Interim Management Statement.

RNS Number : 0958C

Royal Bank of Scotland Group PLC

06 November 2009

 



Appendix 2 

Third quarter 2009 results

Analysis by quarter

Appendix 2 Analysis by quarter 

Summary consolidated income statement - pro forma

	2008			2009				Q3 2009 vs.
	Q3	Q4		Q1	Q2	Q3		Q3 2008	Q2 2009
	£m	£m		£m	£m	£m
Net interest income	3,836	4,427		3,538	3,322	3,261		(15%)	(2%)
Non-interest income (excluding insurance net premium income)	3,340	(5,503)		3,776	1,498	2,532		(24%)	69%
Insurance net premium income	1,409	1,439		1,356	1,301	1,301		(8%)	-
Total income	8,585	363		8,670	6,121	7,094		(17%)	16%
Operating expenses	(4,060)	(3,735)		(4,667)	(4,066)	(4,195)		3%	3%
Profit/(loss) before other operating charges	4,525	(3,372)		4,003	2,055	2,899		(36%)	41%
Insurance net claims	(934)	(1,056)		(966)	(925)	(1,145)		23%	24%
Operating profit before impairment losses	3,591	(4,428)		3,037	1,130	1,754		(51%)	55%
Impairment losses	(1,280)	(4,673)		(2,858)	(4,663)	(3,279)		156%	(30%)
Group operating profit/(loss)*	2,311	(9,101)		179	(3,533)	(1,525)		(166%)	(57%)
Amortisation of purchased intangible assets	(119)	(62)		(85)	(55)	(73)		(39%)	33%
Integration and restructuring costs	(289)	(752)		(379)	(355)	(324)		12%	(9%)
Write-down of goodwill	-	(16,196)		-	(311)	-		-	-
Gain on redemption of own debt	-	-		-	3,790	-		-	-
Strategic disposals	-	442		241	212	(155)		-	(173%)
Profit/(loss) before tax	1,903	(25,669)		(44)	(252)	(2,077)		-	-
Tax	(724)	1,701		(228)	640	576		(180%)	(10%)
Profit/(loss) from continuing operations	1,179	(23,968)		(272)	388	(1,501)		-	-
Loss from discontinued operations	(46)	1		(45)	(13)	(7)		(85%)	(46%)
Profit/(loss) for the period	1,133	(23,967)		(317)	375	(1,508)		-	-
Minority interests	(43)	(221)		(471)	(83)	(47)		9%	(43%)
Preference share and other dividends	(219)	(162)		(114)	(432)	(245)		12%	(43%)
Profit/(loss) attributable to ordinary shareholders	871	(24,350)		(902)	(140)	(1,800)		-	-

*profit/(loss) before tax, purchased intangibles amortisation, integration and restructuring costs, and write-down of goodwill and other intangible assets.

Key metrics
Cost:income ratio	47.3%	1,028.9%		53.8%	66.4%	59.1%		(1,184bp)	730bp
Net interest margin	2.05%	2.10%		1.78%	1.70%	1.75%		(30bp)	5bp
Risk-weighted assets	£543.1bn	£577.8bn		£575.7bn	£547.3bn	£594.7bn		10%	9%
Risk elements In lending	£10.8bn	£18.8bn		£23.7bn	£30.7bn	£35.0bn		-	14%
Provision balance as % of REIL/PPLs*	51%	50%		45%	44%	43%		(800bp)	(100bp)

* includes disposal groups.

Note:

2008 data have been restated for the amendment to IFRS 2 'Share-based Payment' and the finalisation of the ABN AMRO acquisition accounting in the second half of 2008.

Appendix 2 Analysis by quarter 

Divisional performance

The profit/(loss) of each division before amortisation of purchased intangible assets, write-down of goodwill and other assets, integration and restructuring costs, and after allocation of manufacturing costs is shown below.  The Group manages costs where they arise.  Customer-facing divisions control their direct expenses whilst Manufacturing is responsible for shared costs.  

	2008			2009				Q3 2009 vs.
	Q3	Q4		Q1	Q2	Q3		Q3 2008	Q2 2009
	£m	£m		£m	£m	£m
Operating profit/(loss) before impairment losses
UK Retail	420	381		371	490	468		11%	(4%)
UK Corporate	523	487		421	535	566		8%	6%
Wealth	103	77		100	134	120		17%	(10%)
Global Banking & Markets	616	(2,597)		3,845	1,116	647		5%	(42%)
Global Transaction Services	275	285		240	269	275		-	2%
Ulster Bank	98	36		71	78	59		(40%)	(24%)
US Retail & Commercial	236	312		182	136	137		(42%)	1%
RBS Insurance	150	176		81	142	13		(91%)	(91%)
Central items	813	(476)		486	(311)	121		(85%)	139%
Core	3,234	(1,319)		5,797	2,589	2,406		(26%)	(7%)
Non-Core	357	(3,109)		(2,760)	(1,459)	(652)		-	55%
Operating profit/(loss) before impairment losses	3,591	(4,428)		3,037	1,130	1,754		(51%)	55%
Included in the above are movements in fair value of own debt:
Global Banking & Markets	648	(875)		647	(482)	(320)		(149%)	(34%)
Central items	633	14		384	(478)	(163)		(126%)	(66%)
	1,281	(861)		1,031	(960)	(483)		(138%)	(50%)
Impairment losses by division
UK Retail	287	292		354	470	404		41%	(14%)
UK Corporate	55	169		100	450	187		-	(58%)
Wealth	3	8		6	16	1		(67%)	(94%)
Global Banking & Markets	2	505		269	(31)	272		-	-
Global Transaction Services	7	40		9	4	22		-	-
Ulster Bank	17	71		67	90	144		-	60%
US Retail & Commercial	134	177		223	146	180		34%	23%
RBS Insurance	-	42		5	1	2		-	100%
Central items	7	11		(3)	1	1		(86%)	-
Core	512	1,315		1,030	1,147	1,213		137%	6%
Non-Core	768	3,358		1,828	3,516	2,066		169%	(41%)
Total impairment losses	1,280	4,673		2,858	4,663	3,279		156%	(30%)

Appendix 2 Analysis by quarter

Divisional performance (continued)

	2008			2009				Q3 2009 vs.
	Q3	Q4		Q1	Q2	Q3		Q3 2008	Q2 2009
	£m	£m		£m	£m	£m
Operating profit/(loss) by division
UK Retail	133	89		17	20	64		(52%)	-
UK Corporate	468	318		321	85	379		(19%)	-
Wealth	100	69		94	118	119		19%	1%
Global Banking & Markets	614	(3,102)		3,576	1,147	375		(39%)	(67%)
Global Transaction Services	268	245		231	265	253		(6%)	(5%)
Ulster Bank	81	(35)		4	(12)	(85)		-	-
US Retail & Commercial	102	135		(41)	(10)	(43)		(142%)	-
RBS Insurance	150	134		76	141	11		(93%)	(92%)
Central items	806	(487)		489	(312)	120		(85%)	(138%)
Core	2,722	(2,634)		4,767	1,442	1,193		(56%)	(17%)
Non-Core	(411)	(6,467)		(4,588)	(4,975)	(2,718)		-	(45%)
Group operating profit/(loss)	2,311	(9,101)		179	(3,533)	(1,525)		(166%)	(57%)
Loan impairment losses	1,023	4,049		2,276	4,520	3,262		-	(28%)
Impairment losses on available-for-sale securities	257	624		582	143	17		(93%)	(88%)
	1,280	4,673		2,858	4,663	3,279		156%	(30%)
Loan impairment charge as % of gross loans and advances excluding reverse repurchase agreements	0.64%	2.24%		1.34%	2.98%	2.14%		150bp	(84bp)
	2008			2009				30 Sept 2009 vs
	30 Sept	31 Dec		31 Mar	30 June	30 Sept		30 Sept 2008	30 June 2009
	£bn	£bn		£bn	£bn	£bn
Risk-weighted assets by division
UK Retail	46.2	45.7		49.6	54.0	51.6		12%	(4%)
UK Corporate	88.7	85.7		86.2	89.5	91.0		3%	2%
Wealth	10.8	10.8		10.6	10.3	10.7		(1%)	4%
Global Banking & Markets	165.4	162.4		148.6	122.4	131.9		(20%)	8%
Global Transaction Services	19.4	17.4		18.7	16.7	18.9		(3%)	13%
Ulster Bank	22.2	24.5		26.2	26.2	28.5		28%	9%
US Retail & Commercial	51.4	63.9		64.3	55.6	62.8		22%	13%
Other	8.3	7.1		7.8	8.5	9.0		9%	5%
Core	412.4	417.5		412.0	383.2	404.4		(2%)	6%
Non-Core	130.7	160.3		163.7	164.1	190.3		46%	16%
Total risk-weighted assets	543.1	577.8		575.7	547.3	594.7		10%	9%

Appendix 2 Analysis by quarter

UK Retail

	2008			2009				Q3 2009 vs.
	Q3	Q4		Q1	Q2	Q3		Q3 2008	Q2 2009
Income statement	£m	£m		£m	£m	£m
Net interest income	821	856		797	868	848		3%	(2%)
Net fees and commissions - banking	365	345		337	321	303		(17%)	(6%)
Other non-interest income (net of insurance claims)	34	54		53	69	69		103%	-
Non-interest income	399	399		390	390	372		(7%)	(5%)
Total income	1,220	1,255		1,187	1,258	1,220		-	(3%)
Direct expenses
- staff	(243)	(236)		(214)	(214)	(206)		(15%)	(4%)
- other	(109)	(101)		(115)	(102)	(99)		(9%)	(3%)
Indirect expenses	(448)	(537)		(487)	(452)	(447)		-	(1%)
	(800)	(874)		(816)	(768)	(752)		(6%)	(2%)
Operating profit before impairment losses	420	381		371	490	468		11%	(4%)
Impairment losses	(287)	(292)		(354)	(470)	(404)		41%	(14%)
Operating profit	133	89		17	20	64		(52%)	-
Analysis of income by product:
Personal advances	310	296		305	311	303		(2%)	(3%)
Personal deposits	557	470		397	354	319		(43%)	(10%)
Mortgages	93	186		207	273	319		-	17%
Bancassurance	34	51		52	69	69		103%	-
Cards	205	208		204	212	225		10%	6%
Other	21	44		22	39	(15)		(171%)	(138%)
Total income	1,220	1,255		1,187	1,258	1,220		-	(3%)
Analysis of impairment by sector:
Mortgages	9	9		22	41	26		189%	(37%)
Personal	144	169		195	299	247		72%	(17%)
Cards	134	114		137	130	131		(2%)	1%
Total impairment	287	292		354	470	404		41%	(14%)
Loan impairment charge as % of gross customer loans and advances by sector:
Mortgages	0.05%	0.05%		0.12%	0.21%	0.13%		8bp	(8bp)
Personal	3.76%	4.42%		5.20%	8.31%	6.81%		305bp	(149bp)
Cards	8.25%	7.24%		9.13%	8.52%	8.59%		34bp	7bp
	1.23%	1.24%		1.50%	1.94%	1.60%		37bp	(34bp)

Appendix 2 Analysis by quarter

UK Retail (continued)

	2008			2009				Q3 2009 vs.
Key metrics	Q3	Q4		Q1	Q2	Q3		Q3 2008	Q2 2009
Performance ratios
Return on equity (1)	9.4%	6.5%		1.2%	1.4%	4.6%		(480bp)	320bp
Net interest margin	3.62%	3.73%		3.46%	3.69%	3.47%		(15bp)	(22bp)
Cost:income ratio	65.4%	63.8%		69.0%	59.6%	57.4%		800bp	227bp
	2008			2009				30 Sept 2009 vs.
	30 Sept	31 Dec		31 Mar	30 June	30 Sept		30 Sept 2008	30 June 2009
	£bn	£bn		£bn	£bn	£bn
Capital and balance sheet
Loans and advances to customers - gross
- mortgages	71.5	72.2		73.3	76.6	80.3		12%	5%
- personal	15.3	15.3		15.0	14.4	14.5		(5%)	1%
- cards	6.5	6.3		6.0	6.1	6.1		(6%)	-
Customer deposits (excluding bancassurance)	76.5	78.9		80.3	83.4	85.6		12%	3%
AUMs - excluding deposits	6.4	5.7		4.6	4.7	5.0		(22%)	6%
Risk elements in lending	3.4	3.8		4.1	4.5	4.7		38%	4%
Loan:deposit ratio (excluding repos)	121.9%	119.0%		117.5%	116.4%	117.8%		(408bp)	139bp
Risk-weighted assets	46.2	45.7		49.6	54.0	51.6		12%	(4%)

Note:
(1)	Return on equity is based on divisional operating profit after tax, divided by divisional notional equity (based on 7% of divisional risk-weighted assets, adjusted for capital deductions).

Appendix 2 Analysis by quarter

UK Corporate

	2008			2009				Q3 2009 vs.
	Q3	Q4		Q1	Q2	Q3		Q3 2008	Q2 2009
Income statement	£m	£m		£m	£m	£m
Net interest income	618	588		499	560	607		(2%)	8%
Net fees and commissions	222	215		194	219	223		-	2%
Other non-interest income	114	107		117	109	106		(7%)	(3%)
Non-interest income	336	322		311	328	329		(2%)	-
Total income	954	910		810	888	936		(2%)	5%
Direct expenses
- staff	(206)	(210)		(185)	(182)	(174)		(16%)	(4%)
- other	(96)	(73)		(74)	(46)	(71)		(26%)	54%
Indirect expenses	(129)	(140)		(130)	(125)	(125)		(3%)	-
	(431)	(423)		(389)	(353)	(370)		(14%)	5%
Operating profit before impairment losses	523	487		421	535	566		8%	6%
Impairment losses	(55)	(169)		(100)	(450)	(187)		-	(58%)
Operating profit	468	318		321	85	379		(19%)	-
Analysis of income by business:
Corporate and commercial lending	542	529		538	586	616		14%	5%
Asset and invoice finance	60	53		48	57	59		(2%)	4%
Corporate deposits	342	338		290	263	241		(30%)	(8%)
Other	10	(10)		(66)	(18)	20		100%	-
Total income	954	910		810	888	936		(2%)	5%
Analysis of impairment by sector:
Manufacturing	5	6		4	17	7		40%	(59%)
Housebuilding and construction	6	31		6	55	58		-	5%
Property	11	6		11	149	69		-	(54%)
Asset & invoice finance	24	39		21	47	4		(83%)	(91%)
Other	9	87		58	182	49		-	(73%)
Total impairment	55	169		100	450	187		-	(58%)
Loan impairment charge as % of gross customer loans and advances (excluding reverse repurchase agreements) by sector:
Manufacturing	0.41%	0.44%		0.32%	1.36%	0.56%		15bp	(80bp)
Housebuilding and construction	0.41%	2.10%		0.40%	4.40%	4.64%		423bp	24bp
Property	0.15%	0.08%		0.14%	1.81%	0.92%		77bp	(89bp)
Asset & invoice finance	1.13%	1.84%		0.93%	2.09%	0.18%		(95bp)	(191bp)
Other	0.06%	0.52%		0.36%	1.20%	0.30%		25bp	(90bp)
	0.19%	0.58%		0.34%	1.60%	0.66%		47bp	(94bp)

Appendix 2 Analysis by quarter

UK Corporate (continued)

	2008			2009				Q3 2009 vs.
	Q3	Q4		Q1	Q2	Q3		Q3 2008	Q2 2009
Key metrics
Performance ratios
Return on equity (1)	18.6%	12.9%		12.7%	3.2%	13.7%		(490bp)	1,050bp
Net interest margin	2.40%	2.20%		1.88%	2.17%	2.38%		(2bp)	21bp
Cost:income ratio	45.2%	46.5%		48.0%	39.8%	39.5%		565bp	22bp
	2008			2009				30 Sept 2009 vs.
	30 Sept	31 Dec		31 Mar	30 June	30 Sept		30 Sept 2008	30 June 2009
	£bn	£bn		£bn	£bn	£bn
Capital and balance sheet
Total assets	117.8	121.0		120.1	116.2	117.3		-	1%
Loans and advances to customers - gross
- manufacturing	4.9	5.4		5.0	5.0	5.0		2%	-
- housebuilding and construction	5.8	5.9		6.0	5.0	5.0		(14%)	-
- property	30.0	30.5		32.0	33.0	30.0		-	(9%)
- asset and invoice finance	8.5	8.5		9.0	9.0	9.0		6%	-
- other	64.8	66.6		64.7	60.6	64.9		-	7%
Customer deposits	85.9	82.0		82.9	85.6	86.7		1%	1%
Risk elements in lending	1.5	1.3		2.0	2.4	2.5		67%	4%
Loan:deposit ratio (excluding repos)	132.7%	142.7%		140.8%	131.6%	131.4%		(125bp)	(16bp)
Risk-weighted assets	88.7	85.7		86.2	89.5	91.0		3%	2%

Note:
(1)	Return on equity is based on divisional operating profit after tax, divided by divisional notional equity (based on 8% of divisional risk-weighted assets, adjusted for capital deductions).

Appendix 2 Analysis by quarter

Wealth

	2008			2009				Q3 2009 vs.
	Q3	Q4		Q1	Q2	Q3		Q3 2008	Q2 2009
Income statement	£m	£m		£m	£m	£m
Net interest income	153	160		158	176	168		10%	(5%)
Net fees and commissions	98	96		90	90	92		(6%)	2%
Other non-interest income	19	19		21	21	19		-	(10%)
Non-interest income	117	115		111	111	111		(5%)	-
Total income	270	275		269	287	279		3%	(3%)
Direct expenses
- staff	(94)	(97)		(90)	(78)	(82)		(13%)	5%
- other	(34)	(51)		(33)	(34)	(35)		3%	3%
Indirect expenses	(39)	(50)		(46)	(41)	(42)		8%	2%
	(167)	(198)		(169)	(153)	(159)		(5%)	4%
Operating profit before impairment losses	103	77		100	134	120		17%	(10%)
Impairment losses	(3)	(8)		(6)	(16)	(1)		(67%)	(94%)
Operating profit	100	69		94	118	119		19%	1%
Analysis of income:
Private Banking	211	221		219	242	232		10%	(4%)
Investments	59	54		50	45	47		(20%)	4%
Total income	270	275		269	287	279		3%	(3%)
Key metrics
Performance ratios
Net interest margin	4.68%	4.56%		4.47%	4.82%	4.34%		(34bp)	(48bp)
Cost:income ratio	61.9%	72.0%		62.8%	53.3%	57.0%		486bp	(368bp)
	2008			2009				30 Sept 2009 vs.
	30 Sept	31 Dec		31 Mar	30 June	30 Sept		30 Sept 2008	30 June 2009
	£bn	£bn		£bn	£bn	£bn
Capital and balance sheet
Loans and advances to customers  gross
- mortgages	5.0	5.3		5.5	5.6	6.1		22%	9%
- personal	4.9	5.0		4.6	4.7	4.8		(2%)	2%
- other	2.0	2.1		2.2	2.1	2.5		25%	19%
Customer deposits	35.8	34.1		34.9	35.3	36.3		1%	3%
AUMs - excluding deposits	34.6	34.7		31.3	29.8	31.7		(8%)	6%
Risk elements in lending	0.1	0.1		0.1	0.2	0.2		100%	-
Loan:deposit ratio (excluding repos)	33.3%	36.3%		35.3%	35.2%	36.9%		360bp	172bp
Risk-weighted assets	10.8	10.8		10.6	10.3	10.7		(1%)	4%

Note:
(1)	Return on equity is based on divisional operating profit after tax, divided by divisional notional equity (based on 8% of divisional risk-weighted assets, adjusted for capital deductions).

Appendix 2 Analysis by quarter

Global Banking & Markets

	2008			2009				Q3 2009 vs.
	Q3	Q4		Q1	Q2	Q3		Q3 2008	Q2 2009
Income statement	£m	£m		£m	£m	£m
Net interest income from banking activities	535	1,054		812	660	447		(16%)	(32%)
Net fees and commissions receivable	405	187		291	409	338		(17%)	(17%)
Income/(loss) from trading activities	760	(2,918)		4,329	1,338	1,184		56%	(12%)
Other operating income (net of related funding costs)	(22)	(119)		(93)	(97)	(110)		-	13%
Non-interest income	1,143	(2,850)		4,527	1,650	1,412		24%	(14%)
Total income	1,678	(1,796)		5,339	2,310	1,859		11%	(20%)
Direct expenses
- staff	(618)	(178)		(1,001)	(762)	(760)		23%	-
- other	(284)	(421)		(300)	(231)	(261)		(8%)	13%
Indirect expenses	(160)	(202)		(193)	(201)	(191)		19%	(5%)
	(1,062)	(801)		(1,494)	(1,194)	(1,212)		14%	2%
Operating profit/(loss) before impairment losses	616	(2,597)		3,845	1,116	647		5%	(42%)
Impairment losses	(2)	(505)		(269)	31	(272)		-	-
Operating profit/(loss)	614	(3,102)		3,576	1,147	375		(39%)	(67%)
Analysis of income by product:
Rates - money markets	384	748		853	466	287		(25%)	(38%)
Rates - flow	-	16		1,297	536	694		-	29%
Currencies	417	414		558	384	141		(66%)	(63%)
Commodities	47	403		228	239	120		155%	(50%)
Equities	21	(214)		371	364	282		-	(23%)
Credit markets	(105)	(2,341)		858	690	475		-	(31%)
Portfolio management and origination	266	53		527	113	180		(32%)	59%
Fair value of own debt	648	(875)		647	(482)	(320)		(149%)	(34%)
Total income	1,678	(1,796)		5,339	2,310	1,859		11%	(20%)
Analysis of impairment by sector:
Manufacturing and infrastructure	-	39		16	23	33		-	43%
Property and construction	-	-		46	4	-		-	-
Transport	-	-		-	1	2		-	100%
Banks and financial institutions	-	194		4	39	237		-	-
Others	2	272		203	(98)	-		-	-
Total impairment	2	505		269	(31)	272		-	-
Loan impairment charge as % of gross customer loans and advances (excluding reverse repurchase agreements)	-	1.13%		0.68%	(0.11%)	0.60%		60bp	71bp

Appendix 2 Analysis by quarter

Global Banking & Markets (continued)

	2008			2009				Q3 2009 vs.
Key metrics	Q3	Q4		Q1	Q2	Q3		Q3 2008	Q2 2009
Performance ratios
Return on equity (1)	10.5%	(54.1%)		66.1%	25.1%	7.7%		(280bp)	(1,740bp)
Net interest margin	1.24%	1.99%		2.02%	1.48%	1.08%		(16bp)	(40bp)
Cost:income ratio	63.3%	(44.6%)		28.0%	51.7%	65.2%		(191bp)	(1,351bp)
	2008			2009				30 Sept 2009 vs.
	30 Sept	31 Dec		31 Mar	30 June	30 Sept		30 Sept 2008	30 June 2009
	£bn	£bn		£bn	£bn	£bn
Capital and balance sheet
Loans and advances (including banks)	188.6	225.5		206.5	156.0	157.0		(17%)	1%
Reverse repos	206.5	88.8		80.6	75.2	75.4		(63%)	-
Securities	157.6	127.5		124.3	115.5	117.6		(25%)	2%
Cash and eligible bills	35.3	20.2		28.6	51.5	63.8		81%	24%
Other assets	72.3	42.9		43.1	46.2	50.8		(30%)	10%
Total third party assets (excluding derivatives mark to market)	660.3	504.9		483.1	444.4	464.6		(30%)	5%
Net derivative assets (after netting)	73.0	113.0		98.0	70.7	81.5		12%	15%
Customer deposits (excluding repos)	91.0	88.6		81.8	65.0	58.1		(36%)	(11%)
Risk elements in lending	0.3	0.7		0.8	1.1	1.6		-	49%
Loan:deposit ratio (excluding repos)	158.7%	192.0%		194.4%	182.7%	192.4%		3,368bp	962bp
Risk-weighted assets	165.4	162.4		148.6	122.4	131.9		(20%)	8%

Note:
(1)	Return on equity is based on divisional operating profit after tax, divided by divisional notional equity (based on 10% of divisional risk-weighted assets, adjusted for capital deductions).

Appendix 2 Analysis by quarter

Global Transaction Services

	2008			2009				Q3 2009 vs.
	Q3	Q4		Q1	Q2	Q3		Q3 2008	Q2 2009
Income statement	£m	£m		£m	£m	£m
Net interest income	244	249		220	225	234		(4%)	4%
Non-interest income	375	407		385	398	388		3%	(3%)
Total income	619	656		605	623	622		-	-
Direct expenses
- staff	(91)	(93)		(95)	(87)	(87)		(4%)	-
- other	(38)	(42)		(35)	(38)	(37)		(3%)	(3%)
Indirect expenses	(215)	(236)		(235)	(229)	(223)		4%	(3%)
	(344)	(371)		(365)	(354)	(347)		1%	(2%)
Operating profit before impairment losses	275	285		240	269	275		-	2%
Impairment losses	(7)	(40)		(9)	(4)	(22)		-	-
Operating profit	268	245		231	265	253		(6%)	(5%)
Analysis of income by product:
Domestic cash management	203	210		202	204	202		-	(1%)
International cash management	179	200		169	179	183		2%	2%
Trade finance	60	70		75	77	71		18%	(8%)
Merchant acquiring	147	145		129	131	134		(9%)	2%
Commercial cards	30	31		30	32	32		7%	-
Total income	619	656		605	623	622		-	-
Key metrics
Performance ratios
Net interest margin	8.54%	8.00%		8.29%	9.23%	9.63%		109bp	40bp
Cost:income ratio	55.6%	56.6%		60.3%	56.8%	55.8%		(22bp)	103bp
	2008			2009				30 Sept 2009 vs.
	30 Sept	31 Dec		31 Mar	30 June	30 Sept		30 Sept 2008	30 June 2009
	£bn	£bn		£bn	£bn	£bn
Capital and balance sheet
Total third party assets	23.9	22.2		21.1	19.4	21.4		(10%)	10%
Loans and advances	18.0	14.8		14.7	13.5	14.5		(19%)	7%
Customer deposits	60.3	61.8		58.3	54.0	58.6		(3%)	9%
Risk elements in lending	0.2	0.1		0.1	0.1	0.2		-	100%
Loan:deposit ratio (excluding repos)	31.3%	25.1%		26.4%	25.9%	25.6%		(578bp)	(29bp)
Risk-weighted assets	19.4	17.4		18.7	16.7	18.9		(3%)	13%

Appendix 2 Analysis by quarter

Ulster Bank

	2008			2009				Q3 2009 vs.
	Q3	Q4		Q1	Q2	Q3		Q3 2008	Q2 2009
Income statement	£m	£m		£m	£m	£m
Net interest income	207	174		202	208	176		(15%)	(15%)
Net fees and commissions	69	60		46	39	45		(35%)	15%
Other non-interest income	-	(6)		11	12	10		-	(17%)
Non-interest income	69	54		57	51	55		(20%)	8%
Total income	276	228		259	259	231		(16%)	(11%)
Direct expenses
- staff	(84)	(87)		(89)	(81)	(79)		(6%)	(2%)
- other	(23)	(24)		(22)	(25)	(20)		(13%)	(20%)
Indirect expenses	(71)	(81)		(77)	(75)	(73)		3%	(3%)
	(178)	(192)		(188)	(181)	(172)		(3%)	(5%)
Operating profit before impairment losses	98	36		71	78	59		(40%)	(24%)
Impairment losses	(17)	(71)		(67)	(90)	(144)		-	60%
Operating profit/(loss)	81	(35)		4	(12)	(85)		-	-
Analysis of income by business:
Ulster corporate	160	139		162	138	134		(16%)	(3%)
Ulster retail	107	92		93	101	104		(3%)	3%
Other	9	(3)		4	20	(7)		(178%)	(135%)
Total income	276	228		259	259	231		(16%)	(11%)
Analysis of impairment by sector:
Mortgages	5	4		14	10	30		-	-
Corporate	3	43		40	66	87		-	32%
Other	9	24		13	14	27		-	93%
Total impairment	17	71		67	90	144		-	60%
Loan impairment charge as % of gross customer loans and advances excluding reverse repurchase agreements by sector:
Mortgages	0.13%	0.10%		0.32%	0.25%	0.72%		59bp	48bp
Corporate	0.06%	0.72%		0.71%	1.23%	1.59%		153bp	36bp
Other	1.61%	4.60%		2.58%	3.50%	5.40%		379bp	190bp
	0.18%	0.65%		0.64%	0.92%	1.42%		124bp	50bp

Appendix 2 Analysis by quarter

Ulster Bank (continued)

	2008			2009				Q3 2009 vs.
Key metrics	Q3	Q4		Q1	Q2	Q3		Q3 2008	Q2 2009
Performance ratios
Return on equity (1)	17.3%	(6.5%)		0.7%	(2.0%)	(12.7%)		(3,000bp)	(1,070bp)
Net interest margin	2.04%	1.67%		1.87%	2.03%	1.74%		(30bp)	(29bp)
Cost:income ratio	64.5%	84.2%		72.6%	69.9%	74.5%		(997bp)	(458bp)
	2008			2009				30 Sept 2009 vs.
	30 Sept	31 Dec		31 Mar	30 June	30 Sept		30 Sept 2008	30 June 2009
	£bn	£bn		£bn	£bn	£bn
Capital and balance sheet
Loans and advances to customers  gross:
- mortgages	15.5	18.1		17.4	16.0	16.7		8%	4%
- corporate	19.3	23.8		22.8	21.2	21.9		13%	3%
- other	2.2	2.1		2.0	1.8	2.0		(9%)	11%
Customer deposits	21.5	24.3		19.5	18.9	20.9		(3%)	11%
Risk elements in lending:
- mortgages	0.2	0.3		0.4	0.4	0.5		150%	25%
- corporate	0.2	0.8		1.0	1.1	1.3		-	18%
- other	0.1	0.1		0.1	0.1	0.2		100%	-
Loan:deposit ratio (excluding repos)	172.3%	181.1%		217.4%	206.3%	194.0%		2,165bp	(1,237bp)
Risk-weighted assets	22.2	24.5		26.2	26.2	28.5		28%	9%

Note:
(1)	Return on equity is based on divisional operating profit after tax, divided by divisional notional equity (based on 7% of divisional risk-weighted assets, adjusted for capital deductions).

Appendix 2 Analysis by quarter

US Retail and Commercial (£ Sterling)

	2008			2009				Q3 2009 vs.
	Q3	Q4		Q1	Q2	Q3		Q3 2008	Q2 2009
Income statement	£m	£m		£m	£m	£m
Net interest income	440	512		494	448	410		(7%)	(8%)
Net fees and commissions	171	183		198	209	159		(7%)	(24%)
Other non-interest income	29	84		52	45	65		124%	44%
Non-interest income	200	267		250	254	224		12%	(12%)
Total income	640	779		744	702	634		(1%)	(10%)
Direct expenses
- staff	(159)	(175)		(218)	(184)	(174)		9%	(5%)
- other	(92)	(120)		(143)	(188)	(132)		43%	(30%)
Indirect expenses	(153)	(172)		(201)	(194)	(191)		25%	(2%)
	(404)	(467)		(562)	(566)	(497)		23%	(12%)
Operating profit before impairment losses	236	312		182	136	137		(42%)	1%
Impairment losses	(134)	(177)		(223)	(146)	(180)		34%	23%
Operating profit/(loss)	102	135		(41)	(10)	(43)		(142%)	-
Average exchange rate - US$/£	1.892	1.570		1.436	1.551	1.640
Analysis of income by product:
Mortgages and home equity	88	112		142	130	112		27%	(14%)
Personal lending and cards	86	90		107	113	116		35%	3%
Retail deposits	256	279		231	202	200		(22%)	(1%)
Commercial lending	98	128		141	140	127		30%	(9%)
Commercial deposits	97	111		104	89	97		-	9%
Other	15	59		19	28	(18)		-	(164%)
Total income	640	779		744	702	634		(1%)	(10%)
Analysis of impairment by sector:
Residential mortgages	16	13		23	12	29		81%	142%
Home equity	20	22		29	43	82		-	91%
Corporate & commercial	54	87		108	61	65		20%	7%
Other	44	55		63	30	4		(91%)	(87%)
Total impairment	134	177		223	146	180		34%	23%
Loan impairment charge as % of gross customer loans and advances (excluding reverse repurchase agreements) by sector:
Residential mortgages	0.74%	0.55%		1.00%	0.66%	1.68%		95bp	102bp
Home equity	0.53%	0.47%		0.62%	1.08%	2.05%		152bp	97bp
Corporate & commercial	1.11%	1.46%		1.79%	1.19%	1.27%		16bp	8bp
Other	2.17%	2.24%		2.57%	1.45%	0.20%		(197bp)	(124bp)
	1.04%	1.15%		1.44%	1.12%	1.41%		37bp	29bp

Appendix 2 Analysis by quarter

US Retail and Commercial (£ Sterling) (continued)

	2008			2009				Q3 2009 vs.
Key metrics	Q3	Q4		Q1	Q2	Q3		Q3 2008	Q2 2009
Performance ratios
Return on equity (1)	7.4%	7.9%		(2.4%)	(0.7%)	(2.5%)		(990bp)	(180bp)
Net interest margin	2.79%	2.59%		2.33%	2.30%	2.34%		(45bp)	4bp
Cost:income ratio	63.1%	60.0%		75.4%	80.6%	78.4%		(1,526bp)	224bp
	2008			2009				30 Sept 2009 vs.
	30 Sept	31 Dec		31 Mar	30 June	30 Sept		30 Sept 2008	30 June 2009
	£bn	£bn		£bn	£bn	£bn
Capital and balance sheet
Total assets	77.9	87.5		94.9	75.6	76.9		(1%)	2%
Loans and advances to customers (gross):
- residential mortgages	8.7	9.5		9.2	7.3	6.9		(21%)	(5%)
- home equity	15.2	18.7		18.8	15.9	16.0		5%	1%
- corporate and commercial	19.4	23.7		24.2	20.5	20.5		6%	-
- other consumer	8.0	9.8		9.8	8.3	7.8		(2%)	(6%)
Customer deposits	55.6	64.4		67.9	60.2	62.1		12%	3%
Risk elements in lending
- retail	0.2	0.2		0.3	0.3	0.3		50%	-
- commercial	-	0.2		0.1	0.1	0.2		-	100%
Loan:deposit ratio (excluding repos)	92.8%	96.6%		91.5%	86.7%	82.6%		(1,016bp)	(410bp)
Risk-weighted assets	51.4	63.9		64.3	55.6	62.8		22%	13%
Spot exchange rate - US$/£	1.783	1.460		1.433	1.644	1.599

Note:
(1)	Return on equity is based on divisional operating profit after tax, divided by divisional notional equity (based on 7% of divisional risk-weighted assets, adjusted for capital deductions).

Appendix 2 Analysis by quarter

US Retail and Commercial (US Dollar) (continued)

	2008			2009				Q3 2009 vs.
	Q3	Q4		Q1	Q2	Q3		Q3 2008	Q2 2009
Income statement	$m	$m		$m	$m	$m
Net interest income	834	837		711	696	680		(18%)	(2%)
Net fees and commissions	325	294		284	324	266		(18%)	(18%)
Other non-interest income	52	142		75	69	104		100%	51%
Non-interest income	377	436		359	393	370		(2%)	(6%)
Total income	1,211	1,273		1,070	1,089	1,050		(13%)	(4%)
Direct expenses
- staff	(302)	(278)		(313)	(287)	(289)		(4%)	1%
- other	(172)	(201)		(206)	(289)	(219)		27%	(24%)
Indirect expenses	(292)	(277)		(288)	(301)	(313)		7%	4%
	(766)	(756)		(807)	(877)	(821)		7%	(6%)
Operating profit before impairment losses	445	517		263	212	229		(49%)	8%
Impairment losses	(258)	(304)		(320)	(231)	(296)		15%	28%
Operating profit/(loss)	187	213		(57)	(19)	(67)		(136%)	-
Analysis of income by product:
Mortgages and home equity	166	183		204	203	186		12%	(8%)
Personal lending and cards	164	143		154	174	190		16%	9%
Retail deposits	483	451		332	315	329		(32%)	4%
Commercial lending	186	211		202	217	210		13%	(3%)
Commercial deposits	185	179		150	138	160		(14%)	16%
Other	27	106		28	42	(25)		(193%)	(160%)
Total income	1,211	1,273		1,070	1,089	1,050		(13%)	(4%)
Analysis of impairment by sector:
Residential mortgages	30	22		33	19	47		55%	145%
Home equity	37	38		42	65	131		-	102%
Corporate & commercial	106	151		154	99	107		1%	9%
Other	85	93		91	48	11		(87%)	(78%)
Total impairment	258	304		320	231	296		15%	28%
Loan impairment charge as % of gross customer loans and advances (excluding reverse repurchase agreements) by sector:
Residential mortgages	0.77%	0.63%		1.00%	0.63%	1.69%		92bp	106bp
Home equity	0.55%	0.56%		0.62%	1.00%	2.05%		150bp	105bp
Corporate & commercial	1.23%	1.74%		1.78%	1.18%	1.31%		9bp	14bp
Other	2.36%	2.60%		2.58%	1.41%	0.34%		(202bp)	(107bp)
	1.13%	1.35%		1.44%	1.08%	1.45%		32bp	37bp

Appendix 2 Analysis by quarter

US Retail and Commercial (US Dollar) (continued)

	2008			2009				Q3 2009 vs.
Key metrics	Q3	Q4		Q1	Q2	Q3		Q3 2008	Q2 2009
Performance ratios
Return on equity (1)	7.6%	8.5%		(2.3%)	(0.8%)	(2.5%)		(1,010bp)	(170bp)
Net interest margin	2.80%	2.70%		2.33%	2.32%	2.37%		(43bp)	5bp
Cost:income ratio	63.2%	59.4%		75.4%	80.5%	78.2%		(1,497bp)	231bp
	2008			2009				30 Sept 2009 vs.
	30 Sept	31 Dec		31 Mar	30 June	30 Sept		30 Sept 2008	30 June 2009
	$bn	$bn		$bn	$bn	$bn
Capital and balance sheet
Total assets	138.9	127.8		136.0	124.4	122.9		(12%)	(1%)
Loans and advances to customers (gross):
- residential mortgages	15.5	13.9		13.2	12.0	11.0		(29%)	(8%)
- home equity	27.0	27.2		26.9	26.1	25.6		(5%)	(2%)
- corporate and commercial	34.6	34.7		34.7	33.6	32.7		(5%)	(3%)
- other consumer	14.5	14.3		14.1	13.7	12.5		(14%)	(9%)
Customer deposits	99.2	94.0		97.4	99.0	99.3		-	-
Risk elements in lending
- retail	0.3	0.3		0.4	0.4	0.5		67%	25%
- commercial	0.1	0.2		0.2	0.3	0.3		-	-
Loan:deposit ratio (excluding repos)	92.8%	96.6%		91.5%	86.7%	82.6%		(1,016bp)	(410bp)
Risk-weighted assets	91.7	93.2		92.1	91.3	100.4		9%	10%

Note:
(1)	Return on equity is based on divisional operating profit after tax, divided by divisional notional equity (based on 7% of divisional risk-weighted assets, adjusted for capital deductions).

Appendix 2 Analysis by quarter

RBS Insurance

	2008			2009				Q3 2009 vs.
	Q3	Q4		Q1	Q2	Q3		Q3 2008	Q2 2009
Income statement	£m	£m		£m	£m	£m
Earned premiums	1,128	1,121		1,106	1,119	1,145		2%	2%
Reinsurers' share	(51)	(48)		(45)	(40)	(43)		(16%)	8%
Insurance premium income	1,077	1,073		1,061	1,079	1,102		2%	2%
Net fees and commissions	(102)	(93)		(92)	(95)	(95)		(7%)	-
Other income	107	146		108	104	112		5%	8%
Total income	1,082	1,126		1,077	1,088	1,119		3%	3%
Direct expenses
- staff	(64)	(77)		(70)	(69)	(67)		5%	(3%)
- other	(44)	(54)		(67)	(54)	(47)		7%	(13%)
Indirect expenses	(65)	(72)		(66)	(65)	(64)		(2%)	(2%)
	(173)	(203)		(203)	(188)	(178)		3%	(5%)
Gross claims	(777)	(788)		(798)	(776)	(941)		21%	21%
Reinsurers' share	18	41		5	18	13		(28%)	(28%)
Net claims	(759)	(747)		(793)	(758)	(928)		22%	22%
Operating profit before impairment losses	150	176		81	142	13		(91%)	(91%)
Impairment losses	-	(42)		(5)	(1)	(2)		-	100%
Operating profit	150	134		76	141	11		(93%)	(92%)
Analysis of income by product:
Motor own-brands	492	491		477	495	517		5%	4%
Household and Life own-brands	200	206		204	210	214		7%	2%
Motor partnerships and broker	167	166		145	145	141		(16%)	(3%)
Household and Life, partnerships and broker	88	85		83	81	78		(11%)	(4%)
Other (International, commercial and central)	135	178		168	157	169		25%	8%
Total income	1,082	1,126		1,077	1,088	1,119		3%	3%
In-force policies (thousands)
- Own-brand motor	4,434	4,492		4,601	4,789	4,894		10%	2%
- Own-brand non-motor (home, rescue, pet, HR24)	5,468	5,560		5,643	5,890	6,150		12%	4%
- Partnerships & broker (motor, home, rescue, pet, HR24)	6,052	5,898		5,750	5,609	5,371		(11%)	(4%)
- Other (international, commercial and central)	1,122	1,206		1,211	1,210	1,212		8%	-
General insurance reserves - total (£m)	6,661	6,672		6,630	6,601	6,839		3%	4%

Appendix 2 Analysis by quarter

RBS Insurance (continued)

	2008			2009				Q3 2009 vs.
	Q3	Q4		Q1	Q2	Q3		Q3 2008	Q2 2009
Key business metrics
Return on equity (1)	18.8%	16.8%		9.5%	17.7%	1.2%		(1,760bp)	(1,650bp)
Cost:income ratio	16.0%	18.0%		18.9%	17.3%	15.9%		8bp	137bp
Adjusted cost:income ratio (2)	53.6%	53.6%		71.5%	57.0%	93.2%		3,960bp	3,620bp
Gross written premiums (£m)	1,159	1,002		1,123	1,147	1,186		2%	3%

Notes:
(1)	Return on equity is based on divisional operating profit after tax, divided by divisional notional equity (based on regulatory capital).
(2)	Adjusted cost:income ratio is based on total income and operating expenses after netting insurance claims against total income.

Appendix 2 Analysis by quarter

Central items

	2008			2009				Q3 2009 vs.
	Q3	Q4		Q1	Q2	Q3		Q3 2008	Q2 2009
	£m	£m		£m	£m	£m
Fair value of own debt	633	14		384	(478)	(163)		(126%)	66%
Other	173	(501)		105	166	283		64%	70%
Central items not allocated	806	(487)		489	(312)	120		(85%)	138%

Appendix 2 Analysis by quarter

Non-Core 

	2008			2009				Q3 2009 vs.
	Q3	Q4		Q1	Q2	Q3		Q3 2008	Q2 2009
Income statement	£m	£m		£m	£m	£m
Net interest income from banking activities	479	765		395	274	287		(40%)	5%
Net fees and commissions receivable	260	166		178	82	132		(49%)	61%
Income/(loss) from trading activities	68	(3,320)		(2,865)	(1,390)	(735)		-	(47%)
Other operating income (net of related funding costs)	(3)	(194)		25	(56)	83		-	-
Insurance net premium income	252	249		244	196	173		(31%)	(12%)
Non-interest income	577	(3,099)		(2,418)	(1,168)	(347)		(160%)	(70%)
Total income	1,056	(2,334)		(2,023)	(894)	(60)		(106%)	(93%)
Direct expenses
- staff	(141)	(110)		(188)	(71)	(111)		(21%)	56%
- other	(257)	(321)		(230)	(220)	(223)		(13%)	1%
Indirect expenses	(131)	(152)		(142)	(137)	(132)		1%	(4%)
	(529)	(583)		(560)	(428)	(466)		(12%)	9%
Operating profit/(loss) before other operating charges and impairment losses	527	(2,917)		(2,583)	(1,322)	(526)		-	(60%)
Insurance net claims	(170)	(192)		(177)	(137)	(126)		(26%)	(8%)
Impairment losses	(768)	(3,358)		(1,828)	(3,516)	(2,066)		169%	(41%)
Operating loss	(411)	(6,467)		(4,588)	(4,975)	(2,718)		-	(45%)
Key metrics
Performance ratios
Cost:income ratio	50.1%	(25.0%)		(27.7%)	(47.9%)	(776.7%)		-	-
Net interest margin	0.38%	1.36%		0.61%	0.45%	0.55%		17bp	10bp
	2008			2009				30 Sept 2009 vs.
	30 Sept	31 Dec		31 Mar	30 June	30 Sept		30 Sept 2008	30 June 2009
	£bn	£bn		£bn	£bn	£bn
Capital and balance sheet
Total third party assets (including derivatives)	293.8	325.1		297.1	231.9	220.2		(25%)	(5%)
Loans and advances to customers (gross):	172.1	190.6		183.1	163.6	158.7		(8%)	(3%)
Customer deposits	24.7	26.6		21.9	13.4	14.7		(40%)	10%
Risk elements in lending	4.8	11.2		14.7	20.5	23.3		-	14%
Loan:deposit ratio	691.2%	718.1%		844.6%	1,282.2%	1,078.5%		56%	(16%)
Risk-weighted assets	130.7	160.3		163.7	164.1	190.3		46%	16%

Appendix 2 Analysis by quarter

Non-Core (continued)

	2008			2009				Q3 2009 vs.
	Q3	Q4		Q1	Q2	Q3		Q3 2008	Q2 2009
	£m	£m		£m	£m	£m
Analysis of income:
Banking & Portfolio	739	669		90	(772)	(92)		(112%)	(88%)
Retail, Commercial & Countries	773	689		662	570	537		(31%)	(6%)
Trading	(456)	(3,692)		(2,775)	(692)	(505)		11%	(27%)
Total income	1,056	(2,334)		(2,023)	(894)	(60)		(106%)	(93%)
Impairment losses:
Banking & Portfolio	252	1,004		823	1,619	878		-	(46%)
Retail, Commercial & Countries	360	945		720	1,638	1,234		-	(25%)
Trading	156	1,409		285	259	(46)		(129%)	(118%)
Total impairment	768	3,358		1,828	3,516	2,066		169%	(41%)
Loan impairment charge as % of gross customer loans and advances:
Banking & Portfolio	(0.33%)	6.98%		3.37%	7.16%	4.04%		437bp	(312bp)
Retail, Commercial & Countries	1.95%	4.70%		3.66%	9.44%	7.22%		527bp	(222bp)
Trading	7.52%	12.91%		(124.58%)	42.09%	31.73%		2,421bp	(1,036bp)
	1.03%	6.12%		2.82%	8.39%	5.53%		450bp	(286bp)
	£bn	£bn		£bn	£bn	£bn
Gross customer loans and advances (1):
Banking & Portfolio	91.1	106.7		103.5	93.1	88.4		(3%)	(5%)
Retail, Commercial & Countries	73.5	79.9		78.7	69.4	68.4		(7%)	(1%)
Trading	7.5	4.0		0.9	1.1	1.9		(75%)	73%
	172.1	190.6		183.1	163.6	158.7		(8%)	(3%)
Note:
(1) Including disposal groups.
Risk-weighted assets:
Banking & Portfolio	42.9	46.4		71.6	61.8	73.1		70%	18%
Retail, Commercial & Countries	53.8	49.9		51.1	48.3	45.9		(15%)	(5%)
Trading	34.0	64.0		41.0	54.0	71.3		110%	32%
	130.7	160.3		163.7	164.1	190.3		46%	16%

 

END

 

 

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