counterparty credit risk
14,200 
13,600 
Market risk
14,600 
14,800 
Operational risk
22,600 
22,400 
 
 
 
Total RWAs
188,500 
188,700 
 
 
 
Leverage
 
 
 
 
 
Cash and balances at central banks
85,400 
88,900 
Trading assets
85,400 
75,100 
Derivatives
145,600 
133,300 
Financial assets
389,200 
377,500 
Other assets
24,300 
19,400 
 
 
 
Total assets
729,900 
694,200 
Derivatives
 
 
  - netting and variation margin
(156,600)
(141,300)
  - potential future exposures
44,100 
42,100 
Securities financing transactions gross up
1,900 
2,100 
Undrawn commitments
49,300 
50,300 
Regulatory deductions and other adjustments
(9,500)
(2,900)
 
 
 
CRR leverage exposure
659,100 
644,500 
 
 
 
CRR leverage ratio %
5.2 
5.4 
 
 
 
UK leverage exposure (2)
576,600 
559,500 
 
 
 
UK leverage ratio % (2)
5.9 
6.2 
 
 
 
Notes:
(1)
Based on end-point CRR Tier 1 capital and leverage exposure under the CRR Delegated Act.
(2)
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 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
2,084 
200 
 
1,424 
261 
242 
 
(122)
(85)
4,004 
Non-interest income
363 
82 
 
741 
123 
68 
 
667 
80 
2,124 
Own credit adjustments
 
 
(47)
(46)
Strategic disposals
 
 
444 
591 
1,035 
Total income
2,447 
283 
 
2,165 
384 
310 
 
942 
586 
7,117 
Direct expenses
 
 
 
 
 
 
 
 
 
 
  - staff costs
(313)
(106)
 
(374)
(82)
(59)
 
(349)
(558)
(1,841)
  - other costs
(164)
(48)
 
(155)
(35)
(23)
 
(86)
(1,059)
(1,570)
Indirect expenses
(675)
(88)
 
(569)
(96)
(27)
 
(165)
1,620 
Strategic costs
 
 
 
 
 
 
 
 
 
 
  - direct
(9)
 
(32)
(5)
 
(49)
(538)
(629)
  - indirect
(75)
(10)
 
(86)
(17)
(5)
 
(30)
223 
Litigation and conduct costs
(6)
(20)
 
(46)
(2)
 
13 
(60)
Operating expenses
(1,229)
(281)
 
(1,262)
(232)
(119)
 
(678)
(299)
(4,100)
Operating profit before impairment (losses)/releases
1,218 
 
903 
152 
191 
 
264 
287 
3,017 
Impairment (losses)/releases
(181)
21 
 
(202)
 
36 
(3)
(323)
Operating profit
1,037 
23 
 
701 
155 
194 
 
300 
284 
2,694 
Additional information
 
 
 
 
 
 
 
 
 
 
Return on equity (2)
25.6%
2.1%
 
8.8%
16.6%
29.7%
 
1.0%
nm
12.1%
Cost:income ratio (2)
50.2%
99.3%
 
56.9%
60.4%
38.4%
 
72.0%
nm
57.2%
Loan impairment rate (2)
24bps
(21)bps
 
39bps
nm
nm
 
nm
nm
21bps
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)
Net interest margin
2.57%
1.63%
 
1.98%
2.48%
1.69%
 
(0.73%)
nm
1.83%
Third party customer asset rate
3.28%
2.30%
 
3.20%
2.95%
1.75%
 
nm
nm
nm
Third party customer funding rate
(0.37%)
(0.17%)
 
(0.43%)
(0.44%)
(0.14%)
 
nm
nm
nm
Average interest earning assets (£bn)
163.8 
24.7 
 
145.3 
21.2 
28.8 
 
33.3 
23.2 
440.3 
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 
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 
 
 
 
 
 
 
 
 
 
 
 
For the notes to this table refer to page 18. nm = not meaningful
 
 
 
 
 
 
 
Segment performance
 
 
 
 
 
 
 
 
 
 
 
 
Half year ended 30 June 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
2,139 
224 
 
1,400 
252 
219 
 
67 
25 
4,326 
Non-interest income
412 
88 
 
990 
130 
65 
 
615 
37 
2,337 
Own credit adjustments
 
 
39 
39 
Total income
2,551 
312 
 
2,390 
382 
284 
 
721 
62 
6,702 
Direct expenses
 
 
 
 
 
 
 
 
 
 
 - staff costs
(360)
(98)
 
(374)
(83)
(51)
 
(309)
(628)
(1,903)
 - other costs
(117)
(45)
 
(114)
(28)
(33)
 
(115)
(1,229)
(1,681)
Indirect expenses
(708)
(88)
 
(597)
(105)
(37)
 
(201)
1,736 
Strategic costs
 
 
 
 
 
 
 
 
 
 
 - direct
(14)
 
(20)
(1)
 
(28)
(289)
(350)
 - indirect
(85)
(6)
 
(44)
(7)
(3)
 
(6)
151 
Litigation and conduct costs
(7)
(17)
 
(1)
10 
 
(12)
(783)
(801)
Operating expenses
(1,291)
(252)
 
(1,140)
(225)
(114)
 
(671)
(1,042)
(4,735)
Operating profit/(loss) before impairment (losses)/releases
1,260 
60 
 
1,250 
157 
170 
 
50 
(980)
1,967 
Impairment (losses)/releases
(131)
26 
 
(35)
(1)
 
(4)
(141)
Operating profit/(loss)
1,129 
86 
 
1,215 
156 
173 
 
46 
(979)
1,826 
Additional information
 
 
 
 
 
 
 
 
 
 
Return on equity (2)
31.4%
7.0%
 
15.1%
15.8%
25.7%
 
(0.5%)
nm
5.3%
Cost:income ratio (2)
50.6%
80.8%
 
46.4%
58.9%
40.1%
 
93.1%
nm
70.4%
Loan impairment rate (2)
18bps
(26)bps
 
7bps
nm
nm
 
nm
nm
9bps
Impairment provisions (£bn)
(1.1)
(1.1)
 
(1.5)
(0.1)
 
(0.2)
0.1 
(3.9)
Impairment provisions - stage 3 (£bn)
(0.7)
(1.0)
 
(1.3)
 
(0.1)
(3.1)
Net interest margin
2.71%
1.85%
 
1.95%
2.53%
1.64%
 
0.50%
nm
2.02%
Third party customer asset rate
3.38%
2.39%
 
2.93%
2.85%
2.44%
 
nm
nm
nm
Third party customer funding rate
(0.29%)
(0.21%)
 
(0.26%)
(0.18%)
(0.09%)
 
nm
nm
nm
Average interest earning assets (£bn)
159.3 
24.4 
 
144.8 
20.1 
26.9 
 
27.1 
28.6 
431.2 
Total assets (£bn)
168.4 
24.9 
 
165.7 
20.9 
29.8 
 
285.0 
53.6 
748.3 
Funded assets (£bn)
168.4 
24.8 
 
165.7 
20.9 
29.8 
 
134.5 
53.1 
597.2 
Net loans to customers - amortised cost (£bn)
147.7 
19.1 
 
102.6 
13.8 
13.0 
 
8.1 
(0.2)
304.1 
Customer deposits (£bn)
143.5 
17.3 
 
135.1 
26.4 
28.4 
 
3.6 
4.7 
359.0 
Risk-weighted assets (RWAs) (£bn)
32.0 
16.8 
 
83.1 
9.4 
6.8 
 
50.1 
0.6 
198.8 
RWA equivalent (RWAes) (£bn)
32.7 
17.3 
 
86.5 
9.5 
6.8 
 
54.1 
1.0 
207.9 
Employee numbers (FTEs - thousands)
23.4 
3.1 
 
10.7 
1.9 
1.7 
 
5.6 
23.6 
70.0 
For the notes to this table refer to page 18. nm = not meaningful.
 
 
 
 
 
 
 
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
 
 
(5)
(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)
 
(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)
 
20 
(2)
(237)
Operating profit
539 
 
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%
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)
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
Average interest earning assets (£bn)
164.8 
25.3 
 
146.1 
21.2 
29.8 
 
34.4 
23.2 
444.8 
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 
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 
 
 
 
 
 
 
 
 
 
 
 
For the notes to this table refer to page 18. nm = not meaningful
 
 
 
 
 
 
 
Segment performance
 
 
 
 
 
 
 
 
 
 
 
 
Quarter ended 31 March 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
1,052 
98 
 
708 
132 
117 
 
(31)
(43)
2,033 
Non-interest income
193 
47 
 
374 
61 
34 
 
329 
1,047 
Own credit adjustments
 
 
(42)
(1)
(43)
Total income
1,245 
145 
 
1,082 
193 
151 
 
256 
(35)
3,037 
Direct expenses
 
 
 
 
 
 
 
 
 
 
 - staff costs
(158)
(52)
 
(190)
(41)
(28)
 
(173)
(294)
(936)
 - other costs
(74)
(26)
 
(75)
(18)
(13)
 
(48)
(548)
(802)
Indirect expenses
(378)
(47)
 
(309)
(51)
(14)
 
(89)
888 
Strategic costs
 
 
 
 
 
 
 
 
 
 
 - direct
(5)
 
(20)
(2)
 
(18)
(150)
(195)
 - indirect
(26)
(5)
 
(36)
(7)
(2)
 
(13)
89 
Litigation and conduct costs
(1)
 
(10)
 
(2)
(5)
Operating expenses
(635)
(136)
 
(640)
(117)
(59)
 
(334)
(17)
(1,938)
Operating profit/(loss) before impairment (losses)/releases
610 
 
442 
76 
92 
 
(78)
(52)
1,099 
Impairment (losses)/releases
(112)
11 
 
(5)
 
16 
(1)
(86)
Operating profit/(loss)
498 
20 
 
437 
80 
93 
 
(62)
(53)
1,013 
Additional information
 
 
 
 
 
 
 
 
 
 
Return on equity (2)
24.7%
3.8%
 
11.5%
17.1%
28.6%
 
(2.4%)
nm
8.3%
Cost:income ratio (2)
51.0%
93.8%
 
57.8%
60.6%
39.1%
 
130.5%
nm
63.4%
Loan impairment rate (2)
30bps
(23)bps
 
2bps
nm
nm
 
nm
nm
11bps
Impairment provisions (£bn)
(1.2)
(0.7)
 
(1.0)
 
(0.1)
(0.1)
(3.1)
Impairment provisions - stage 3 (£bn)
(0.6)
(0.6)
 
(0.8)
 
(0.1)
(2.1)
Net interest margin
2.62%
1.65%
 
1.99%
2.52%
1.70%
 
(0.39%)
nm
1.89%
Third party customer asset rate
3.31%
2.32%
 
3.22%
3.01%
1.72%
 
nm
nm
nm
Third party customer funding rate
(0.37%)
(0.19%)
 
(0.47%)
(0.42%)
(0.15%)
 
nm
nm
nm
Average interest earning assets (£bn)
162.9 
24.1 
 
144.6 
21.2 
27.8 
 
32.1 
23.1 
435.8 
Total assets (£bn)
172.2 
24.8 
 
165.4 
21.7 
28.9 
 
272.8 
33.3 
719.1 
Funded assets (£bn)
172.2 
24.8 
 
165.4 
21.7 
28.9 
 
138.8 
33.3 
585.1 
Net loans to customers - amortised cost (£bn)
150.6 
18.2 
 
100.8 
14.4 
13.3 
 
9.1 
306.4 
Customer deposits (£bn)
145.7 
17.5 
 
131.8 
26.9 
27.6 
 
2.7 
3.0 
355.2 
Risk-weighted assets (RWAs) (£bn)
35.8 
14.2 
 
78.1 
9.6 
7.0 
 
44.6 
1.5 
190.8 
RWA equivalent (RWAes) (£bn)
36.8 
14.2 
 
79.9 
9.6 
7.1 
 
49.1 
2.0 
198.7 
Employee numbers (FTEs - thousands)
21.6 
3.1 
 
10.3 
1.9 
1.7 
 
5.0 
23.3 
66.9 
For the notes to this table refer to page 18. nm = not meaningful.
 
 
 
 
 
 
 
Segment performance
 
 
 
 
 
 
 
 
 
 
 
 
Quarter ended 30 June 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
1,071 
118 
 
717 
129 
115 
 
31 
(1)
2,180 
Non-interest income
182 
48 
 
515 
69 
32 
 
235 
121 
1,202 
Own credit adjustments
 
 
18 
18 
Total income
1,253 
166 
 
1,232 
198 
147 
 
284 
120 
3,400 
Direct expenses
 
 
 
 
 
 
 
 
 
 
 - staff costs
(182)
(49)
 
(186)
(40)
(27)
 
(144)
(311)
(939)
 - other costs
(52)
(26)
 
(67)
(14)
(18)
 
(62)
(623)
(862)
Indirect expenses
(334)
(41)
 
(286)
(50)
(17)
 
(99)
827 
Strategic costs
 
 
 
 
 
 
 
 
 
 
 - direct
(7)
 
(14)
 
(11)
(112)
(141)
 - indirect
(24)
(3)
 
(2)
(2)
 
30 
Litigation and conduct costs
(6)
(8)
 
10 
(1)
 
(6)
(780)
(782)
Operating expenses
(605)
(124)
 
(545)
(104)
(55)
 
(322)
(969)
(2,724)
Operating profit/(loss) before impairment (losses)/releases
648 
42 
 
687 
94 
92 
 
(38)
(849)
676 
Impairment (losses)/releases
(63)
34 
 
(23)
 
(13)
(1)
(63)
Operating profit/(loss)
585 
76 
 
664 
94 
95 
 
(51)
(850)
613 
Additional information
 
 
 
 
 
 
 
 
 
 
Return on equity (2)
33.0%
12.5%
 
16.4%
19.3%
27.9%
 
(3.0%)
nm
1.1%
Cost:income ratio (2)
48.3%
74.7%
 
43.0%
52.5%
37.4%
 
113.4%
nm
80.0%
Loan impairment rate (2)
17bps
(67)bps
 
9bps
nm
nm
 
nm
nm
8bps
Impairment provisions (£bn)
(1.1)
(1.1)
 
(1.5)
(0.1)
 
(0.2)
0.1 
(3.9)
Impairment provisions - stage 3
(0.7)
(1.0)
 
(1.3)
 
(0.1)
(3.1)
Net interest margin (2)
2.68%
1.91%
 
1.98%
2.54%
1.72%
 
0.46%
nm
2.01%
Third party customer asset rate
3.36%
2.40%
 
2.96%
2.82%
2.34%
 
nm
nm
nm
Third party customer funding rate
(0.29%)
(0.21%)
 
(0.26%)
(0.17%)
(0.11%)
 
nm
nm
nm
Average interest earning assets (£bn)
160.1 
24.8 
 
144.9 
20.3 
26.9 
 
27.0 
30.9 
434.9 
Total assets (£bn)
168.4 
24.9 
 
165.7 
20.9 
29.8 
 
285.0 
53.6 
748.3 
Funded assets (£bn)
168.4 
24.8 
 
165.7 
20.9 
29.8 
 
134.5 
53.1 
597.2 
Net loans to customers - amortised cost (£bn)
147.7 
19.1 
 
102.6 
13.8 
13.0 
 
8.1 
(0.2)
304.1 
Customer deposits (£bn)
143.5 
17.3 
 
135.1 
26.4 
28.4 
 
3.6 
4.7 
359.0 
Risk-weighted assets (RWAs) (£bn)
32.0 
16.8 
 
83.1