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RBS Regulatory News (RBS)



Regulatory News for RBS (RBS)


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Q3 2017 Interim Management Statement

Fri, 27th Oct 2017 07:00

RNS Number : 7726U
Royal Bank of Scotland Group PLC
27 October 2017
 


The Royal Bank of Scotland Group plc

Q3 2017 Interim Management Statement

Highlights

 

Our strategy

RBS is progressing with its plan to build a strong, simple, fair bank for customers and shareholders, and remains committed to achieving its target of being the number one bank for customer service, trust and advocacy by 2020. In order to achieve this ambition, our strategic priorities and long term targets remain as follows:

 

?

Strength and sustainability - CET1 ratio of 13% and a return on tangible equity of 12% or above;

?

Customer experience - number one for service, trust and advocacy;

?

Simplifying the bank - cost:income ratio of less than 50%;

?

Supporting sustainable growth - leading market positions in every franchise; and

?

Employee engagement - employee engagement in upper quartile of Global Financial Services norm.

 

Q3 2017 RBS highlights

Headline performance

?

RBS reported a profit before tax of £871 million and an attributable profit(1) of £392 million for Q3 2017, the third successive quarter of profit, and an attributable profit of £1,331 million for the year to date.

?

Return on tangible equity was 4.5% for the quarter, and 5.2% for the year to date, with a core(2) adjusted return on equity of 15.0% in Q3 2017.

?

RBS delivered positive operating JAWS(3) of 19.9% for the year to date.

?

Net interest margin (NIM) reduced by 1 basis point to 2.12% compared with Q2 2017. Excluding various one-off interest income releases impacting Capital Resolution and Centre, NIM reduced by 7 basis points with 4 basis points driven by a build up in liquidity and the remainder due to continued structural hedge roll-off and ongoing margin pressure associated with mortgage balance growth.

?

RBS remains on track to achieve all of its 2017 financial targets.

 

Delivering against our 2017 ambition

RBS's stated ambition for the year is to grow income, cut costs and use less capital across its core businesses and to make progress on resolving legacy issues. In Q3 2017 we have continued to make progress against this ambition.

 

?

Grow income: Across the core businesses, adjusted income has increased by 5.6% in Q3 2017 compared with Q3 2016 and has increased by 7.5% for the year to date.

?

Cut costs: Excluding VAT recoveries, adjusted operating expenses have reduced by £708 million for the year to date, with 33% delivered by the core businesses, and we remain on track to meet our full year £750 million cost reduction target. 

?

Reduce capital usage: Excluding volume growth, core RWAs have reduced £10.2 billion for the year to date.

?

Resolve legacy issues: Capital Resolution RWAs reduced by a further £3.5 billion in the quarter to £23.1 billion, or £16.1 billion excluding RBS's stake in Alawwal Bank. In addition, RBS has received formal approval from the European Commission for its alternative remedies package in respect of Williams & Glyn. This quarter is the last time we will report Capital Resolution and Williams & Glyn separately.

 

Continued loan growth while remaining within our risk appetite

?

Across PBB and CPB, net loans and advances increased by 3.4% on an annualised basis for the year to date, largely driven by mortgage growth within UK PBB, and we remain on track to meet our 3% full year target.

?

A net impairment charge of £143 million, 17 basis points of gross customer loans, was reported in Q3 2017. Risk elements in lending (REIL) were £9.0 billion, representing 2.7% of gross customer loans compared with 2.8% at Q2 2017. Within UK PBB, LTV on the mortgage portfolio was 56%, in line with FY 2016, and LTV on new mortgage lending was 70% for the year to date.

 

Building a stronger RBS

?

RBS continued to strengthen its capital position; CET1 ratio increased by 70 basis points in the quarter to 15.5% reflecting continued RWA reduction, the attributable profit and a reduction in the prudential valuation capital deduction, broadly offsetting the Capital Resolution losses taken in the quarter.

?

Leverage ratio increased by 20 basis points in the quarter to 5.3%.

?

Fully diluted tangible net asset value per ordinary share was stable at 298p.

?

Employee engagement has improved by 7 points to 83 (1 point above GFS Norm) meeting our target for 2017.

?

RBSG's Commercial Banking franchise NPS is significantly ahead of its three biggest competitors, however more work is required to close the gap in some of our other target segments.

For notes refer to page 3.


Summary consolidated results

 

Summary consolidated income statement for the period ended 30 September 2017









Nine months ended


Quarter ended


30 September

30 September


30 September

30 June

30 September


2017 

2016 


2017 

2017 

2016 


£m

£m


£m

£m

£m

Net interest income

6,776 

6,500 


2,304 

2,238 

2,167 








Own credit adjustments

(78)

294 


(5)

(44)

(156)

(Loss)/gain on redemption of own debt

(7)

(127)


(9)

Strategic disposals

156 

164 


156 

(31)

Other non-interest income

3,229 

2,543 


858 

1,366 

1,327 








Non-interest income

3,300 

2,874 


853 

1,469 

1,143 








Total income

10,076 

9,374 


3,157 

3,707 

3,310 








Litigation and conduct costs

(521)

(1,740)


(125)

(342)

(425)

Restructuring costs

(1,034)

(1,099)


(244)

(213)

(469)

Other expenses

(5,440)

(6,001)


(1,774)

(1,844)

(2,017)








Operating expenses

(6,995)

(8,840)


(2,143)

(2,399)

(2,911)








Profit before impairment losses

3,081 

534 


1,014 

1,308 

399 

Impairment losses

(259)

(553)


(143)

(70)

(144)








Operating profit/(loss) before tax

2,822 

(19)


871 

1,238 

255 

Tax charge

(992)

(922)


(265)

(400)

(582)








Profit/(loss) for the period

1,830 

(941)


606 

838 

(327)








Attributable to:







Non-controlling interests

21 

37 


(8)

18 

Other owners

478 

343 


222 

140 

135 

Dividend access share

1,193 


Ordinary shareholders

1,331 

(2,514)


392 

680 

(469)








Memo items:







Total income - adjusted (4)

10,005 

9,043 


3,162 

3,604 

3,494 

Operating expenses - adjusted (5)

(5,440)

(6,001)


(1,774)

(1,844)

(2,017)

Operating profit - adjusted (6)

4,306 

2,489 


1,245 

1,690 

1,333 

 

Performance key metrics and ratios







Net interest margin

2.16%

2.18%


2.12%

2.13%

2.17%

Average interest earning assets

£419,450m

£398,943m


£430,962m

£421,981m

£397,345m

Cost:income ratio (7)

69.1%

94.2%


67.5%

64.4%

87.8%

Cost:income ratio - adjusted (4,5,7)

53.9%

65.9%


55.6%

50.7%

57.3%

Earnings/(loss) per share







  - basic

11.2p

(21.5p)


3.3p

5.7p

(3.9p)

  - basic fully diluted

11.2p

(21.5p)


3.3p

5.7p

(3.9p)

  - adjusted basic (4,5)

22.3p

(1.6p)


5.9p

9.2p

3.9p

  - adjusted fully diluted (4,5,8)

22.3p

(1.6p)


5.9p

9.2p

3.9p

Return on tangible equity (9,10)

5.2%

(8.5%)


4.5%

8.0%

(4.8%)

Return on tangible equity - adjusted (4,5,10)

10.4%

(0.6%)


8.2%

12.9%

4.6%

Average tangible equity (10)

£33,964m

£39,516m


£34,465m

£33,974m

£38,696m

Average number of ordinary shares







 outstanding during the period (millions)







   - basic

11,840 

 11,668 


11,886 

 11,841 

 11,724 

  -  fully diluted (8)

11,913 

11,709 


11,943 

11,923 

11,764 








For notes to this table refer to the following page.









 

Summary consolidated results

 


30 September

30 June

31 December

Balance sheet related key metrics and ratios

2017 

2017 

2016 

Total assets

£751.8bn

£782.7bn

£798.7bn

Funded assets (11)

£580.0bn

£589.1bn

£551.7bn

Loans and advances to customers (excludes reverse repos)

£324.7bn

£326.1bn

£323.0bn

Customer deposits (excludes repos)

£359.9bn

£359.9bn

£353.9bn





Liquidity coverage ratio (LCR) (12,13)

147%

145%

123%

Liquidity portfolio

£177bn

£178bn

£164bn

Net stable funding ratio (NSFR) (14)

126%

123%

121%

Loan:deposit ratio (15)

90%

91%

91%

Risk elements in lending

£9.0bn

£9.3bn

£10.3bn

Impairment provisions

£3.9bn

£3.9bn

£4.5bn

Short-term wholesale funding (15,16)

£21bn

£18bn

£14bn

Wholesale funding (15,16)

£69bn

£70bn

£59bn





Common Equity Tier 1 (CET1) ratio

15.5%

14.8%

13.4%

Total capital ratio

20.6%

20.0%

19.2%

Risk-weighted assets (RWAs)

£210.6bn

£215.4bn

£228.2bn

CRR leverage ratio (17)

5.3%

5.1%

5.1%

UK leverage ratio (18)

6.0%

5.8%

5.6%





Tangible net asset value (TNAV) per ordinary share (10)

299p

300p

296p

Tangible net asset value (TNAV) per ordinary share - fully diluted (10)

298p

298p

294p

Tangible equity (10)

£35,621m

£35,682m

£34,982m

Number of ordinary shares in issue (millions) (19)

11,905 

11,876 

11,823 

Number of ordinary shares in issue (millions) - fully diluted (8,19)

11,950 

11,956 

11,906 

 

Notes:

(1)

Attributable to ordinary shareholders.

(2)

Core business comprises Personal & Business Banking (PBB), Commercial & Private Banking (CPB) and NatWest Markets.

(3)

JAWS represents the combined net growth / reduction in income and costs over the period.

(4)

Excluding own credit adjustments, (loss)/gain on redemption of own debt and strategic disposals.

(5)

Excluding restructuring costs and litigation and conduct costs.

(6)

Operating profit before tax excluding own credit adjustments, (loss)/gain on redemption of own debt, strategic disposals, restructuring, litigation and conduct costs.

(7)

Operating lease depreciation included in income (nine months ended 30 September 2017 - £107 million; Q3 2017 - £35 million; nine months ended 30 September 2016 - £115  million; Q2 2017 - £36 million, Q3 2016 - £39 million).

(8)

Includes the effect of dilutive share options and convertible securities. Dilutive shares on an average basis for Q3 2017 were 57 million shares and for the nine months ended 30 September 2017 were 73 million (Q2 2017 - 82 million; Q3 2016 - 40 million; nine months ended 30 September 2016 - 41 million) and as at 30 September 2017 were 45 million (30 June 2017 - 80 million; 31 December 2016 - 83 million).

(9)

Calculated using profit/(loss) for the period attributable to ordinary shareholders.

(10)

Tangible equity is equity attributable to ordinary shareholders less intangible assets.

(11)

Total assets less derivatives.

(12)

On 1 October 2015 the LCR became the Prudential Regulation Authority's (PRA) primary regulatory liquidity standard; UK banks are required to meet a minimum standard of 90% from 1 January 2017, rising to 100% by 1 January 2018. The published LCR excludes Pillar 2 add-ons. RBS calculates the LCR using its own interpretation of the EU LCR Delegated Act, which may change over time and may not be fully comparable with those of other institutions.

(13)

The LCR of 145% at 30 June 2017 excludes the impact of the litigation settlement with the FHFA in respect of claims relating to RBS issuance and underwriting of RMBS in the US, as announced on 12 July 2017. The estimated impact of the settlement on the LCR was a 6% reduction to 139% as at 30 June 2017. The LCR of 147% at 30 September 2017 includes the impact of settling with the FHFA.

(14)

NSFR for all periods have been calculated using RBS's current interpretations of the revised BCBS guidance on NSFR issued in late 2014. Therefore, reported NSFR will change over time with regulatory developments. Due to differences in interpretation, RBS's ratio may not be comparable with those of other financial institutions.

(15)

Excludes repurchase agreements and stock lending.

(16)

Excludes derivative collateral.

(17)

Based on end-point Capital Requirements Regulation (CRR) Tier 1 capital and leverage exposure under the CRR Delegated Act.

(18)

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.

(19)

Includes 17 million treasury shares (30 June 2017 - 17 million; 31 December 2016 - 39 million).

 



 

Analysis of results

 

Q3 2017 progress

PBB, CPB & NatWest Markets businesses

Grow income

Across the core businesses, adjusted income has increased by 7.5% for the year to date and by 5.6% in Q3 2017 compared with Q3 2016. Across Personal & Business Banking (PBB) and Commercial & Private Banking (CPB), income growth has been supported by increased lending, with net loans and advances 3.6% higher than Q3 2016. NatWest Markets adjusted income was 14.4% higher for the year to date as the business continues to navigate markets well.

 

On an annualised basis, PBB and CPB net loans and advances have increased by 3.4% in the first nine months of the year, with mortgage growth driving an 8.4% increase in UK PBB. Gross new mortgage lending was £7.1 billion with market share of new mortgages at approximately 10%, supporting growth in stock share to approximately 9.2%. Mortgage approval share was around 14% in the quarter, up from 12% in Q2 2017. Across CPB, net loans and advances have reduced by 2.1% on an annualised basis as growth in targeted segments has been more than offset by active capital management of our lending book.

 

Cut costs

Across the core businesses, adjusted operating expenses have reduced £231 million for the year to date, representing 33% of the £708 million reduction achieved across the bank. Cost:income ratio across the core bank improved to 53.1% for the year to date compared with 59.8% for the equivalent period in 2016, with operating JAWS of 11.8%. 

 

RBS now has 5.2 million customers regularly using its mobile app, 14% higher than December 2016. Within UK PBB, digital service transactions were 7% higher than Q3 2016 and in Q3 2017 more than 60% of existing customers transferring to a new fixed rate mortgage deal switched digitally. New Bankline, our new best in class commercial web access tool, continues to be rolled out, simplifying the customer experience and saving customers' time.

 

Reduce capital usage

Excluding volume growth, RWAs reduced by £10.2 billion across the core businesses for the year to date and we remain committed to achieving a gross RWA reduction of at least £20 billion by the end of 2018. The reduction comprised £0.5 billion in PBB, £6.3 billion in CPB and £3.4 billion in NatWest Markets.

 

Capital Resolution and legacy issues

Capital Resolution RWAs reduced by a further £3.5 billion in the quarter to £23.1 billion, or £16.1 billion excluding RBS's stake in Alawwal Bank (£7.0 billion as at 30 September 2017), already towards the lower end of our £15 - £20 billion full year guidance. Disposal losses, other adjustments and impairments of £375 million were incurred in Q3 2017, although the charge is broadly CET1 neutral as the prudential valuation adjustment increase taken in Q2 2017 in anticipation of these losses has largely reversed. It remains our intention to wind up Capital Resolution during Q4 2017 and transfer the remaining assets back into the rest of the bank.

 

Williams & Glyn

On 18 September 2017 RBS announced that it had received confirmation from the European Commission that the alternative remedies package regarding Williams & Glyn, announced on 26 July 2017, had been formally approved in the form proposed. In full year 2017 reporting we will no longer report Williams & Glyn as a separate segment, but include as part of UK PBB.

 

Outlook (1)

We retain the 2017 full year financial guidance and medium term financial outlook we provided in the 2016 Annual Results document. In addition, and subject to any further provisions for the investigations of the US Department of Justice into the Group's historic RMBS related activities being substantially taken in 2017, our expectation remains that we will be profitable in 2018.

 

On 24 October 2017, RBS completed the disposal of its shares in Euroclear for a cash consideration of €275 million. RBS expects to recognise a gain on disposal before tax of around £175 million in Q4 2017.

 

Note:

(1)       The targets, expectations and trends discussed in this section represent management's current expectations and are subject to change, including as a result of the factors described in this document and in the "Risk Factors" on pages 432 to 463 of the Annual Report and Accounts 2016. These statements constitute forward-looking statements; refer to Forward-looking statements in this announcement.



Analysis of results


Nine months ended

Quarter ended


30 September

30 September


30 September

30 June

30 September


2017 

2016 


2017 

2017 

2016 

Operating profit/(loss) before tax

£m

£m


£m

£m

£m

Statutory operating profit/(loss)

2,822 

(19)


871 

1,238 

255 

Adjusted for







Own credit adjustments

78 

(294)


44 

156 

Loss/(gain) on redemption of own debt

127 


 - 

(3)

Strategic disposals

(156)

(164)


 - 

(156)

31 

Litigation and conduct costs

521 

1,740 


125 

342 

425 

Restructuring costs

1,034 

1,099 


244 

213 

469 

Adjusted operating profit

4,306 

2,489 


1,245 

1,690 

1,333 








PBB, CPB & NWM - adjusted operating profit

4,072 

3,401 


1,394 

1,352 

1,331 

 

?

Adjusted operating profit reduced by 6.6% compared with Q3 2016 largely reflecting increased losses in Capital Resolution, up £248 million to £366 million.

?

Across the core businesses adjusted operating profit increased by 4.7%. UK PBB increased by 32.3%, benefiting from a £168 million debt sale gain. Partially offsetting this, lower income drove a £89 million reduction in NatWest Markets adjusted operating profit.

?

Compared with Q2 2017, adjusted operating profits were £445 million lower reflecting increased Capital Resolution losses, lower IFRS volatility gains (£21 million compared with £172 million in Q2 2017) and higher impairment losses in Commercial Banking, partially offset by the debt sale gain in UK PBB.









Nine months ended


Quarter ended


30 September

30 September


30 September

30 June

30 September


2017 

2016 


2017 

2017 

2016 

Total income

£m

£m


£m

£m

£m








Statutory total income

10,076 

9,374 


3,157 

3,707 

3,310 

Adjusted for







Own credit adjustments

78 

(294)


44 

156 

Loss/(gain) on redemption of own debt

127 


 - 

(3)

Strategic disposals

(156)

(164)


 - 

(156)

31 

Adjusted total income

10,005 

9,043 


3,162 

3,604 

3,494 







PBB, CPB & NWM - adjusted total income

9,587 

8,916 


3,290 

3,143 

3,115 








Notable items within adjusted total income







IFRS volatility in Central items (1)

175 

(818)


21 

172 

(150)

UK PBB debt sale gain

176 


168 

 - 

 - 

Commercial Banking disposal gain

52 

 - 


52 

 - 

 - 

FX reserve (loss)/gain in Central items

(37)

97 


(37)

 - 

97 

Unwind of securitisations in the property portfolio

(105)

 - 


 - 

 - 

 - 

FX (losses)/gains in Central items

(138)

209 


(30)

(56)

(44)

Capital Resolution disposal losses







  and other adjustments

(549)

(166)


(446)

(53)

(113)

 

?

Excluding a £168 million debt sale gain, UK PBB adjusted income increased by 3.3% compared with Q3 2016 as increased mortgage lending has more than offset margin pressure. Excluding the impact of foreign exchange movements, Ulster Bank RoI adjusted income reduced by 2.9% due to lower income on free funds and one-off items in Q3 2016.

?

Commercial Banking adjusted income increased by 9.3% compared with Q3 2016 reflecting a £52 million asset disposal gain, increased deposit volumes and re-pricing benefits. RBS International increased by 4.3% whilst Private Banking income was stable at £166 million.

?

NatWest Markets adjusted income of £401 million was 23.8% lower than Q3 2016 which benefited from heightened customer activity and favourable market conditions following the EU referendum and central bank actions.

?

Compared with Q2 2017, adjusted income was £442 million lower reflecting increased Capital Resolution losses, reduced IFRS volatility gains and lower NatWest Markets income, partially offset by the debt sale gain in UK PBB.

 

Note:

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



Analysis of results


Nine months ended


Quarter ended


30 September

30 September


30 September

30 June

30 September


2017 

2016 


2017 

2017 

2016 

Net interest margin

%

%


%

%

%








Net interest margin (NIM)

2.16%

2.18%


2.12%

2.13%

2.17%

 

?

NIM reduced by 5 basis points versus Q3 2016 principally reflecting increased liquidity requirements and asset margin pressure.

?

Compared with Q2 2017, NIM reduced by 1 basis point. Excluding various one-off interest income releases impacting Capital Resolution and Centre, NIM reduced by 7 basis points with 4 basis points driven by a build up in liquidity and the remainder due to continued structural hedge roll-off and ongoing margin pressure associated with mortgage balance growth.

?

The sensitivity of net interest earnings, over the next 12 months, to an immediate increase of 25 basis points to all interest rates is c.£175 million across all currencies.









Nine months ended


Quarter ended


30 September

30 September


30 September

30 June

30 September


2017 

2016 


2017 

2017 

2016 

Operating expenses

£m

£m


£m

£m

£m








Statutory operating expenses

6,995 

8,840 


2,143 

2,399 

2,911 

Adjusted for







Litigation and conduct costs

(521)

(1,740)


(125)

(342)

(425)

Restructuring costs

(1,034)

(1,099)


(244)

(213)

(469)

Adjusted operating expenses

5,440 

6,001 


1,774 

1,844 

2,017 

PBB, CPB & NWM - adjusted operating expenses

5,144 

5,375 


1,693 

1,702 

1,773 








Notable items within adjusted operating expenses







VAT recovery in Central items

(80)

(227)


(29)

 - 

 - 








Notable items within restructuring costs







Property exit costs

203 

 - 


(14)

(18)

 - 

Williams and Glyn restructuring costs

75 

646 


17 

46 

301 

 

?

UK PBB adjusted operating expenses reduced by 2.6% compared with Q3 2016 reflecting reduced headcount coupled with process and productivity improvements, partially offset by increased technology infrastructure costs. Excluding the impact of foreign exchange movements, Ulster Bank RoI adjusted operating expenses reduced by 5.8%.

?

Commercial Banking adjusted operating expenses reduced 6.0% compared with Q3 2016 reflecting cost efficiencies and a 15.5% reduction in headcount. Cost efficiencies also drove an 8.3% reduction in Private Banking adjusted operating expenses. RBSI increased 22.5% reflecting increased investment spend and regulatory expenses, in part associated with the creation of a bank outside the ring-fence.

?

NatWest Markets adjusted operating expenses were 10.5% lower than Q3 2016 principally due to the prior year including a one-off expense adjustment for investment spend that had previously been capitalised.

?

Capital Resolution adjusted operating expenses reduced by 64.7% to £61 million compared with Q3 2016.

?

Compared with Q2 2017, adjusted operating expenses of £1,774 million were £70 million lower and included a £29 million VAT recovery.


Nine months ended


Quarter ended


30 September

30 September


30 September

30 June

30 September


2017 

2016 


2017 

2017 

2016 

Impairment losses

£m

£m


£m

£m

£m








Impairment losses

259 

553 


143 

70 

144 








Notable items within impairment losses







Capital Resolution impairment (releases)/losses

(149)

383 


(71)

(33)

120 

Ulster Bank RoI impairment (releases)/losses

(21)

(66)


(10)

13 

(39)

Commercial Banking impairment losses

245 

123 


151 

33 

20 

 

?

UK PBB reported a net impairment loss of £67 million, 19 basis points of gross customer loans, £40 million higher than Q3 2016 primarily reflecting reduced provision releases. Defaults remain low across all portfolios.

?

Commercial Banking reported a net impairment loss of £151 million in the quarter.

?

Capital Resolution reported a net impairment release of £71 million compared with a charge of £120 million in Q3 2016, which included a £190 million charge in respect of the shipping portfolio.

?

Compared with Q2 2017, impairments increased by £73 million reflecting higher impairment losses in Commercial Banking.


Analysis of results

 






End-point CRR basis (1)


30 September 

30 June 

31 December 


2017 

2017 

2016 

Risk asset ratios





CET1

15.5 

14.8 

13.4 

Tier 1

17.4 

16.7 

15.2 

Total

20.6 

20.0 

19.2 





Capital

£m

£m

£m

Tangible equity

35,621 

35,682 

34,982 





Expected loss less impairment provisions

(1,197)

(1,226)

(1,371)

Prudential valuation adjustment

(459)

(854)

(532)

Deferred tax assets

(865)

(877)

(906)

Own credit adjustments

(110)

(142)

(304)

Pension fund assets

(185)

(186)

(208)

Cash flow hedging reserve

(298)

(575)

(1,030)

Other adjustments for regulatory purposes

51 

52 

(8)





Total deductions

(3,063)

(3,808)

(4,359)

CET1 capital

32,558 

31,874 

30,623 

AT1 capital

4,041 

4,041 

4,041 

Tier 1 capital

36,599 

35,915 

34,664 

Tier 2 capital

6,841 

7,107 

9,161 





Total regulatory capital

43,440 

43,022 

43,825 





Risk-weighted assets








Credit risk




  - non-counterparty

154,400 

157,300 

162,200 

  - counterparty

16,000 

17,800 

22,900 

Market risk

16,400 

16,500 

17,400 

Operational risk

23,800 

23,800 

25,700 





Total RWAs

210,600 

215,400 

228,200 





Leverage (2)








Cash and balances at central banks

88,200 

86,800 

74,200 

Derivatives

171,700 

193,500 

247,000 

Loans and advances

341,500 

346,800 

340,300 

Reverse repos

36,700 

40,000 

41,800 

Other assets

113,700 

115,600 

95,400 





Total assets

751,800 

782,700 

798,700 

Derivatives




  - netting and variation margin

(169,500)

(193,400)

(241,700)

  - potential future exposures

54,100 

56,700 

65,300 

Securities financing transactions gross up

2,300 

1,900 

2,300 

Undrawn commitments

52,600 

53,100 

58,600 

Regulatory deductions and other adjustments

200 

800 

100 





CRR Leverage exposure

691,500 

701,800 

683,300 





CRR leverage ratio%

5.3 

5.1 

5.1 





UK leverage exposure (3)

609,400 

618,700 

614,600 





UK leverage ratio% (3)

6.0 

5.8 

5.6 

 

Notes:

(1)

CRR as implemented by the PRA in the UK, with effect from 1 January 2014. All regulatory adjustments and deductions to CET1 have been applied in full with the exception of unrealised gains on available-for-sale securities which have been included from 2015 under the PRA transitional basis.

(2)

Based on end-point CRR Tier 1 capital and leverage exposure under the CRR Delegated Act.

(3)

Based on end-point CRR Tier 1 capital and UK leverage exposures reflecting the post EU referendum measures announced by the Bank of England in the third quarter of 2016.


Segment performance


Nine months ended 30 September 2017


PBB


CPB





Central




Ulster


Commercial

Private

RBS


NatWest

Capital

Williams

 items &

Total


UK PBB

Bank RoI


Banking

Banking

International


Markets

Resolution

& Glyn (1)

other (2)

RBS


£m

£m


£m

£m

£m


£m

£m

£m

£m

£m

Income statement













Net interest income

3,359 

310 


1,711 

342 

244 


65 

100 

499 

146 

6,776 

Other non-interest income

944 

136 


967 

145 

48 


1,316 

(556)

127 

102 

3,229 

Total income - adjusted (3)

4,303 

446 


2,678 

487 

292 


1,381 

(456)

626 

248 

10,005 

Own credit adjustments

(3)



(55)

(20)

(78)

Loss on redemption of own debt



(7)

(7)

Strategic disposals



156 

156 

Total income

4,303 

443 


2,678 

487 

292 


1,326 

(476)

626 

397 

10,076 

Direct expenses - staff costs

(492)

(146)


(358)

(110)

(36)


(440)

(33)

(141)

(1,239)

(2,995)

                           - other costs

(172)

(41)


(166)

(18)

(10)


(149)

(38)

(29)

(1,822)

(2,445)

Indirect expenses

(1,448)

(149)


(771)

(190)

(93)


(355)

(123)

(60)

3,189 

Operating expenses - adjusted (4)

(2,112)

(336)


(1,295)

(318)

(139)


(944)

(194)

(230)

128 

(5,440)

Restructuring costs  - direct

(24)

(25)


(42)

(1)

(2)


(48)

(195)

(697)

(1,034)

                                 - indirect

(184)

(27)


(96)

(16)

(4)


(86)

35 

378 

Litigation and conduct costs

(13)

(34)


(6)

(8)


(47)

(361)

(52)

(521)

Operating expenses

(2,333)

(422)


(1,439)

(335)

(153)


(1,125)

(715)

(230)

(243)

(6,995)

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

1,970 

21 


1,239 

152 

139 


201 

(1,191)

396 

154 

3,081 

Impairment (losses)/releases

(139)

21 


(245)

(4)

(3)


(1)

149 

(36)

(1)

(259)

Operating profit/(loss)

1,831 

42 


994 

148 

136 


200 

(1,042)

360 

153 

2,822 

Operating profit/(loss) - adjusted (3,4)

2,052 

131 


1,138 

165 

150 


436 

(501)

360 

375 

4,306 

Additional information













Return on equity (5)

30.8%

2.1%


8.3%

9.5%

12.2%


1.8%

nm

23.0%

nm

5.2%

Return on equity - adjusted (3,4,5)

34.8%

6.5%


9.9%

10.8%

13.7%


6.1%

nm

23.0%

nm

10.4%

Cost:income ratio (6)

54.2%

95.3%


51.8%

68.8%

52.4%


84.8%

nm

36.7%

nm

69.1%

Cost:income ratio - adjusted (3,4,6)

49.1%

75.3%


46.2%

65.3%

47.6%


68.4%

nm

36.7%

nm

53.9%

Average interest earning assets (£bn)

153.0 

25.3 


131.2 

18.5 

23.9 


17.7 

15.1 

25.3 

nm

419.5 

Net interest margin

2.93%

1.64%


1.74%

2.48%

1.37%


0.49%

0.88%

2.63%

nm

2.16%

Total assets (£bn)

164.5 

25.1 


147.3 

19.9 

24.3 


215.7 

89.3 

25.6 

40.1 

751.8 

Funded assets (£bn) (7)

164.5 

25.1 


147.3 

19.9 

24.3 


112.7 

22.2 

25.6 

38.4 

580.0 

Net loans and advances to customers (£bn)

140.4 

19.5 


96.6 

13.3 

9.3 


16.7 

8.4 

20.4 

0.1 

324.7 

Risk elements in lending (£bn)

1.7 

3.4 


1.7 

0.1 

0.1 


-  

1.6 

0.3 

0.1 

9.0 

Impairment provisions (£bn)

(1.1)

(1.1)


(0.8)

-  

-  


-  

(0.5)

(0.2)

(0.2)

(3.9)

Customer deposits (£bn)

154.0 

17.3 


98.2 

27.0 

24.9 


7.1 

6.6 

24.6 

0.2 

359.9 

Risk-weighted assets (RWAs) (£bn)

34.0 

17.9 


74.6 

9.2 

9.6 


31.8 

23.1 

9.3 

1.1 

210.6 

RWA equivalent (£bn) (5)

37.2 

18.9 


77.4 

9.2 

9.6 


33.5 

25.6 

9.8 

1.3 

222.5 

Employee numbers (FTEs - thousands) (8)

17.4 

2.8 


4.9 

1.6 

0.8 


5.4 

0.1 

4.0 

36.6 

73.6 














For the notes to this table refer to page 10. nm = not meaningful














 

Segment performance


Quarter ended 30 September 2017


PBB


CPB





Central




Ulster


Commercial

Private

RBS


NatWest

Capital

Williams

 items &

Total


UK PBB

Bank RoI


Banking

Banking

International


Markets

Resolution

& Glyn (1)

other (2)

RBS


£m

£m


£m

£m

£m


£m

£m

£m

£m

£m

Income statement













Net interest income

1,128 

104 


570 

116 

83 


23 

76 

166 

38 

2,304 

Other non-interest income

420 

46 


358 

50 

14 


378 

(452)

43 

858 














Total income adjusted (3)

1,548 

150 


928 

166 

97 


401 

(376)

209 

39 

3,162 

Own credit adjustments



(7)

(5)

Total income

1,548 

150 


928 

166 

97 


394 

(374)

209 

39 

3,157 

Direct expenses - staff costs

(163)

(50)


(113)

(36)

(13)


(143)

(7)

(45)

(384)

(954)

                           - other costs

(51)

(17)


(55)

(6)

(3)


(50)

(19)

(9)

(610)

(820)

Indirect expenses

(485)

(52)


(252)

(58)

(33)


(113)

(35)

(18)

1,046 

Operating expenses  - adjusted (4)

(699)

(119)


(420)

(100)

(49)


(306)

(61)

(72)

52 

(1,774)

Restructuring costs   - direct

(1)

(1)


(2)

(1)

(2)


(18)

(65)

(154)

(244)

  - indirect

(47)

(8)


(19)

(2)


(13)

39 

50 

Litigation and conduct costs

(1)


(2)

(8)


(13)

(89)

(12)

(125)














Operating expenses

(747)

(129)


(443)

(103)

(59)


(350)

(176)

(72)

(64)

(2,143)














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

801 

21 


485 

63 

38 


44 

(550)

137 

(25)

1,014 

Impairment (losses)/releases

(67)

10 


(151)


71 

(11)

(143)














Operating profit/(loss)

734 

31 


334 

66 

40 


44 

(479)

126 

(25)

871 














Operating profit/(loss) - adjusted (3,4)

782 

41 


357 

69 

50 


95 

(366)

126 

91 

1,245 

Additional information













Return on equity (5)

36.8%

4.6%


8.6%

13.2%

10.4%


0.6%

nm

24.6%

nm

4.5%

Return on equity - adjusted (3,4,5)

39.3%

6.1%


9.3%

13.8%

13.6%


3.6%

nm

24.6%

nm

8.2%

Cost:income ratio (6)

48.3%

86.0%


45.7%

62.0%

60.8%


88.8%

nm

34.4%

nm

67.5%

Cost:income ratio - adjusted (3,4,6)

45.2%

79.3%


43.1%

60.2%

50.5%


76.3%

nm

34.4%

nm

55.6%

Average interest earning assets (£bn)

155.8 

26.1 


130.0 

19.2 

23.7 


19.1 

13.5 

25.4 

nm

431.0 

Net interest margin

2.87%

1.58%


1.74%

2.39%

1.39%


0.48%

2.23%

2.60%

nm

2.12%

Total assets (£bn)

164.5 

25.1 


147.3 

19.9 

24.3 


215.7 

89.3 

25.6 

40.1 

751.8 

Funded assets (£bn) (7)

164.5 

25.1 


147.3 

19.9 

24.3 


112.7 

22.2 

25.6 

38.4 

580.0 

Net loans and advances to customers (£bn)

140.4 

19.5 


96.6 

13.3 

9.3 


16.7 

8.4 

20.4 

0.1 

324.7 

Risk elements in lending (£bn)

1.7 

3.4 


1.7 

0.1 

0.1 


1.6 

0.3 

0.1 

9.0 

Impairment provisions (£bn)

(1.1)

(1.1)


(0.8)


(0.5)

(0.2)

(0.2)

(3.9)

Customer deposits (£bn)

154.0 

17.3 


98.2 

27.0 

24.9 


7.1 

6.6 

24.6 

0.2 

359.9 

Risk-weighted assets (RWAs) (£bn)

34.0 

17.9 


74.6 

9.2 

9.6 


31.8 

23.1 

9.3 

1.1 

210.6 

RWA equivalent (£bn) (5)

37.2 

18.9 


77.4 

9.2 

9.6 


33.5 

25.6 

9.8 

1.3 

222.5 

Employee numbers (FTEs - thousands) (8)

17.4 

2.8 


4.9 

1.6 

0.8 


5.4 

0.1 

4.0 

36.6 

73.6 














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













Condensed consolidated income statement for the period ended 30 September 2017 (unaudited)

 


Nine months ended


Quarter ended


30 September

30 September


30 September

30 June

30 September

2017

2016


2017

2017

2016


£m

£m


£m

£m

£m








Interest receivable

8,280 

8,488 


2,818 

2,730 

2,796 

Interest payable

(1,504)

(1,988)


(514)

(492)

(629)








Net interest income (1)

6,776 

6,500 


2,304 

2,238 

2,167 








Fees and commissions receivable

2,492 

2,519 


826 

844 

843 

Fees and commissions payable

(652)

(592)


(204)

(231)

(200)

Income from trading activities

832 

384 


(52)

485 

401 

(Loss)/gain on redemption of own debt

(7)

(127)


(9)

Other operating income

635 

690 


283 

380 

96 








Non-interest income

3,300 

2,874 


853 

1,469 

1,143 








Total income

10,076 

9,374 


3,157 

3,707 

3,310 








Staff costs

(3,576)

(3,982)


(1,129)

(1,132)

(1,287)

Premises and equipment

(1,041)

(1,006)


(363)

(301)

(354)

Other administrative expenses

(1,736)

(3,234)


(528)

(789)

(1,095)

Depreciation and amortisation

(630)

(529)


(119)

(169)

(175)

Write down of other intangible assets

(12)

(89)


(4)

(8)








Operating expenses

(6,995)

(8,840)


(2,143)

(2,399)

(2,911)








Profit before impairment losses

3,081 

534 


1,014 

1,308 

399 

Impairment losses

(259)

(553)


(143)

(70)

(144)








Operating profit/(loss) before tax

2,822 

(19)


871 

1,238 

255 

Tax charge

(992)

(922)


(265)

(400)

(582)















Profit/(loss) for the period

1,830 

(941)


606 

838 

(327)








Attributable to:







Non-controlling interests

21 

37 


(8)

18 

Preference share and other dividends

478 

343 


222 

140 

135 

Dividend access share

1,193 


Ordinary shareholders

1,331 

(2,514)


392 

680 

(469)








Earnings/(loss) per ordinary share (EPS)







Earnings/(loss) per ordinary share (2)

11.2p

(21.5p)


3.3p

5.7p

(3.9p)

 

Notes:

(1)

Negative interest on loans and advances is classed as interest payable. Negative interest on customer deposits is classed as interest receivable. Nine months ended and quarter ended 30 September 2016 have been re-presented accordingly.

(2)

There is no dilutive impact in any period.

 

 

 

 

 

 

Notes to segment performance on pages 8 and 9

 (1)

Williams & Glyn refers to the business formerly intended to be divested as a separate legal entity and comprises RBS England and Wales branch-based businesses, along with certain small and medium enterprises and corporate activities across the UK. During the period presented W&G has not operated as a separate legal entity.

(2)

Central items include unallocated transactions which principally comprise volatile items under IFRS and balances in relation to international private banking for Q1 2016.

(3)

Excluding own credit adjustments, (loss)/gain on redemption of own debt and strategic disposals.

(4)

Excluding restructuring costs and litigation and conduct costs.

(5)

RBS's CET 1 target is 13% but for the purposes of computing segmental return on equity (ROE), to better reflect the differential drivers of capital usage, segmental operating profit after tax and adjusted for preference dividends is divided by average notional equity allocated at different rates of 14% (Ulster Bank RoI - 11% prior to Q1 2017), 11% (Commercial Banking), 14% (Private Banking - 15% prior to Q1 2017), 12% (RBS International) and 15% for all other segments, of the monthly average of segmental risk-weighted assets incorporating the effect of capital deductions (RWAes). RBS's Return on equity is calculated using profit for the period attributable to ordinary shareholders.

(6)

Operating lease depreciation included in income (nine months ended September 2017 - £107 million and Q3 2017 - £35 million).

(7)

Funded assets exclude derivative assets.

(8)

On 1 January 2017 4.5 thousand employees on a FTE basis were transferred from Central items to NatWest Markets in preparation for ring-fencing.

 


Condensed consolidated statement of comprehensive income for the period ended 30 September 2017 (unaudited)

 


Nine months ended


Quarter ended


30 September

30 September


30 September

30 June

30 September


2017

2016


2017

2017

2016


£m

£m


£m

£m

£m

Profit/(loss) for the period

1,830 

(941)


606 

838 

(327)

Items that do not qualify for reclassification







Loss on remeasurement of retirement benefit schemes

(26)

(1,047)


 - 

(5)

(52)

Loss on fair value of credit in financial liabilities







  designated at fair value through profit or loss







  due to own credit risk

(107)


(30)

(57)

Tax

(5)

285 


12 


(138)

(762)


(27)

(54)

(40)

Items that do qualify for reclassification







Available-for-sale financial assets

37 

(162)


(31)

(67)

Cash flow hedges

(983)

1,515 


(372)

(422)

(66)

Currency translation

82 

1,276 


(21)

109 

205 

Tax

237 

(297)


76 

128 

63 


(627)

2,332 


(309)

(216)

135 

Other comprehensive (loss)/income after tax

(765)

1,570 


(336)

(270)

95 








Total comprehensive income/(loss) for the period

1,065 

629 


270 

568 

(232)








Total comprehensive income/(loss) is attributable to:







Non-controlling interests

30 

157 


(19)

39 

32 

Preference shareholders

155 

192 


70 

45 

79 

Paid-in equity holders

323 

151 


152 

95 

56 

Dividend access share

 - 

1,193 


 - 

 - 

 - 

Ordinary shareholders

557 

(1,064)


67 

389 

(399)


1,065 

629 


270 

568 

(232)


Condensed consolidated balance sheet as at 30 September 2017 (unaudited)

 


30 September

30 June

31 December

2017 

2017 

2016 


£m

£m 

£m





Assets




Cash and balances at central banks

88,210 

86,807 

74,250 

Net loans and advances to banks

16,671 

20,685 

17,278 

Reverse repurchase agreements and stock borrowing

12,905 

14,847 

12,860 

Loans and advances to banks

29,576 

35,532 

30,138 

Net loans and advances to customers

324,650 

326,059 

323,023 

Reverse repurchase agreements and stock borrowing

23,767 

25,183 

28,927 

Loans and advances to customers

348,417 

351,242 

351,950 

Debt securities

87,860 

86,169 

72,522 

Equity shares

507 

518 

703 

Settlement balances

8,528 

12,091 

5,526 

Derivatives

171,720 

193,531 

246,981 

Intangible assets

6,484 

6,467 

6,480 

Property, plant and equipment

4,777 

4,823 

4,590 

Deferred tax

1,637 

1,677 

1,803 

Prepayments, accrued income and other assets

4,046 

3,797 

3,713 

Total assets

751,762 

782,654 

798,656 





Liabilities




Bank deposits

36,186 

38,965 

33,317 

Repurchase agreements and stock lending

7,047 

5,183 

5,239 

Deposits by banks

43,233 

44,148 

38,556 

Customer deposits

359,879 

359,882 

353,872 

Repurchase agreements and stock lending

33,245 

37,855 

27,096 

Customer accounts

393,124 

397,737 

380,968 

Debt securities in issue

31,700 

31,997 

27,245 

Settlement balances

9,094 

11,379 

3,645 

Short positions

31,793 

29,862 

22,077 

Derivatives

164,394 

184,161 

236,475 

Provisions for liabilities and charges

7,109 

11,227 

12,836 

Accruals and other liabilities

6,925 

6,603 

7,006 

Retirement benefit liabilities

152 

182 

363 

Deferred tax

516 

585 

662 

Subordinated liabilities

14,248 

14,724 

19,419 





Total liabilities

702,288 

732,605 

749,252 





Equity




Non-controlling interests

746 

844 

795 

Owners' equity*




  Called up share capital

11,906 

11,876 

11,823 

  Reserves

36,822 

37,329 

36,786 





Total equity

49,474 

50,049 

49,404 





Total liabilities and equity

751,762 

782,654 

798,656 





*Owners' equity attributable to:




Ordinary shareholders

42,105 

42,149 

41,462 

Other equity owners

6,623 

7,056 

7,147 






48,728 

49,205 

48,609 


Condensed consolidated statement of changes in equity for the period ended 30 September 2017 (unaudited)

 


Share








capital and




Total

Non



statutory

Paid-in

Retained

Other

owners'

controlling

Total


reserves

equity

earnings

reserves*

equity

 interests

equity


£m

£m

£m

£m

£m

£m

£m

At 1 January 2017

41,926 

4,582 

(12,936)

15,037 

48,609 

795 

49,404 

Profit attributable to ordinary shareholders








  and other equity owners

1,809 

1,809 

21 

1,830 

Other comprehensive income








 - changes in fair value of credit in financial








   liabilities designated at fair value through profit








   or loss due to own credit risk

(107)

(107)

(107)

 - other amounts recognised in equity

(26)

(175)

(201)

(192)

 - amounts transferred from equity to profit or loss

(677)

(677)

(677)

 - recycled to profit or loss on disposal








   of businesses (1)

(21)

(21)

(21)

 - tax

(5)

237 

232 

232 

Preference share and other dividends paid

(478)

(478)

(20)

(498)

Shares and securities issued during the period

226 

(5)

221 

221 

Redemption of preference shares (2)

692 

(692)

-

-

Reclassification of paid-in equity (3)

(524)

(196)

(720)

(720)

Capital reduction (4)

(30,331)

30,331 

-

-

Share-based payments - gross

(26)

(26)

(26)

Movement in own shares held

87 

87 

87 

Equity withdrawn

(59)

(59)

At 30 September 2017

12,600 

4,058 

17,669 

14,401 

48,728 

746 

49,474 
















30 September








2017

Total equity is attributable to:





£m

Non-controlling interests







746 

Preference shareholders







2,565 

Paid-in equity holders







4,058 

Ordinary shareholders







42,105 








49,474 

*Other reserves consist of:







Merger reserve







10,881 

Available-for-sale reserve







260 

Cash flow hedging reserve







298 

Foreign exchange reserve







2,962 








14,401 

 

Notes:

(1)

No tax impact.

(2)

In September 2017, non-cumulative US dollar preference shares recorded as debt were redeemed at their original issue price of US$1.1billion. The nominal value of £0.3 million has been credited to the capital redemption reserve; share premium increased by £0.7 billion in respect of the premium received on issue, with a corresponding decrease in retained earnings.

(3)

Paid-in equity reclassified to liabilities as a result of the call of RBS Capital Trust D in March 2017 (redeemed in June 2017) and the call of US$564 million and CAD321 million EMTN notes in August 2017 (redeemed in October 2017).

(4)

On 15 June 2017, the Court of Session approved a reduction of RBSG plc capital so that the amounts which stood to the credit of share premium account and capital redemption reserve were transferred to retained earnings.

 


Notes

 

1. Basis of preparation

The condensed consolidated financial statements should be read in conjunction with RBS's 2016 Annual Report and Accounts which were prepared in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board (IASB) and interpretations issued by the IFRS Interpretations Committee of the IASB as adopted by the European Union (EU) (together IFRS).

 

Accounting policies

Ahead of adopting IFRS 9 Financial Instruments from 1 January 2018 RBS has adopted the provisions in respect of the presentation of gains and losses on financial liabilities designated as at fair value through profit or loss from 1 January 2017.  Accordingly, a loss of £30 million has been reported in the consolidated statement of other comprehensive income in Q3 2017 instead of in the consolidated income statement. Comparatives have not been restated, however, in Q3 2016 a loss of £92 million was included in the consolidated income statement. Own credit adjustments on financial liabilities held-for-trading will continue to be recognised in the consolidated income statement, a loss of £5 million was reported in Q3 2017 (Q3 2016 - loss of £64 million).

 

Apart from the above RBS's principal accounting policies are as set out on pages 297 to 306 of the 2016 Annual Report and Accounts. Other amendments to IFRS effective for 2017 have not had a material effect on RBS's Q3 2017 results.

 

Critical accounting policies and key sources of estimation uncertainty

The judgements and assumptions that are considered to be the most important to the portrayal of RBS's financial condition are those relating to goodwill, provisions for liabilities, deferred tax, loan impairment provisions and fair value of financial instruments. These critical accounting policies and judgements are described on pages 306 to 308 of RBS's 2016 Annual Report and Accounts.

 

Going concern

Having reviewed RBS's forecasts, projections and other relevant evidence, the directors have a reasonable expectation that RBS will continue in operational existence for the foreseeable future. Accordingly, the results for the period ended 30 September 2017 have been prepared on a going concern basis.


 

2. Provisions for liabilities and charges

 


Payment

Other

Residential

Litigation




protection

 customer

mortgage

and other



insurance

 redress (1)

backed securities

regulatory

Other (2)


£m

£m

£m

£m

£m

£m








At 1 January 2017

1,253 

1,105 

6,752 

1,918 

1,808 

12,836 

Currency translation and other movements

(1)

(114)

(13)

10 

(118)

Charge to income statement

32 

204 

236 

Releases to income statement

(2)

(3)

(39)

(44)

Provisions utilised

(78)

(99)

(950)

(164)

(1,291)

At 31 March 2017

1,175 

1,003 

6,638 

984 

1,819 

11,619 








Currency translation and other movements

(237)

(17)

38 

(211)

Charge to income statement

55 

222 

59 

371 

707 

Releases to income statement

(38)

(4)

(96)

(138)

Provisions utilised

(81)

(114)

(44)

(113)

(398)

(750)

At 30 June 2017

1,094 

911 

6,579 

909 

1,734 

11,227 








Currency translation and other movements

(159)

(4)

(14)

(176)

Charge to income statement

105 

118 

224 

Releases to income statement

(1)

(2)

(1)

(4)

Provisions utilised (3)

(115)

(84)

(3,588)

(221)

(154)

(4,162)

At 30 September 2017

979 

828 

2,832 

787 

1,683 

7,109 

 

Notes:

(1)

Closing provision predominantly relates to investment advice, packaged accounts (including costs) and tracker mortgages.

(2)

The Group recognised a £750 million provision in 2016 as a consequence of the announcement that HM Treasury is seeking a revised package of remedies that would conclude its remaining State Aid commitments. An additional charge of £50 million was taken in Q2 2017 following further revisions to the package, taking the total provision to £800 million.

(3)

Q3 2017 utilisation includes the $4.75 billion payment made following the settlement reached between RBS and the Federal Housing Finance Agency in relation to RBS's issuance and underwriting of RMBS in the US.

 

 

There are uncertainties as to the eventual cost of redress in relation to certain of the provisions contained in the table above. Assumptions relating to these are inherently uncertain and the ultimate financial impact may be different from the amount provided.


Notes

 

3. Material developments in litigation, investigations and reviews

RBS's 2017 Interim Results issued on 4 August 2017 included comprehensive disclosures about RBS's litigation, investigations and reviews in Note 12. Set out below are the material developments in these matters since the 2017 Interim Results were published. RBS generally does not disclose information about the establishment or existence of a provision for a particular matter where disclosure of the information can be expected to prejudice seriously RBS's position in the matter.

 

Litigation

Residential mortgage-backed securities (RMBS) litigation in the US

Among other RMBS litigation, RBS Securities Inc. (RBSSI) remains a defendant in a lawsuit relating to RMBS issued by Nomura Holding America Inc. (Nomura) and subsidiaries, filed by the US Federal Housing Finance Agency (FHFA) as conservator for the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). On 11 May 2015, following a trial, the United States District Court for the Southern District of New York issued a written decision in favour of FHFA, finding, as relevant to RBS, that the offering documents for four Nomura-issued RMBS for which RBSSI served as an underwriter contained materially misleading statements about the mortgage loans that backed the securitisations. Nomura and RBS appealed. On 28 September 2017, the court's judgment against Nomura and RBSSI was affirmed by the United States Court of Appeals for the Second Circuit.

 

RBSSI estimates that its net exposure under the court's judgment is approximately US$383 million, which consists of the difference between the amount of the judgment against RBSSI (US$636 million) and the estimated market value of the four RMBS that FHFA would return to RBSSI pursuant to the judgment, plus the costs and attorney's fees that will be due to FHFA if the judgment is upheld. The estimated net exposure in this matter is covered by an existing provision.  The judgment is stayed pending potential further appeal by the defendants, though post-judgment interest on the judgment amount will accrue while the appeal is pending. RBSSI intends to pursue a contractual claim for indemnification against Nomura with respect to any losses it suffers as a result of this matter. 

 

RBS continues to caution that, in connection with its RMBS litigation matters and RMBS investigations taken as a whole, further substantial provisions and costs may be recognised and, depending upon the final outcomes, other adverse consequences may occur.

 

London Interbank Offered Rate (LIBOR)

As previously disclosed, certain members of the Group have been named as defendants in a number of class actions and individual claims filed in the US with respect to the setting of LIBOR and certain other benchmark interest rates. On 18 August 2017, the court in the action relating to the Singapore Interbank Offered Rate and Singapore Swap Offer Rate dismissed all claims against RBS for lack of personal jurisdiction; however, the court is allowing the plaintiffs to replead their complaint. On 25 September 2017, the court in the action relating to Swiss Franc LIBOR dismissed all claims against all defendants; however, the court is allowing the plaintiffs to replead their complaint.  Both of these actions are pending in the United States District Court for the Southern District of New York.

 

FX antitrust litigation

On 3 August 2017, the United States District Court for the Southern District of New York held that the amended complaint in the FX-related antitrust class action on behalf of a purported class of "consumers and end-user businesses" adequately pleads that the class has the requisite antitrust standing.  As a result, the discovery phase has commenced. RBS and the other defendants are seeking reconsideration of the court's decision regarding standing or, in the alternative, permission to take an immediate appeal to the United States Court of Appeals for the Second Circuit. 

Notes

 

3. Material developments in litigation, investigations and reviews (continued)

 

Weiss v. National Westminster Bank Plc (NatWest)

As previously disclosed, NatWest is defending a lawsuit filed by a number of US nationals (or their estates, survivors, or heirs) who were victims of terrorist attacks in Israel. The plaintiffs allege that NatWest is liable for damages arising from those attacks pursuant to the US Anti-terrorism Act because NatWest previously maintained bank accounts and transferred funds for the Palestine Relief & Development Fund, an organisation which plaintiffs allege solicited funds for Hamas, the alleged perpetrator of the attacks. On 5 October 2017, the United States District Court for the Eastern District of New York dismissed claims against NatWest with respect to two terrorist attacks, but denied NatWest's summary judgment motion with respect to claims arising from 16 other attacks. No trial date has been set.

 

Investigations and reviews

RMBS and other securitised products investigations

On 26 October 2017, the United States Attorney for the District of Connecticut (USAO) announced that it entered into a Non-Prosecution Agreement (NPA) with RBSSI in connection with misrepresentations to counterparties relating to secondary trading in various forms of asset-backed securities.  The NPA, which recognises RBSSI's timely self-reporting and cooperation, requires RBSSI to pay a penalty of US$35 million, reimburse customers at least US$9.1 million, and continue to cooperate with the investigation.  These amounts are covered by existing provisions.  As part of the NPA, the USAO has agreed not to file criminal charges against RBSSI relating to certain conduct and information described in the NPA if RBSSI complies with the NPA during its one-year term.  In March and December 2015, two former RBSSI traders entered guilty pleas in the United States District Court for the District of Connecticut, each to one count of conspiracy to commit securities fraud while employed at RBSSI.

 

FCA review of RBS's treatment of SMEs

On 23 October 2017, the FCA published an interim account incorporating a summary of the Skilled Person's report which stated that, further to the general investigation announced in November 2016, the FCA has decided to carry out a more focused investigation. 


 

4. Post balance sheet events

Other than matters disclosed, there have been no further significant events between 30 September 2017 and the date of approval of this announcement.


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; structural reform and the implementation of the UK ring-fencing regime; the implementation of RBS's transformation programme, including the further restructuring of the NatWest Markets business; the satisfaction of the Group's residual EU State Aid obligations; the continuation of RBS'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; future pension contributions; RBS's exposure to political risks, operational risk, conduct risk, cyber and IT risk and credit rating risk and to various types of market risks, including as 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 2016 Annual Report on Form 20-F 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 RBS presented by the outcomes of the legal, regulatory and governmental actions and investigations that RBS is or may be subject to (including active civil and criminal investigations) and any resulting material adverse effect on RBS of unfavourable outcomes and the timing thereof (including where resolved by settlement); economic, regulatory and political risks, including as may result from the uncertainty arising from the vote to leave in the EU Referendum and from the outcome of general elections in the UK and changes in government policies; RBS's ability to satisfy its residual EU State Aid obligations and the timing thereof; RBS's ability to successfully implement the significant and complex restructuring required to be undertaken in order to implement the UK ring-fencing regime and related costs; RBS's ability to successfully implement the various initiatives that are comprised in its transformation programme, particularly the proposed further restructuring of the NatWest Markets business, the balance sheet reduction programme and its significant cost-saving initiatives and whether RBS will be a viable, competitive, customer focused and profitable bank especially after its restructuring and the implementation of the UK ring-fencing regime; the exposure of RBS to cyber-attacks and its ability to defend against such attacks; RBS's ability to achieve its capital and leverage requirements or targets which will depend in part on RBS's success in reducing the size of its business and future profitability as well as developments which may impact its CET1 capital including additional litigation or conduct costs, additional pension contributions, further impairments or accounting changes; ineffective management of capital or changes to regulatory requirements relating to capital adequacy and liquidity or failure to pass mandatory stress tests; RBS's ability to access sufficient sources of capital, liquidity and funding when required; changes in the credit ratings of RBS, RBS entities or the UK government; declining revenues resulting from lower customer retention and revenue generation in light of RBS's strategic refocus on the UK; as well as increasing competition from new incumbents and disruptive technologies.



Forward-looking statements

 

In addition, there are other risks and uncertainties that could adversely affect our results, ability to implement our strategy, cause us to fail to meet our targets or the accuracy of forward-looking statements in this document. These include operational risks that are inherent to RBS's business and will increase as a result of RBS's significant restructuring initiatives being concurrently implemented; the potential negative impact on RBS's business of global economic and financial market conditions and other global risks, including risks arising out of geopolitical events and political developments; the impact of a prolonged period of low interest rates or unanticipated turbulence in interest rates, yield curves, foreign currency exchange rates, credit spreads, bond prices, commodity prices, equity prices; basis, volatility and correlation risks; the extent of future write-downs and impairment charges caused by depressed asset valuations; deteriorations in borrower and counterparty credit quality; heightened regulatory and governmental scrutiny and the increasingly regulated environment in which RBS operates as well as divergences in regulatory requirements in the jurisdictions in which RBS operates; the risks relating to RBS's IT systems or a failure to protect itself and its customers against cyber threats, reputational risks; risks relating to increased pension liabilities and the impact of pension risk on RBS's capital position; risks relating to the failure to embed and maintain a robust conduct and risk culture across the organisation or if its risk management framework is ineffective; RBS's ability to attract and retain qualified personnel; limitations on, or additional requirements imposed on, RBS's activities as a result of HM Treasury's investment in RBS; the value and effectiveness of any credit protection purchased by RBS; risks relating to the reliance on valuation, capital and stress test models and any inaccuracies resulting therefrom or failure to accurately reflect changes in the micro and macroeconomic environment in which RBS operates, risks relating to changes in applicable accounting policies or rules which may impact the preparation of RBS's financial statements or adversely impact its capital position; the impact of the recovery and resolution framework and other prudential rules to which RBS is subject; the recoverability of deferred tax assets by the Group; and the success of RBS in managing the risks involved in the foregoing.

 

The forward-looking statements contained in this document speak only as at the date hereof, and RBS 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.



 

Additional information

 

Presentation of information

In this document, 'RBSG plc' or the 'parent company' refers to The Royal Bank of Scotland Group plc, and 'RBS' or the 'Group' refers to RBSG plc and its subsidiaries.

 

Financial information contained in this document does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006 ('the Act'). The statutory accounts for the year ended 31 December 2016 have been filed with the Registrar of Companies. The report of the auditor on those statutory accounts was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Act.

 

In this document Williams & Glyn refers to the business formerly intended to be divested as a separate legal entity, which continues to be reported as a separate operating segment. 

 

Key operating indicators

As described in Note 1 on page 14, RBS prepares its financial statements in accordance with IFRS as issued by the IASB which constitutes a body of generally accepted accounting principles (GAAP). This document contains a number of adjusted or alternative performance measures, also known as non-GAAP financial measures. These measures exclude certain items which management believe are not representative of the underlying performance of the business and which distort period-on-period comparison. These measures include:

?

'Adjusted' measures of financial performance, principally operating performance before: own credit adjustments; gain or loss on redemption of own debt; strategic disposals; restructuring costs and litigation and conduct costs;

?

Performance, funding and credit metrics such as 'return on tangible equity', 'adjusted return on tangible equity' and related RWA equivalents incorporating the effect of capital deductions (RWAes), total assets excluding derivatives (funded assets), net interest margin (NIM) adjusted for items designated at fair value through profit or loss (non-statutory NIM), cost:income ratio, loan:deposit ratio and REIL/impairment provision ratios. These are internal metrics used to measure business performance;

?

Personal & Business Banking (PBB) franchise results, combining the reportable segments of UK Personal & Business Banking (UK PBB) and Ulster Bank RoI, Commercial & Private Banking (CPB) franchise results, combining the reportable segments of Commercial Banking, Private Banking and RBS International (RBSI) and 'core businesses' results combining PBB, CPB and NatWest Markets results which are presented to provide investors with a summary of the Group's business performance; and

?

Cost savings progress and 2017 target calculated using operating expenses excluding litigation and conduct costs, restructuring costs and the VAT recoveries.

 

 

Contacts

Analyst enquiries:

Matt Waymark

Investor Relations

+44 (0) 207 672 1758

Media enquiries:

RBS Press Office


+44 (0) 131 523 4205

 


Analyst and investor presentation

Web cast and dial in details

Date:

Friday 27 October 2017

www.rbs.com/results

Time:

9:00 am UK time

International - +44 1452 568 172

Conference ID:

59366016

UK Free Call - 0800 694 8082

US Toll Free - 1 866 966 8024

 

Available on www.rbs.com/results

?

Interim Management Statement Q3 2017 and background slides.

?

A financial supplement containing income statement, balance sheet and segment performance information for the nine quarters ended 30 September 2017.

?

Pillar 3 supplement at 30 September 2017.


 

 

 

 

 

 

 

 

Appendix

 

Segmental income statement reconciliations

 

 


Segmental income statement reconciliations


PBB


CPB





Central




Ulster


Commercial

Private

RBS


NatWest

Capital

Williams

 items &

Total


UK PBB

Bank RoI


Banking

Banking

International


Markets

Resolution

& Glyn

other

RBS

Nine months ended 30 September 2017

£m

£m


£m

£m

£m


£m

£m

£m

£m

£m

Income statement













Total income - statutory

4,303 

443 


2,678 

487 

292 


1,326 

(476)

626 

397 

10,076 

Own credit adjustments



55 

20 

78 

Loss on redemption of own debt



Strategic disposals



(156)

(156)

Total income - adjusted

4,303 

446 


2,678 

487 

292 


1,381 

(456)

626 

248 

10,005 

Operating expenses - statutory

(2,333)

(422)


(1,439)

(335)

(153)


(1,125)

(715)

(230)

(243)

(6,995)

Restructuring costs  - direct

24 

25 


42 


48 

195 

697 

1,034 

  - indirect

184 

27 


96 

16 


86 

(35)

(378)

Litigation and conduct costs

13 

34 



47 

361 

52 

521 

Operating expenses - adjusted

(2,112)

(336)


(1,295)

(318)

(139)


(944)

(194)

(230)

128 

(5,440)

Impairment (losses)/releases

(139)

21 


(245)

(4)

(3)


(1)

149 

(36)

(1)

(259)

Operating profit/(loss) - statutory

1,831 

42 


994 

148 

136 


200 

(1,042)

360 

153 

2,822 

Operating profit/(loss) - adjusted

2,052 

131 


1,138 

165 

150 


436 

(501)

360 

375 

4,306 

Additional information













Return on equity (1)

30.8%

2.1%


8.3%

9.5%

12.2%


1.8%

nm

23.0%

nm

5.2%

Return on equity   - adjusted (1,2,3)

34.8%

6.5%


9.9%

10.8%

13.7%


6.1%

nm

23.0%

nm

10.4%

Cost:income ratio (4)

54.2%

95.3%


51.8%

68.8%

52.4%


84.8%

nm

36.7%

nm

69.1%

Cost:income ratio - adjusted (2,3,4)

49.1%

75.3%


46.2%

65.3%

47.6%


68.4%

nm

36.7%

nm

53.9%














Nine months ended 30 September 2016













Income statement













Total income - statutory

3,951 

439 


2,548 

496 

278 


1,289 

(69)

620 

(178)

9,374 

Own credit adjustments

(3)



(82)

(142)

(67)

(294)

Loss on redemption of own debt



127 

127 

Strategic disposals



81 

(245)

(164)

Total income - adjusted

3,951 

436 


2,548 

496 

278 


1,207 

(130)

620 

(363)

9,043 

Operating expenses - statutory

(2,784)

(443)


(1,458)

(390)

(110)


(1,110)

(915)

(353)

(1,277)

(8,840)

Restructuring costs  - direct

50 

32 


13 


16 

35 

57 

894 

1,099 

- indirect

86 


49 

22 


50 

35 

(248)

Litigation and conduct costs

420 

95 


16 

(1)


62 

257 

889 

1,740 

Operating expenses - adjusted

(2,228)

(312)


(1,380)

(365)

(108)


(982)

(588)

(296)

258 

(6,001)

Impairment (losses)/releases

(67)

66 


(123)

(5)

(11)


(383)

(31)

(553)

Operating profit/(loss) - statutory

1,100 

62 


967 

101 

157 


179 

(1,367)

236 

(1,454)

(19)

Operating profit/(loss) - adjusted

1,656 

190 


1,045 

126 

159 


225 

(1,101)

293 

(104)

2,489 

Additional information













Return on equity (1)

17.0%

3.1%


8.5%

7.0%

15.4%


1.6%

nm

14.8%

nm

(8.5%)

Return on equity  - adjusted (1,2,3)

26.4%

9.5%


9.4%

8.9%

15.6%


2.4%

nm

18.3%

nm

(0.6%)

Cost:income ratio (4)

70.5%

100.9%


55.4%

78.6%

39.6%


86.1%

nm

56.9%

nm

94.2%

Cost:income ratio - adjusted (2,3,4)

56.4%

71.6%


52.2%

73.6%

38.8%


81.4%

nm

47.7%

nm

65.9%














For notes refer to page 3 of this appendix.















 

Segmental income statement reconciliations















PBB


CPB





Central




Ulster


Commercial

Private

RBS


NatWest

Capital

Williams

 items &

Total


UK PBB

Bank RoI


Banking

Banking

International


Markets

Resolution

& Glyn

other

RBS

Quarter ended 30 September 2017

£m

£m


£m

£m

£m


£m

£m

£m

£m

£m

Income statement













Total income - statutory

1,548 

150 


928 

166 

97 


394 

(374)

209 

39 

3,157 

Own credit adjustments



(2)

Total income  - adjusted

1,548 

150 


928 

166 

97 


401 

(376)

209 

39 

3,162 

Operating expenses - statutory

(747)

(129)


(443)

(103)

(59)


(350)

(176)

(72)

(64)

(2,143)

Restructuring costs  - direct



18 

65 

154 

244 

 - indirect

47 


19 


13 

(39)

(50)

Litigation and conduct costs



13 

89 

12 

125 

Operating expenses - adjusted

(699)

(119)


(420)

(100)

(49)


(306)

(61)

(72)

52 

(1,774)

Impairment (losses)/releases

(67)

10 


(151)


71 

(11)

(143)

Operating profit/(loss) - statutory

734 

31 


334 

66 

40 


44 

(479)

126 

(25)

871 

Operating profit/(loss) - adjusted

782 

41 


357 

69 

50 


95 

(366)

126 

91 

1,245 

Additional information













Return on equity (1)

36.8%

4.6%


8.6%

13.2%

10.4%


0.6%

nm

24.6%

nm

4.5%

Return on equity  - adjusted (1,2,3)

39.3%

6.1%


9.3%

13.8%

13.6%


3.6%

nm

24.6%

nm

8.2%

Cost:income ratio (4)

48.3%

86.0%


45.7%

62.0%

60.8%


88.8%

nm

34.4%

nm

67.5%

Cost:income ratio - adjusted (2,3,4)

45.2%

79.3%


43.1%

60.2%

50.5%


76.3%

nm

34.4%

nm

55.6%














Quarter ended 30 June 2017













Income statement













Total income - statutory

1,378 

148 


885 

161 

97 


444 

(43)

211 

426 

3,707 

Own credit adjustments



28 

15 

(1)

44 

Gain on redemption of own debt



Strategic disposals



(156)

(156)

Total income  - adjusted

1,378 

150 


885 

161 

97 


472 

(28)

211 

278 

3,604 

Operating expenses - statutory

(735)

(151)


(446)

(108)

(48)


(355)

(378)

(74)

(104)

(2,399)

Restructuring costs  - direct



10 

60 

134 

213 

  - indirect

26 


17 


25 

(12)

(64)

Litigation and conduct costs

33 



266 

30 

342 

Operating expenses - adjusted

(697)

(109)


(427)

(105)

(47)


(317)

(64)

(74)

(4)

(1,844)

Impairment (losses)/releases

(40)

(13)


(33)

(4)


(1)

33 

(14)

(70)

Operating profit/(loss) - statutory

603 

(16)


406 

49 

51 


88 

(388)

123 

322 

1,238 

Operating profit/(loss) - adjusted

641 

28 


425 

52 

52 


154 

(59)

123 

274 

1,690 

Additional information













Return on equity (1)

30.8%

(2.4%)


10.7%

9.6%

14.0%


2.9%

nm

23.5%

nm

8.0%

Return on equity  - adjusted (1,2,3)

32.8%

4.3%


11.4%

10.3%

14.3%


6.6%

nm

23.5%

nm

12.9%

Cost:income ratio (4)

53.3%

102.0%


48.3%

67.1%

49.5%


80.0%

nm

35.1%

nm

64.4%

Cost:income ratio - adjusted (2,3,4)

50.6%

72.7%


46.1%

65.2%

48.5%


67.2%

nm

35.1%

nm

50.7%














For notes refer to next page.















 

Segmental income statement reconciliations

 


PBB


CPB





Central




Ulster


Commercial

Private

RBS


NatWest

Capital

Williams

 items &

Total


UK PBB

Bank RoI


Banking

Banking

International


Markets

Resolution

& Glyn

other

RBS

Quarter ended 30 September 2016

£m

£m


£m

£m

£m


£m

£m

£m

£m

£m














Income statement













Total income - statutory

1,336 

146 


849 

165 

93 


471 

103 

209 

(62)

3,310 

Own credit adjustments



55 

42 

59 

156 

Loss on redemption of own debt



(3)

(3)

Strategic disposals



30 

31 

Total income  - adjusted

1,336 

146 


849 

165 

93 


526 

175 

209 

(5)

3,494 

Operating expenses - statutory

(742)

(131)


(474)

(112)

(39)


(381)

(437)

(111)

(484)

(2,911)

Restructuring costs - direct

(1)


12 


23 

12 

409 

469 

- indirect

26 



27 

10 

(78)

Litigation and conduct costs

(1)


(1)


231 

181 

425 

Operating expenses - adjusted

(718)

(117)


(447)

(109)

(40)


(342)

(173)

(99)

28 

(2,017)

Impairment (losses)/releases

(27)

39 


(20)

(3)


(120)

(14)

(144)

Operating profit/(loss) - statutory

567 

54 


355 

50 

54 


90 

(454)

84 

(545)

255 

Operating profit/(loss) - adjusted

591 

68 


382 

53 

53 


184 

(118)

96 

24 

1,333 














Additional information













Return on equity (1)

27.1%

7.8%


9.5%

11.1%

15.4%


3.1%

nm

15.7%

nm

(4.8%)

Return on equity  - adjusted (1,2,3)

28.3%

9.9%


10.4%

11.8%

15.1%


8.0%

nm

17.9%

nm

4.6%

Cost income ratio (4)

55.5%

89.7%


53.9%

67.9%

41.9%


80.9%

nm

53.1%

nm

87.8%

Cost income ratio - adjusted (2,3,4)

53.7%

80.1%


50.6%

66.1%

43.0%


65.0%

nm

47.4%

nm

57.3%

 

 

Notes:

(1)

RBS's CET 1 target is 13% but for the purposes of computing segmental return on equity (ROE), to better reflect the differential drivers of capital usage, segmental operating profit after tax and adjusted for preference dividends is divided by average notional equity allocated at different rates of 14% (Ulster Bank RoI - 11% prior to Q1 2017), 11% (Commercial Banking), 14% (Private Banking - 15% prior to Q1 2017), 12% (RBS International) and 15% for all other segments, of the monthly average of segmental risk-weighted assets incorporating the effect of capital deductions (RWAes). RBS's Return on equity is calculated using profit for the period attributable to ordinary shareholders.

(2)

Excluding own credit adjustments, (loss)/gain on redemption of own debt and strategic disposals.

(3)

Excluding restructuring costs and litigation and conduct costs.

(4)

Operating lease depreciation included in income (nine months ended September 2017 - £107 million; Q3 2017 - £35 million; nine months ended September 2016 - £115 million; Q2 2017 - £36 million, Q3 2016 - £39 million).

 

Legal Entity Identifier: 2138005O9XJIJN4JPN90

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
QRTLLFLTITLRFID






DateSourceHeadlineCategory
20-Apr-18 16:35RNSDividend DeclarationDividends
17-Apr-18 18:07RNSAllotment and Issue of New Ordinary SharesCompany Announcement - General
17-Apr-18 13:24RNSMoU with Pension Trustee on ring-fencing alignmentCompany Announcement - General
13-Apr-18 11:32RNSBlock listing Interim ReviewCompany Announcement - General
05-Apr-18 12:00RNSUpdate on ring-fencing plansCompany Announcement - General
05-Apr-18 07:00RNSRBS notes credit ratings action by Moody'sCompany Announcement - General
03-Apr-18 07:00RNSFILING OF ANNUAL REPORT ON FORM 20-F WITH US SECCompany Announcement - General
29-Mar-18 13:19RNSDirector/PDMR ShareholdingDirectors' Dealings
26-Mar-18 15:18RNSAdditional ListingCompany Announcement - General
23-Mar-18 17:09RNSPublication of Suppl.ProspctsCompany Announcement - General
22-Mar-18 15:21RNSUpdate on ring fencing plansCompany Announcement - General
20-Mar-18 08:00RNSMorgan Stanley European Financials ConferenceCompany Announcement - General
16-Mar-18 14:37RNSPublication of Final TermsCompany Announcement - General
08-Mar-18 16:02RNSDirector/PDMR ShareholdingDirectors' Dealings
01-Mar-18 18:10RNSDividend DeclarationDividends
01-Mar-18 15:10RNSDirector/PDMR ShareholdingDirectors' Dealings
28-Feb-18 18:27RNSPublication of Final TermsCompany Announcement - General
28-Feb-18 18:20RNSTotal Voting RightsHolding(s) in Company
28-Feb-18 13:37RNSAdditional ListingCompany Announcement - General
23-Feb-18 15:30RNSPublication of Suppl.ProspctsCompany Announcement - General
23-Feb-18 07:02RNSDirectorate ChangeExecutive Changes
23-Feb-18 07:01RNSAnnual Financial ReportResults and Trading Reports
23-Feb-18 07:00RNSFinal ResultsResults and Trading Reports
31-Jan-18 17:12RNSTotal Voting RightsHolding(s) in Company
29-Jan-18 14:27RNSDirector/PDMR ShareholdingDirectors' Dealings
03-Jan-18 17:05RNSPublication of Suppl.ProspctsCompany Announcement - General
29-Dec-17 13:20RNSDirector/PDMR ShareholdingDirectors' Dealings
29-Dec-17 13:20RNSTotal Voting RightsHolding(s) in Company
21-Dec-17 10:14RNSSegmental Reporting Restatement DocumentCompany Announcement - General
21-Dec-17 09:00RNSDirectorate ChangeExecutive Changes


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