Interim Results

Royal Bank of Scotland Group PLC 7 August 2001 PART 1 THE ROYAL BANK OF SCOTLAND GROUP plc FOREWORD The acquisition of National Westminster Bank Plc ('NatWest') on 6 March 2000 has had a significant effect on the Group's financial position. Comparison with the prior year on a statutory basis (which includes NatWest from 6 March 2000) is of limited benefit. Accordingly, in order to provide more meaningful and relevant comparatives the results for the six months to 30 June 2000 are on a pro forma basis and assume that the acquisition of NatWest took place on 1 January 1999. The results for the six months ended 30 June 2001 are also presented with the statutory results for the six months ended 30 June 2000 in a separate announcement. For the purposes of this announcement goodwill amortisation and integration costs are shown separately in the profit and loss account. In the statutory announcement these items are included in the profit and loss account captions prescribed by the Companies Act. THE ROYAL BANK OF SCOTLAND GROUP plc FINANCIAL HIGHLIGHTS FOR THE SIX MONTHS ENDED 30 JUNE 2001 Pro forma Pro forma Half-year Half-year Full year 2001 2000 Increase 2000 £m £m % £m Total income 6,822 5,974 14 12,358 -------- -------- -------- Total expenses 3,284 3,330 (1) 6,614 -------- -------- -------- Operating profit before provisions 3,120 2,321 34 5,046 -------- -------- -------- Profit before tax, goodwill amortisation and integration costs 2,751 2,011 37 4,401 -------- -------- -------- Profit before tax 2,072 1,511 37 3,332 -------- -------- -------- Cost:income ratio 48.1% 55.7% 53.5% -------- -------- -------- Adjusted earnings per ordinary share 62.6p 46.1p 36 102.0p -------- -------- -------- Sir George Mathewson, Chairman of The Royal Bank of Scotland Group plc said:- 'All our businesses are performing well, and integration is fully on track. We are pleased with these results as they demonstrate our continuing strong income growth and a cost:income ratio that has been substantially reduced in the last 12 months. Provisions have increased largely as a consequence of growth in our lending. Credit quality remains strong in absolute terms and we continue to see a flow of business with a good credit profile at attractive margins. 'Clearly we are faced with a wide range of economic scenarios. We consider that it would be inadvisable for us to assume that any one outlook will prevail. We remain confident that the strength, diversity and flexibility of our business will enable us to continue to deliver superior performance for our shareholders in any credible economic scenario.' THE ROYAL BANK OF SCOTLAND GROUP plc CONTENTS Page Overview of results 4 Consolidated profit and loss account 6 Consolidated balance sheet 8 Divisional performance 9 Corporate Banking and Financial Markets 10 Retail Banking 11 Retail Direct 12 Manufacturing 13 Wealth Management 14 Direct Line Insurance Group 15 Ulster Bank 16 Citizens 17 Central items 18 Notes 19 Integration information 24 Average balance sheet 25 Average interest rates, yields, spreads and margins 26 Risk elements in lending 27 Market risk 28 Regulatory ratios and other information 29 INDEPENDENT REVIEW REPORT BY THE AUDITORS 30 CONTACTS 31 THE ROYAL BANK OF SCOTLAND GROUP plc OVERVIEW OF RESULTS Profit before tax, goodwill amortisation and integration costs increased by 37%, £740 million, from £2,011 million to £2,751 million. Net interest income increased by 13%, £385 million, to £3,253 million. Good growth was achieved in both corporate and personal lending and deposits. Average interest-earning assets of the Group's banking business increased by 11%, including 17% growth in average loans and advances to customers. Net interest margin of the banking business was unchanged at 3.0%. Non-interest income, excluding general insurance, grew by 12%, £312 million, to £2,968 million. Fees and commissions receivable increased by 12%, £239 million, to £2,209 million. Dealing profits were up by 20%, £115 million, to £ 689 million. Other operating income was £505 million, an increase of 3%, £16 million. General insurance premium income, after reinsurance, increased by 34%, £151 million, to £601 million. Total income increased by 14%, £848 million, to £6,822 million. Operating expenses, excluding goodwill amortisation and integration costs, fell by 1%, £46 million, to £3,284 million. Staff expenses were down 5%, £88 million to £1,659 million. Staff numbers fell by 4%, 3,600 to 95,600. Other expenses were up 3%, £42 million, to £1,625 million. Group cost:income ratio improved from 55.7% to 48.1%. General insurance claims, after reinsurance, increased by 29%, £95 million, to £418 million. Operating profit before provisions increased by 34%, £799 million, to £3,120 million. Total provisions were up 19%, £59 million to £369 million. Within this, the charge for bad and doubtful debts was up £83 million and amounts written off investments were down £24 million. Total provisions for bad and doubtful debts amounted to £3,226 million (30 June 2000: £3,066 million) equivalent to 80% (30 June 2000: 79%) of risk elements in lending. Goodwill amortisation was £318 million and relates primarily to the goodwill arising on the acquisition of NatWest which is being written off over 20 years. Integration costs, which is expenditure incurred in respect of cost reduction and income enhancement targets related to the acquisition of NatWest, were £ 361 million compared with £189 million in the six months ended 30 June 2000. The tax charge was £746 million, equivalent to 36% of profit before tax of £ 2,072 million. Adjusting for goodwill amortisation, the effective rate was 31%. Profit attributable to ordinary shareholders, after tax, minority interests and preference dividends increased by 42%, £325 million to £1,104 million. Earnings per share, adjusted for goodwill amortisation and integration costs, increased by 36%, from 46.1p to 62.6p. Interim dividend, up 16% to 11.0p per ordinary share, is covered 5.4 times by earnings before goodwill amortisation and integration costs. Group post-tax return on equity, excluding goodwill, increased from 35.8% to 43.3%. Group total assets were £341 billion at 30 June 2001, of which £266 billion related to banking business and £75 billion to trading business. Loans and advances to customers at 30 June 2001 were £179 billion, up 15% from £156 billion. Capital ratios at 30 June 2001 were 7.2% (tier 1) and 11.4% (total). Recent developments On 17 July 2001, the Group announced that Citizens had entered into agreements, subject to US regulatory consents, to acquire the retail, small business and certain middle market banking businesses of Mellon Financial Corporation for a cash consideration of approximately US$2.1 billion. On 18 July 2001, the Group placed 140 million new ordinary shares at 1475p per share raising £2.065 billion. THE ROYAL BANK OF SCOTLAND GROUP plc CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE SIX MONTHS ENDED 30 JUNE 2001 (unaudited) Pro forma Pro forma Half-year Half-year Full year 2001 2000 2000 £m £m £m Interest receivable 7,400 7,059 14,626 Interest payable 4,147 4,191 8,697 -------- -------- -------- Net interest income 3,253 2,868 5,929 -------- -------- -------- Dividend income 24 17 46 Fees and commissions receivable 2,209 1,970 4,079 Fees and commissions payable (459) (394) (804) Dealing profits 689 574 1,131 Other operating income 505 489 998 -------- -------- -------- 2,968 2,656 5,450 General insurance - earned premiums 817 621 1,346 - reinsurance (216) (171) (367) -------- -------- -------- Non-interest income 3,569 3,106 6,429 -------- -------- --------- Total income 6,822 5,974 12,358 -------- -------- --------- Administrative expenses - staff costs 1,659 1,747 3,440 - premises and equipment 404 425 839 - other 812 769 1,566 Depreciation of tangible fixed assets 409 389 769 -------- -------- -------- Operating expenses 3,284 3,330 6,614 -------- -------- -------- Profit before other operating charges 3,538 2,644 5,744 General insurance - gross claims 585 462 982 - reinsurance (167) (139) (284) -------- -------- -------- Operating profit before provisions 3,120 2,321 5,046 Provisions for bad and doubtful debts 367 284 602 Amounts written off fixed asset investments 2 26 43 -------- -------- -------- Group operating profit before goodwill amortisation and integration costs 2,751 2,011 4,401 Goodwill amortisation 318 311 635 Integration costs 361 189 434 -------- -------- -------- Group profit before tax 2,072 1,511 3,332 -------- -------- -------- THE ROYAL BANK OF SCOTLAND GROUP plc CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE SIX MONTHS ENDED 30 JUNE 2001 (unaudited) Pro forma Pro forma Half-year Half-year Full year 2001 2000 2000 £m £m £m Group profit before tax 2,072 1,511 3,332 Tax 746 548 1,171 -------- -------- -------- Group profit after tax 1,326 963 2,161 Minority interests 44 22 54 -------- -------- -------- Profit after minority interests 1,282 941 2,107 Preference dividends 178 162 328 -------- -------- -------- Profit attributable to ordinary shareholders 1,104 779 1,779 -------- -------- -------- Basic earnings per ordinary share 41.1p 29.4p 66.9p -------- -------- -------- Adjusted earnings per ordinary share (Note 6) 62.6p 46.1p 102.0p -------- -------- --------- THE ROYAL BANK OF SCOTLAND GROUP plc CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2001 (unaudited) Audited 30 June 30 June 31 December 2001 2000 2000 £m £m £m Assets Cash and balances at central banks 2,639 2,533 3,049 Items in the course of collection from other 3,799 3,916 2,961 banks Treasury bills and other eligible bills 3,882 5,332 3,316 Loans and advances to banks 39,748 37,324 32,061 Loans and advances to customers 179,389 156,292 168,076 Debt securities 53,721 52,995 57,789 Equity shares 1,609 1,302 1,553 Interests in associated undertakings 115 87 83 Intangible fixed assets 11,821 12,121 12,080 Tangible fixed assets 6,934 6,263 6,121 Other assets 22,455 14,607 18,034 Prepayments and accrued income 4,422 3,175 4,182 ----------- ----------- --------- 330,534 295,947 309,305 Long-term assurance assets attributable to policyholders 10,344 10,258 10,699 ----------- ----------- --------- Total assets 340,878 306,205 320,004 ----------- ----------- --------- Liabilities Deposits by banks 35,627 33,618 35,130 Items in the course of transmission to other 1,851 1,854 1,707 banks Customer accounts 180,964 166,221 177,302 Debt securities in issue 29,847 23,614 19,407 Other liabilities 37,234 30,426 32,959 Accruals and deferred income 7,448 5,427 7,172 Provisions for liabilities and charges - deferred taxation 1,298 1,168 1,224 - other provisions 316 327 306 Subordinated liabilities - dated loan capital 6,404 6,177 6,316 - undated loan capital including convertible 4,255 3,915 4,120 debt Minority interests - equity (15) 199 (34) - non-equity 618 560 580 Shareholders' funds - equity 20,215 18,622 19,081 - non-equity 4,472 3,819 4,035 ----------- ----------- --------- 330,534 295,947 309,305 Long-term assurance liabilities to 10,344 10,258 10,699 policyholders ----------- ----------- --------- Total liabilities 340,878 306,205 320,004 ----------- ----------- --------- Memorandum items: Contingent liabilities and commitments 115,343 99,699 105,102 ----------- ----------- --------- THE ROYAL BANK OF SCOTLAND GROUP plc DIVISIONAL PERFORMANCE The results of each division before goodwill amortisation and integration costs are detailed below. Pro forma Pro forma Half-year Half-year Profit Full year 2001 2000 increase 2000 £m £m % £m Corporate Banking and Financial Markets 1,505 1,337 13 2,730 Retail Banking 1,377 1,202 15 2,467 Retail Direct 241 177 36 373 -------- -------- -------- Contribution before manufacturing costs 3,123 2,716 15 5,570 Manufacturing (778) (859) 9 (1,660) -------- -------- -------- Operating profit 2,345 1,857 26 3,910 Wealth Management 234 200 17 405 Direct Line Insurance Group 112 76 47 201 Ulster Bank 119 96 24 200 Citizens 233 167 40 349 Central items (292) (385) 24 (664) -------- -------- -------- Group operating profit before goodwill amortisation and integration costs 2,751 2,011 37 4,401 -------- -------- -------- THE ROYAL BANK OF SCOTLAND GROUP plc CORPORATE BANKING AND FINANCIAL MARKETS Pro forma Pro forma Half-year Half-year Full year 2001 2000 2000 £m £m £m Net interest income 994 885 1,793 Non-interest income 1,525 1,398 2,856 -------- -------- -------- Total income 2,519 2,283 4,649 Direct expenses - staff costs 547 499 998 - other 149 150 310 - operating lease depreciation 188 188 388 -------- -------- -------- Contribution before provisions 1,635 1,446 2,953 Provisions 130 109 223 -------- -------- -------- Contribution 1,505 1,337 2,730 -------- -------- -------- Direct cost:income ratio (%) 35.1 36.7 36.5 Total assets (£bn) 205.8 186.2 191.1 Loans and advances to customers (gross) (£bn) 92.5 81.2 87.6 Employees at period end - permanent 12,300 13,000 12,400 - temporary 800 700 700 --------- --------- --------- - total 13,100 13,700 13,100 --------- --------- --------- Corporate Banking and Financial Markets provides an integrated range of products and services to its mid-sized and large corporate and institutional customers in the UK and overseas including corporate and commercial banking, treasury and capital markets products, structured and leveraged finance, trade finance, leasing and factoring. Contribution was up 13%, £168 million to £1,505 million. Total income was up 10%, £236 million to £2,519 million. Net interest income was up 12%, £109 million to £994 million, mainly reflecting growth in lending. Non-interest income was up 9%, £127 million to £1,525 million reflecting strong results from Financial Markets. Increased fees receivable in Corporate Banking and higher dealing profits in Financial Markets were partly offset by a reduced contribution from the Private Equity business. Direct expenses, were up 6%, £47 million to £884 million, primarily due to higher performance related bonuses in Financial Markets reflecting higher income. Staff numbers fell by 4%, 600, to 13,100. The direct cost:income ratio improved from 36.7% to 35.1%. Provisions were up 19%, £21 million to £130 million, with an increase in provisions for bad debts, reflecting growth in lending and a relatively low level of specific provision in the first half of 2000 being offset by a reduction in the amounts written off investments. THE ROYAL BANK OF SCOTLAND GROUP plc RETAIL BANKING Pro forma Pro forma Half-year Half-year Full year 2001 2000 2000 £m £m £m Net interest income 1,280 1,180 2,418 Non-interest income 609 546 1,128 -------- -------- -------- Total income 1,889 1,726 3,546 Direct expenses - staff costs 339 371 736 - other 89 85 210 -------- -------- -------- Contribution before provisions 1,461 1,270 2,600 Provisions for bad and doubtful debts 84 68 133 -------- -------- -------- Contribution 1,377 1,202 2,467 -------- -------- -------- Direct cost:income ratio (%) 22.7 26.4 26.7 Total assets (£bn) 59.2 53.8 57.9 Loans and advances to customers (gross) (£bn) 46.0 41.1 44.3 Employees at period end - permanent 27,900 30,300 27,700 - temporary 1,400 1,500 1,200 --------- --------- --------- - total 29,300 31,800 28,900 --------- --------- --------- Retail Banking provides a wide range of banking, insurance and other related financial services to individuals and small businesses. These services are delivered from a network of RBS and NatWest branches throughout Great Britain and through alternative distribution channels. Contribution before integration costs increased by 15%, £175 million to £1,377 million. Total income was up 9%, £163 million to £1,889 million. Net interest income was 8%, £100 million higher at £1,280 million, reflecting strong volume growth. Loans to customers, excluding mortgages, were up 18% to £19 billion. Mortgage lending grew by 8%, to £27 billion. Average deposits were 7%, £3.2 billion higher. The account base continues to grow in both banks, with increased market share of current accounts. NatWest maintained its market leading position for small business relationships. Non-interest income increased by 12%, £63 million to £609 million, resulting from growth in packaged accounts, up 48% to 1.8 million accounts, together with benefits from integration initiatives. Direct expenses at £428 million were down 6%, £28 million as a result of integration savings. Staff numbers were down 8%, 2,500, to 29,300. The increase in staff numbers since 31 December 2000 reflects business growth and the higher number of temporary staff working on integration projects. The direct cost:income ratio improved from 26.4% to 22.7%. Provisions for bad and doubtful debts were up 24%, £16 million to £84 million, reflecting growth in lending. THE ROYAL BANK OF SCOTLAND GROUP plc RETAIL DIRECT Pro forma Pro forma Half-year Half-year Full year 2001 2000 2000 £m £m £m Net interest income 319 256 516 Non-interest income 317 265 565 ----- ----- ------- Total income 636 521 1,081 Direct expenses - staff costs 79 83 154 - other 192 155 327 ----- ----- ----- Contribution before provisions 365 283 600 Provisions for bad and doubtful debts 124 106 227 ----- ----- ----- Contribution 241 177 373 ----- ----- ----- Direct cost:income ratio (%) 42.6 45.7 44.5 Total assets (£bn) 15.7 13.3 14.4 Loans and advances to customers (gross) (£bn) 15.5 12.7 14.1 Employees at period end - permanent 5,300 5,700 5,200 - temporary 700 700 600 -------- -------- -------- - total 6,000 6,400 5,800 -------- -------- -------- Retail Direct issues a comprehensive range of credit, charge and debit cards to personal and corporate customers and engages in merchant acquisition and processing facilities for retail businesses. It also includes: Tesco Personal Finance, Virgin Direct Personal Finance, Direct Line Financial Services and Lombard Direct, the Group's internet banking platform and Comfort Card European businesses, all of them offering products to customers through direct channels. Contribution rose by 36%, £64 million to £241 million. Total income was up 22%, £115 million to £636 million driven by strong performances in Cards and Tesco Personal Finance ('TPF'). Net interest income was up 25%, £63 million to £319 million, reflecting higher average cards balances, up 11% to £7.2 billion. The total number of cards in issue grew by 10% to 13.1 million. In Virgin Direct Personal Finance mortgage balances were up 91% to £3.0 billion. Non-interest income increased 20%, £52 million to £317 million, primarily as a result of increased revenues from retailers and higher interchange income. Non-interest income in TPF grew by 96%, driven by increased volumes, particularly ATM and motor insurance income. Direct expenses at £271 million were 14%, £33 million higher, as a result of increased business volumes and marketing activity, partly offset by lower staff costs due to reduced staff numbers. The direct cost:income ratio improved from 45.7% to 42.6%. Provisions for bad and doubtful debts increased by 17%, £18 million to £124 million, due to the increase in lending. THE ROYAL BANK OF SCOTLAND GROUP plc MANUFACTURING Pro forma Pro forma Half-year Half-year Full year 2001 2000 2000 £m £m £m Staff costs 194 274 490 Other costs 584 585 1,170 ----- ----- ------- Total manufacturing costs 778 859 1,660 ----- ----- ------- Analysis: Group Technology 299 401 723 Property 255 239 486 Customer support and other operations 224 219 451 ----- ----- ------- Total manufacturing costs 778 859 1,660 ----- ----- ------- Employees at period end - permanent 16,500 17,900 17,200 - temporary 2,800 2,000 2,000 --------- --------- --------- - total 19,300 19,900 19,200 --------- --------- --------- Manufacturing supports the customer facing businesses of Corporate Banking and Financial Markets, Retail Banking and Retail Direct and provides operational technology, account management, money transmission, property and other services. Total manufacturing costs of £778 million, were 9%, £81 million lower. The reduction reflects integration savings. In particular, technology costs were down 25%, £102 million, as de-duplication initiatives have taken effect. Costs of customer support and other operations increased by 2%, £5 million due to business growth and the realignment of activities to enhance customer service, particularly in telephony and branch support. Notwithstanding an increase in the number of staff working on integration initiatives, staff numbers fell by 3%, 600 to 19,300. THE ROYAL BANK OF SCOTLAND GROUP plc WEALTH MANAGEMENT Pro Pro forma forma Half-year Half-year Full year 2001 2000 2000 £m £m £m Net interest income 231 204 425 Non-interest income 241 237 463 ----- ----- ----- Total income 472 441 888 Expenses - staff costs 150 153 303 - other 92 91 185 ----- ----- ----- Profit before provisions 230 197 400 Net release of provisions for bad and doubtful 4 3 5 debts ----- ----- ----- Profit before integration costs 234 200 405 ----- ----- ----- Cost:income ratio (%) 51.3 55.3 55.0 Total assets (£bn) 12.1 10.2 10.4 Employees at period end - permanent 6,200 6,200 6,200 - temporary 600 600 600 --------- -------- -------- - total 6,800 6,800 6,800 --------- -------- -------- Wealth Management comprises Coutts Group, Adam & Company and the offshore banking businesses - The Royal Bank of Scotland International and NatWest Offshore. The Coutts Group focuses on private banking through the Coutts and NatWest Private Banking brands. Adam & Company is a private bank operating primarily in Scotland. The offshore businesses deliver retail banking services to local and expatriate customers, and corporate banking and treasury services to corporate, intermediary and institutional clients. Profit before integration costs increased by 17%, £34 million to £234 million. Total income was up 7%, £31 million to £472 million. Net interest income grew by 13%, £27 million to £231 million, driven largely by higher deposits as customers moved out of equity investments, and a higher volume of lending, principally in offshore banking. Non-interest income increased 2%, £4 million to £241 million. The decline in equity market values and the consequent effect on fees earned on assets under management constrained income growth. Expenses were 1%, £2 million lower at £242 million. The cost:income ratio improved from 55.3% to 51.3%. There was a net release of provisions for bad and doubtful debts of £4 million (2000: release of £3 million). THE ROYAL BANK OF SCOTLAND GROUP plc DIRECT LINE INSURANCE GROUP Pro forma Pro forma Half-year Half-year Full year 2001 2000 2000 £m £m £m Earned premiums 817 621 1,346 Reinsurers' share (216) (171) (367) ------- ------- ------- Insurance premium income 601 450 979 Net interest income 60 43 98 Non-interest income 18 37 78 ------ ------- ------- Total income 679 530 1,155 Expenses - staff costs 68 58 124 - other 81 73 132 Gross claims 585 462 982 Reinsurers' share (167) (139) (284) ------- ------ ------ Profit before goodwill amortisation and integration costs 112 76 201 ------- ------ ------ In-force policies (000) - Motor 3,617 2,939 3,219 - Home 1,143 1,036 1,055 Combined operating ratio (%) 87.0 86.6 86.2 Total assets (£bn) 2.9 2.2 2.5 Insurance reserves (£m) 1,336 1,226 1,221 Employees at period end - permanent 7,300 6,300 6,600 - temporary 200 100 100 -------- -------- -------- - total 7,500 6,400 6,700 -------- -------- -------- Direct Line Insurance Group sells and underwrites retail and wholesale insurance on the telephone and the internet to customers. The Direct Division sells general insurance and motor breakdown services direct to the customer, whilst Green Flag is a leading wholesale provider of insurance and motoring related services. Through its International Division, Direct Line sells insurance in Spain and Japan, and has recently announced plans to expand into Germany and Italy. Profit before goodwill amortisation and integration costs increased by 47%, £ 36 million to £112 million. Total income was up 28%, £149 million to £679 million. Earned premiums grew strongly, up 32%, £196 million to £817 million due to increased policy numbers and higher average premiums. Gross claims were up 27%, £123 million at £585 million with continued lower claims experience being offset by the larger number of in-force policies. Net premium income increased by 34%, £151 million to £601 million and net claims rose 29%, £95 million to £418 million. Non-interest income fell as a result of increased commissions payable and a reduction in investment gains. Expenses were up 14%, £18 million to £149 million reflecting business expansion including the costs of establishing overseas operations. Motor in-force policies increased by 23% and home in-force policies were up 10%. THE ROYAL BANK OF SCOTLAND GROUP plc ULSTER BANK Pro forma Pro forma Half-year Half-year Full year 2001 2000 2000 £m £m £m Net interest income 166 139 294 Non-interest income 89 88 172 ----- ----- ----- Total income 255 227 466 Expenses - staff costs 70 70 144 - other 56 50 103 ----- ----- ----- Profit before provisions 129 107 219 Provisions for bad and doubtful debts 10 11 19 ----- ----- ----- Profit before integration costs 119 96 200 ----- ----- ----- Cost:income ratio (%) 49.4 52.9 53.0 Total assets (£bn) 12.2 11.1 11.1 Employees at period end - permanent 4,300 4,500 4,400 - temporary 400 300 200 -------- -------- -------- - total 4,700 4,800 4,600 -------- -------- -------- Average exchange rate - Euro/£ 1.605 1.635 1.642 Spot exchange rate - Euro/£ 1.660 1.581 1.606 Ulster Bank provides a comprehensive range of retail and wholesale financial services in Northern Ireland and the Republic of Ireland. Retail Banking has a network of branches throughout Ireland and operates in the personal, small business and wealth management sectors. Corporate Banking and Financial Markets provides a wide range of services in the corporate and institutional markets. Profit before integration costs of £119 million was 24%, £23 million higher. At constant exchange rates profit before integration costs rose by 23%, £22 million. Total income increased by 12%, £28 million to £255 million. Net interest income rose by 19%, £27 million to £166 million reflecting strong volume growth in customer loans and deposits. Average loans and advances to customers increased by 19%. Non-interest income was up £1 million to £89 million, with an increase in dealing profits being offset by a reduction in fees and commissions. Expenses rose by 5%, £6 million to £126 million due mainly to additional depreciation on property and equipment and operating lease assets and costs related to the preparation for the introduction of euro notes and coins. The cost:income ratio improved from 52.9% to 49.4%. Provisions for bad and doubtful debts were down £1 million to £10 million. THE ROYAL BANK OF SCOTLAND GROUP plc CITIZENS Pro forma Pro forma Half-year Half-year Full year 2001 2000 2000 £m £m £m Net interest income 370 317 667 Non-interest income 147 111 247 ----- ----- ----- Total income 517 428 914 Expenses - staff costs 146 141 290 - other 110 105 235 ----- ----- ----- Profit before provisions 261 182 389 Provisions for bad and doubtful debts 28 15 40 ----- ----- ----- Profit before goodwill amortisation 233 167 349 ----- ----- ----- Cost:income ratio (%) 49.5 57.5 57.4 Total assets (£bn) 22.6 19.6 20.3 Employees at period end - permanent 7,200 7,300 7,200 - temporary 100 200 100 -------- -------- -------- - total 7,300 7,500 7,300 -------- -------- -------- Average exchange rate - US$/£ 1.440 1.569 1.516 Spot exchange rate - US$/£ 1.405 1.515 1.493 Citizens is engaged in retail and corporate banking activities through its branch network in the states of Rhode Island, Connecticut, Massachusetts and New Hampshire and is the second largest bank in New England. The acquisition of the regional retail and commercial businesses of Mellon Bank will expand Citizens' presence to the states of Pennsylvania, Delaware and New Jersey. This acquisition is subject to regulatory approvals and is expected to complete in the final quarter of 2001. Profit before goodwill amortisation was up 40%, £66 million to £233 million reflecting strong organic growth and exchange rate movements. At constant exchange rates the increase was 28%, £51 million. Net interest income rose by 17%, £53 million to £370 million mainly due to deposit growth, partially offset by a slight reduction in interest spread. Non-interest income was up 32%, £36 million to £147 million reflecting growth in deposit service charges, mortgage banking and ATM and debit card income. Expenses at £256 million were 4%, £10 million higher due to exchange rate movements. The cost:income ratio improved from 57.5% to 49.5%. Provisions for bad and doubtful debts were £28 million compared with £15 million in 2000 reflecting growth in customer lending and the economic environment in the US. THE ROYAL BANK OF SCOTLAND GROUP plc CENTRAL ITEMS Pro forma Pro forma Half-year Half-year Full year 2001 2000 2000 £m £m £m Funding costs 102 105 217 Central department costs - staff costs 48 65 114 - other 37 63 107 Other corporate items - net 105 152 226 ------ ------ ------ Loss before goodwill amortisation and integration costs 292 385 664 ------ ------ ------ Employees at period end - permanent 1,400 1,700 1,400 - temporary 200 200 200 ------- ------- ------- - total 1,600 1,900 1,600 ------- ------- ------- The Centre comprises group and corporate functions which provide services to the operating divisions. The loss before goodwill amortisation and integration costs reduced by £93 million to £292 million. The first half of 2000 included £44 million of expenses relating to Citizens' acquisition of UST in January 2000. Staff numbers at 1,600 were 16%, 300 lower reflecting integration savings. MORE TO FOLLOW

Companies

NATWEST GROUP (NWG)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today