rbs201510306k2.htm
 
FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549

 
 
Report of Foreign Private Issuer
 
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
 
For October 30, 2015
 
Commission File Number: 001-10306

 
The Royal Bank of Scotland Group plc

 
RBS, Gogarburn, PO Box 1000
Edinburgh EH12 1HQ

 
(Address of principal executive offices)
 
 
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
 
Form 20-F X
  
Form 40-F ___
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):_________

 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):_________


Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.


Yes
   ___
No X
 
 
If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- ________

 
 
The following information was issued as a Company announcement in London, England and is furnished pursuant to General Instruction B to the General Instructions to Form 6-K:

 


The Royal Bank of Scotland Group plc
Q3 2015 Results

Contents
Page
   
Introduction
1
Highlights
3
Analysis of results
11
Segment performance
18
Selected statutory financial statements
26
Notes
31
Appendix 1 - Additional segment information
  
Appendix 2 - Go-forward Bank profile
  
Appendix 3 - Income statement reconciliations
  

Introduction

Presentation of information
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 2014 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, ‘RBSG plc’ or the ‘company’ refers to The Royal Bank of Scotland Group plc, and ‘RBS’ or the ‘Group’ refers to RBSG plc and its subsidiaries. Some of the financial information contained in this document, prepared using Group accounting policies, shows the operating performance of RBS on a non-statutory basis which excludes own credit adjustments, gain on redemption of own debt, write down of goodwill and strategic disposals. RFS Holdings minority interest (RFS MI) was also excluded in the periods ended 30 September 2014. Such information is provided to give a better understanding of the results of RBS’s operations.

RBS is committed to becoming a leaner, less volatile business based around its core franchises of Personal & Business Banking (PBB) and Commercial & Private Banking (CPB). To achieve this goal a number of initiatives have been announced which include, but are not limited to, the restructuring of Corporate & Institutional Banking (CIB) into CIB Go-forward and CIB Capital Resolution, the divestment of the remaining stake in Citizens, the sale of the international private banking business (the remaining Private Banking UK business is within the Go-forward Bank (Private Banking Go-forward)), the exit of Williams & Glyn (mainly within UK Personal & Business Banking (UK PBB)) and the continued run down of RBS Capital Resolution (RCR). Significant progress towards these exits is expected by the end of 2015. This document contains some information to illustrate the impact on certain key performance measures of these initiatives by showing the future profile of the bank (the ‘Go-forward Bank’) and the segments, businesses and portfolios which it intends to exit (the ‘Exit Bank’). This information is presented to illustrate the strategy and its impact on the business and is on a non-statutory basis and should be read in conjunction with the notes attached as well as the section titled Forward-looking statements. Other than the change in treatment of Citizens described on page 2 there has been no change to the reportable segments in the period as a result of these initiatives.

Introduction

Citizens
On 31 December 2014 Citizens was classified as a disposal group and a discontinued operation: its aggregate assets were presented in Assets of disposal groups and its aggregate liabilities in Liabilities of disposal groups. Prior period results were re-presented.

From 3 August 2015, when RBS’s interest fell to 20.9%, Citizens has been accounted for as an associate classified as held for sale. Citizens Financial Group is no longer a reportable segment; the non-statutory operating results and operating segment disclosures for all periods have been restated accordingly.

Statutory results
The condensed consolidated income statement, condensed consolidated statement of comprehensive income, condensed consolidated balance sheet, condensed consolidated statement of changes in equity and related Notes presented on pages 26 to 35 inclusive are on a statutory basis. Reconciliations between income statement lines on a non-statutory basis and a statutory basis are included in Appendix 3.

Contacts

For analyst enquiries:
    
Richard O’Connor
Head of Investor Relations
+44 (0) 20 7672 1758
     
For media enquiries:
    
RBS Press Office
  
+44 (0) 131 523 4205

Analysts and investors conference call
RBS will hold an audio Q&A session for analysts and investors on the results for the quarter ended 30 September 2015. Details are as follows:

Date:
  
Friday 30 October 2015
Time:
  
9.00 am UK time
Webcast:
  
www.rbs.com/results
Dial in details:
  
International – +44 (0) 1452 568 172
UK Free Call – 0800 694 8082
US Toll Free – 1 866 966 8024

Announcement and slides are available on www.rbs.com/results

Financial supplement
A financial supplement containing income statement and balance sheet information for the nine quarters ended 30 September 2015 is available on www.rbs.com/results
Highlights

The Royal Bank of Scotland Group (RBS) continues to deliver on its plan to build a stronger, simpler and fairer bank for both customers and shareholders; on track for 2015 targets.

●
Q3 attributable profit was £952 million, up slightly from £896 million in Q3 2014. Restructuring costs remained high at £847 million as the Go-forward Bank transforms, while litigation and conduct costs were £129 million compared with £780 million in Q3 2014.
●
Attributable profit included (in profit from discontinued operations) the gain on loss of control of Citizens (£1,147 million). The principal component of this gain was a reclassification of foreign exchange reserves of £962 million to profit or loss with no effect on RBS's net asset value.
●
Q3 operating loss(1) was £134 million, down from a profit of £1,107 million in Q3 2014. Adjusted operating profit(2) was £842 million (Q3 2014 - £2,054 million), after £126 million of losses relating to IFRS volatility, and £77 million of CIB disposal losses.
 
○
Income was £596 million lower than in Q3 2014, principally driven by a £394 million decline in Corporate & Institutional Banking (CIB), reflecting its planned reshaping. Income pressures were also seen in UK Personal & Business Banking (UK PBB) and Commercial Banking where good loan volume growth was offset by continued competitive pressure on asset margins.
 
○
Operating expenses, excluding restructuring costs and litigation and conduct costs, were £152 million lower, with headcount down and restructuring benefits feeding through to a lower cost base.
 
○
Credit quality remained good, with net impairment releases of £79 million, £768 million lower than the high levels of releases recorded in Q3 2014.
●
Tangible net asset value per ordinary and equivalent B share increased from 380p per share at 30 June 2015 to 384p per share at 30 September 2015. This was largely driven by the attributable profit for the period (less the impact of reclassified reserves), together with underlying gains in foreign exchange reserves reflecting the strengthening of the US dollar and the euro, and gains in cash flow hedging reserves as swap rates decreased.

Good progress on 2015 targets
●
RBS remains well on track to achieve substantially all its priority targets for 2015. The cost savings target for the year has already been exceeded and strong improvements were recorded in the bank’s annual employee engagement survey.




Strategy goal
2015 target
Q3 2015 Progress
Strength and sustainability
Reduce risk-weighted assets (RWAs) to <£300 billion
£316 billion, a reduction of £10 billion in the quarter
RCR exit substantially completed
Funded assets down 83% since initial pool of assets identified
Citizens deconsolidation
Further sale in August 2015 takes holding to 20.9%; de-consolidated for accounting purposes
£2 billion AT1 issuance
Successfully priced US$3.15 billion AT1 capital notes (£2 billion equivalent)
Customer experience
Improve NPS in every UK franchise
Year-on-year, significant improvement in NatWest Business Banking, RBS Business Banking and Ulster Bank Personal Banking (NI)
Simplifying the bank
Reduce costs by £800 million(3)
Target exceeded by Q3 2015, target increased to >£900 million
Supporting growth
Lending growth in strategic segments ≥ nominal UK GDP growth
4.6% annualised growth in the first nine months of 2015 in UK PBB and Commercial Banking
Employee engagement
Raise employee engagement index to within 8% of Global Financial Services (GFS) norm
Surpassed employee engagement goal, up six points to within three points of GFS
Highlights

Building a stronger RBS
●
RBS is on track with its plan to build a stronger, simpler, fairer bank for customers and shareholders.
 
●
Capital strength continued to build with the Common Equity Tier 1 ratio strengthening to 12.7% at 30 September 2015, up 40 basis points from 30 June 2015 and 150 basis points from 31 December 2014. RBS’s leverage ratio rose from 4.6% at 30 June 2015 to 5.0% at 30 September 2015, assisted by the successful issue of US$3.15 billion (£2 billion) of Additional Tier 1 capital notes in August 2015.
 
●
We continue to develop our technology capabilities to make it simpler for us to serve our customers and for them to do business with us. A new automated account-opening system is being rolled out and will increase the efficiency of our onboarding processes, reducing end-to-end account opening times by 50% for business banking customers and 30% for Commercial Banking customers. Our Pay on Your Mobile (PAYM) capability has been enhanced, with customers now able to both send and receive payments. We continue to simplify our core technology platforms with 245 applications decommissioned year-to-date.
 
●
We are seeking to build customer engagement with a market-leading current account that enables customers to receive 3% cash back on their household bills for a monthly account fee of £3. The initial launch of the Reward account to existing private and packaged account holders has attracted around one million customers with the majority of these moving additional direct debits to their RBS and NatWest accounts. We are also extending our stand against teaser rates by offering three year fixed rates on home insurance, breaking with insurance industry practice.
 
●
RBS delivered good support for both household and business customers. UK PBB net mortgage lending totalled £3.8 billion in Q3 2015, with a strong applications pipeline and gross lending up 42% from Q3 2014 to £7.4 billion. Our flow market share in Q3 2015 was 12.1% of the UK market, compared with RBS’s stock share of 8.5%. Net new lending in Commercial Banking totalled £1.5 billion in the quarter with growth across most of the customer segments. Further support was provided to small businesses with the opening of three new business accelerator hubs in Brighton, Leeds and Bristol in partnership with Entrepreneurial Spark: seven hubs are now open.
 
●
Adjusted return on equity(4) in the Go-forward Bank on an annualised basis for the first nine months of 2015 is estimated at 13%. IFRS volatility had a minimal impact on the adjusted return on equity during the first nine months of 2015.


Notes:
(1)
Operating profit/(loss) before tax, own credit adjustments, gain on redemption of own debt and strategic disposals. The nine months and quarter ended 30 September 2014 are stated before RFS minority interest.
(2)
Excluding restructuring costs and litigation and conduct costs.
(3)
Excluding restructuring costs and litigation and conduct costs, write off of intangible assets and operating expenses of Williams & Glyn.
(4)
Calculated using operating profit after tax on a non-statutory basis excluding restructuring costs and litigation and conduct costs adjusted for preference share dividends divided by average notional equity (based on 13% of average RWA equivalent (RWAe)).

Highlights

Accelerated run-down of the Exit Bank
●
RBS has maintained good momentum in the run-down of its Exit Bank, with RWAs down by approximately £31 billion since the start of 2015 to £141 billion at 30 September 2015.
   
●
RBS Capital Resolution (RCR) funded assets have fallen to £6.5 billion at 30 September 2015, down 83% since the initial pool of assets was identified. This leaves it on track to achieve its targeted 85% reduction in funded assets by the end of 2015, a year ahead of schedule. Good progress was also recorded in CIB Capital Resolution where RWAs were reduced by £6.7 billion to £38.7 billion in Q3 2015 with the reduction since the start of 2015 totalling £25.4 billion.
   
●
The sale of a further 109 million shares in August 2015 reduced RBS’s stake in Citizens to 20.9%. Following this significant reduction in its voting interest RBS no longer controls Citizens for accounting purposes and ceased to consolidate it, classifying its remaining investment as an associate held for sale. Citizens remains fully consolidated for regulatory capital purposes. RBS continues to target a complete exit by the end of 2015, subject to market conditions.
   
●
On a pro forma basis, assuming full deconsolidation of Citizens credit and counterparty risk RWAs at 30 September 2015, RBS’s CET1 ratio would have been 16.2% and its leverage ratio 5.6%.
   
●
Williams & Glyn submitted its banking licence application to the UK regulatory authorities in October 2015. RBS continues to work towards its separation in the summer of 2016 and an initial public offering by the end of 2016.

UK Government ownership
●
On 4 August 2015, HM Treasury sold 630 million RBS ordinary shares, its first sale since its initial investment in 2008. The sale of the 5.4% stake reduced HM Treasury’s economic interest in RBS to 72.9%.
   
●
On 8 October 2015, HM Treasury gave notice of its intention to convert 51 billion B shares it held into 5.1 billion ordinary shares, a move that helps normalise the ownership structure of RBS. These new ordinary shares have now been admitted to the London Stock Exchange. HM Treasury’s economic interest in RBS remains unchanged at 72.9%. The Dividend Access Share (DAS) remains outstanding and may be retired at any time following the payment of dividends amounting to £1,180 million (with interest starting to accrue on this amount from 1 January 2016).


Highlights

Customer
RBS remains committed to achieving its target of being number one bank for customer service, trust and advocacy by 2020. In recent years, RBS has launched a number of initiatives to make it simpler, fairer and easier to do business with, and it continues to deliver on the commitments that it made to its customers in 2014.

We use independent surveys to measure our customers’ experience and track our progress against our goal in each of our markets.

Net promoter score (NPS)
Customers are asked how likely they would be to recommend their bank to a friend or colleague, and respond based on a 0-10 scale with 10 indicating ‘extremely likely’ and 0 indicating ‘not at all likely’. Customers scoring 0 to 6 are termed detractors and customers scoring 9 to 10 are termed promoters. NPS is established by subtracting the proportion of detractors from the proportion of promoters.

The table below lists all of the businesses for which we have a NPS for Q3 2015. Year-on-year, NatWest Business Banking, RBS Business Banking and Ulster Bank (Northern Ireland) Personal Banking have seen significant improvements in NPS.

   
Q3 2014
Q2 2015
Q3 2015
Year end 2015 target
Personal Banking
NatWest (England & Wales)(1)
7
8
8
9
Royal Bank of Scotland (Scotland)(1)
-4
-10
-9
-10
Ulster Bank (Northern Ireland)(2)
-29
-11
-9
-21
Ulster Bank (Republic of Ireland)(2)
-19
-14
-15
-15
Business Banking
NatWest (England & Wales)(3)
-13
4
6
-7
Royal Bank of Scotland (Scotland)(3)
-26
-17
-12
-21
Commercial Banking(4)
10
10
9
15

Customer trust
We also use independent experts to measure our customers’ trust in the bank. Each quarter we ask customers to what extent they trust or distrust their bank to do the right thing. The score is a net measure of those customers that trust their bank (a lot or somewhat) minus those that distrust their bank (a lot or somewhat).

Trust in the RBS brand in Q2 2015 was impacted by the IT incident on 17 June 2015, current quarter scores return to pre-incident levels.

   
Q3 2014
Q2 2015
Q3 2015
Year end 2015 target
Customer trust(5)
NatWest (England & Wales)(1)
45%
48%
44%
46%
Royal Bank of Scotland (Scotland)
8%
-2%
11%
11%

Notes:
(1)
Source: GfK FRS six month rolling data. Latest base sizes: NatWest (England & Wales) (3392) Royal Bank of Scotland (Scotland) (545). Based on the question: "How likely is it that you would recommend (brand) to a relative, friend or colleague in the next 12 months for current account banking?”
(2)
Source: Coyne Research 12 MAT data. Latest base sizes: Ulster Bank NI (305) Question: “Please indicate to what extent you would be likely to recommend (brand) to your friends or family using a scale of 0 to 10 where 0 is not at all likely and 10 is extremely likely”
(3)
Source: Charterhouse Research Business Banking Survey, based on interviews with businesses with an annual turnover up to £2 million. Quarterly rolling data. Latest base sizes: NatWest England & Wales (1289), RBS Scotland (429). Weighted by region and turnover to be representative of businesses in England & Wales/Scotland.
(4)
Source: Charterhouse Research Business Banking Survey, based on interviews with businesses with annual turnover between £2 million and £1 billion. Latest base size: RBSG Great Britain (878). Weighted by region and turnover to be representative of businesses in Great Britain.
(5)
Source: Populus. Latest quarter’s data. Measured as a net of those that trust RBS/NatWest to do the right thing, less those that do not. Latest base sizes: NatWest, England & Wales (925), RBS Scotland (214).
 
Highlights

Outlook
The credit environment is expected to remain relatively benign, with modest underlying impairment charges. Competitive pressure on asset margins is likely to continue, with limited opportunities for offsetting deposit repricing. In addition, non-interest income from fee-related products remains subdued due to modest volume growth, and specific regulatory impacts such as the change in interchange fees in the cards business.

Our estimate of overall restructuring and disposal losses guidance for 2015 to 2019 remains unchanged. In the fourth quarter of 2015, we expect restructuring costs to remain high as we continue to implement our core bank transformation and disposal losses to be elevated within the overall guidance on disposal losses, although the timing and quantum of these losses are subject to market conditions.

Whilst legacy issues continue to be addressed, material further and incremental costs and provisions in respect of conduct and litigation related matters are expected, and could be substantially greater than the aggregate provisions RBS has recognised. The timing and quantum of any future costs, provisions and settlements, however, remain uncertain.
 
Highlights

Summary consolidated income statement for the period ended 30 September 2015
 
 
Nine months ended
 
Quarter ended
 
30 September
30 September
 
30 September
30 June
30 September
 
2015
2014 
 
2015 
2015 
2014 
 
£m
£m
 
£m
£m
£m
 
 
 
 
 
 
 
Net interest income
6,605 
6,879 
 
2,187 
2,215 
2,370 
Non-interest income
3,545 
5,131 
 
860 
1,354 
1,273 
 
 
 
 
 
 
 
Total income
10,150 
12,010 
 
3,047 
3,569 
3,643 
 
 
 
 
 
 
 
Litigation and conduct costs
(1,444)
(1,030)
 
(129)
(459)
(780)
Restructuring costs
(2,317)
(612)
 
(847)
(1,023)
(167)
Other costs
(6,783)
(7,768)
 
(2,284)
(2,207)
(2,436)
 
 
 
 
 
 
 
Operating expenses
(10,544)
(9,410)
 
(3,260)
(3,689)
(3,383)
 
 
 
 
 
 
 
(Loss)/profit before impairment releases
(394)
2,600 
 
(213)
(120)
260 
Impairment releases
400 
682 
 
79 
192 
847 
 
 
 
 
 
 
 
Operating profit/(loss) (1)
6 
3,282 
 
(134)
72 
1,107 
Own credit adjustments
424 
(2)
 
136 
168 
49 
Gain on redemption of own debt
- 
20 
 
- 
- 
- 
Write down of goodwill
- 
(130)
 
- 
- 
- 
Strategic disposals
(135)
191 
 
- 
- 
- 
RFS Holdings minority interest
- 
(35)
 
- 
- 
(56)
 
 
 
 
 
 
 
Operating profit before tax
295 
3,326 
 
2 
240 
1,100 
Tax charge
(294)
(869)
 
(1)
(100)
(277)
 
 
 
 
 
 
 
Profit from continuing operations
1 
2,457 
 
1 
140 
823 
Profit from discontinued operations, net of tax (2)
1,451 
437 
 
1,093 
674 
117 
 
 
 
 
 
 
 
Profit for the period
1,452 
2,894 
 
1,094 
814 
940 
Non-controlling interests
(389)
11 
 
(45)
(428)
53 
Other owners
(264)
(264)
 
(97)
(93)
(97)
Dividend access share
- 
(320)
 
- 
- 
- 
 
 
 
 
 
 
 
Profit attributable to ordinary and B shareholders
799 
2,321 
 
952 
293 
896 
 
 
 
 
 
 
 
Memo:
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses - adjusted (3)
(6,783)
(7,768)
 
(2,284)
(2,207)
(2,436)
Operating profit - adjusted (3)
 
3,767 
4,924 
 
842 
1,554 
2,054 
 
 
 
 
 
 
 
Key metrics and ratios
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest margin
2.12%
2.09%
 
2.09%
2.13%
2.17%
Cost:income ratio
104%
78%
 
107%
103%
93%
(Loss)/earnings per share from continuing operations
 
 
 
 
 
 
  - basic
(2.8p)
16.9p
 
(0.9p)
0.2p
6.9p
  - adjusted (4)
(4.5p)
16.1p
 
(1.8p)
(0.9p)
6.5p
Return on tangible equity (5)
2.4%
7.3%
 
8.8%
2.7%
8.2%
Average tangible equity (5)
£43,538m
£42,231m
 
£43,403m
£43,062m
£43,536m
Average number of ordinary shares and equivalent B
 
 
 
 
 
 
  shares outstanding during the period (millions)
11,503 
11,333 
 
11,546 
11,511 
11,384 
 
 
Notes:
(1)
Operating profit/(loss) before tax, own credit adjustments, gain on redemption of own debt, write down of goodwill and strategic disposals. The nine months and quarter ended 30 September 2014 are stated before RFS minority interest.
(2)
Refer to Note 2 on page 31 for further details.
(3)
Excluding restructuring costs and litigation and conduct costs.
(4)
Adjusted earnings excludes own credit adjustments, gain on redemption of own debt, write down of goodwill and strategic disposals. RFS minority interest was also a reconciling item for periods ended 30 September 2014.
(5)
Tangible equity is equity attributable to ordinary and B shareholders less intangible assets.

Highlights

Summary consolidated balance sheet as at 30 September 2015
 
30 September 
30 June 
31 December 
 
2015 
2015 
2014 
 
£m 
£m 
£m 
 
 
 
 
Cash and balances at central banks
77,220 
81,900 
74,872 
Net loans and advances to banks (1)
22,681 
20,714 
23,027 
Net loans and advances to customers (1)
311,383 
314,993 
334,251 
Reverse repurchase agreements and stock borrowing
51,800 
67,606 
64,695 
Debt securities and equity shares
83,506 
80,550 
92,284 
Assets of disposal groups (2)
6,300 
89,071 
82,011 
Other assets
27,517 
28,010 
26,033 
 
 
 
 
Funded assets
580,407 
682,844 
697,173 
Derivatives
296,019 
281,857 
353,590 
 
 
 
 
Total assets
876,426 
964,701 
1,050,763 
 
 
 
 
Bank deposits (3)
30,543 
30,978 
35,806 
Customer deposits (3)
346,267 
342,023 
354,288 
Repurchase agreements and stock lending
43,355 
66,362 
62,210 
Debt securities in issue
37,360 
41,819 
50,280 
Subordinated liabilities
20,184 
19,683 
22,905 
Derivatives
288,905 
273,589 
349,805 
Liabilities of disposal groups (2)
6,401 
80,388 
71,320 
Other liabilities
45,164 
48,090 
43,957 
 
 
 
 
Total liabilities
818,179 
902,932 
990,571 
Non-controlling interests
703 
5,705 
2,946 
Owners’ equity
57,544 
56,064 
57,246 
 
 
 
 
Total liabilities and equity
876,426 
964,701 
1,050,763 
 
 
 
 
Contingent liabilities and commitments
160,205 
210,679 
241,186 

Notes:
(1)
Excludes reverse repurchase agreements and stock borrowing.
(2)
Primarily International Private Banking and the interest in associate in relation to Citizens at 30 September 2015, Citizens and International Private Banking at 30 June 2015 and Citizens at 31 December 2014.
(3)
Excludes repurchase agreements and stock lending.


Highlights
 
 
 
 
 
30 September
30 June
31 December
Balance sheet related key metrics and ratios
2015 
2015 
2014 
 
 
 
 
Tangible net asset value per ordinary and equivalent B share (1)
384p
380p
387p
Loan:deposit ratio (2,3)
89%
92%
95%
Short-term wholesale funding (3,4)
£17bn
£25bn
£28bn
Wholesale funding (3,4)
£66bn
£76bn
£90bn
Liquidity portfolio
£164bn
£161bn
£151bn
Liquidity coverage ratio (5)
136%
117%
112%
Net stable funding ratio (6)
117%
115%
112%
Tangible equity (7)
£44,442m
£43,919m
£44,368m
Number of ordinary shares and equivalent B shares in issue (millions) (8)
11,574 
11,570 
11,466 
Common Equity Tier 1 ratio
12.7%
12.3%
11.2%
Risk-weighted assets
£316.0bn
£326.4bn
£355.9bn
Leverage ratio (9)
5.0%
4.6%
4.2%
 
 
 
 
Balance sheet related key metrics and ratios excluding Citizens (10)
 
 
 
 
 
 
 
Liquidity portfolio
£149bn
£148bn
 
Liquidity coverage ratio (5)
139%
118%
 
Net stable funding ratio (6)
118%
112%
 
Common Equity Tier 1 ratio
16.2%
15.3%
 
Risk-weighted assets
£248.7bn
£261.5bn
 
Leverage ratio (9)
5.6%
5.1%
 

Notes:
(1)
Tangible net asset value per ordinary and equivalent B share represents tangible equity divided by the number of ordinary shares and equivalent B shares in issue.
(2)
Includes disposal groups.
(3)
Excludes repurchase agreements and stock lending.
(4)
Excludes derivative collateral.
(5)
On 1 October 2015 the LCR became the PRA’s primary regulatory liquidity standard; UK banks are required to meet a minimum standard of 80% initially, rising to 100% by 1 January 2018.
(6)
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.
(7)
Tangible equity is equity attributable to ordinary and B shareholders less intangible assets.
(8)
Includes 26 million Treasury shares (30 June 2015 - 26 million; 31 December 2014 - 28 million).
(9)
Based on end-point CRR Tier 1 capital and revised 2014 Basel III leverage ratio framework and the CRR Delegated Act.
(10)
Assuming Citizens was fully divested at the carrying value at 30 September 2015 and excluding only credit and counterparty risk RWAs.

Analysis of results

 
Nine months ended
 
Quarter ended
 
30 September
30 September
 
30 September
30 June
30 September
2015
2014
 
2015
2015
2014
Net interest income
£m
£m
 
£m
£m
£m
 
 
 
 
 
 
 
Net interest income
 
 
 
 
 
 
RBS
6,605 
6,879 
 
2,187 
2,215 
2,370 
 
 
 
 
 
 
 
  - UK Personal & Business Banking
3,460 
3,474 
 
1,170 
1,147 
1,198 
  - Ulster Bank
392 
486 
 
127 
132 
163 
  - Commercial Banking
1,673 
1,520 
 
565 
562 
521 
  - Private Banking
377 
516 
 
123 
126 
172 
  - Corporate & Institutional Banking
518 
595 
 
142 
174 
230 
  - Central items
227 
312 
 
77 
88 
109 
  - RCR
(42)
(24)
 
(17)
(14)
(23)
 
 
 
 
 
 
 
Average interest-earning assets
 
 
 
 
 
 
RBS
415,463 
436,876 
 
413,778 
417,248 
431,863 
 
 
 
 
 
 
 
  - UK Personal & Business Banking
129,422 
127,101 
 
131,299 
128,569 
127,896 
  - Ulster Bank
27,621 
28,033 
 
27,825 
27,404 
27,922 
  - Commercial Banking
78,559 
74,611 
 
79,689 
78,880 
74,339 
  - Private Banking
15,752 
18,669 
 
15,557 
15,729 
18,681 
  - Corporate & Institutional Banking
63,634 
83,821 
 
48,612 
69,437 
83,903 
  - Central items
85,117 
70,662 
 
99,526 
82,471 
69,872 
  - RCR
15,358 
33,979 
 
11,270 
14,758 
29,250 
 
 
 
 
 
 
 
Gross yield on interest-earning assets of banking
 
 
 
 
 
 
   business
2.92%
3.01%
 
2.84%
2.91%
3.04%
Cost of interest-bearing liabilities of banking business
(1.15%)
(1.26%)
 
(1.09%)
(1.14%)
(1.20%)
 
 
 
 
 
 
 
Interest spread of banking business
1.77%
1.75%
 
1.75%
1.77%
1.84%
Benefit from interest free funds
0.35%
0.34%
 
0.34%
0.36%
0.33%
Net interest margin (1)
 
 
 
 
 
 
RBS
2.12%
2.09%
 
2.09%
2.13%
2.17%
 
 
 
 
 
 
 
  - UK Personal & Business Banking
3.57%
3.65%
 
3.54%
3.58%
3.72%
  - Ulster Bank
1.90%
2.32%
 
1.81%
1.93%
2.32%
  - Commercial Banking
2.85%
2.72%
 
2.81%
2.86%
2.78%
  - Private Banking
3.20%
3.70%
 
3.14%
3.21%
3.65%
  - Corporate & Institutional Banking
1.09%
0.95%
 
1.16%
1.00%
1.08%
  - Central items
0.34%
0.52%
 
0.29%
0.41%
0.58%
  - RCR
(0.37%)
(0.09%)
 
(0.60%)
(0.38%)
(0.31%)

Non-interest income
 
 
 
 
 
 
 
 
 
 
 
 
 
Net fees and commissions
2,280 
2,688 
 
685 
783 
920 
Income from trading activities
747 
1,644 
 
82 
430 
205 
Other operating income
518 
799 
 
93 
141 
148 
 
 
 
 
 
 
 
Total non-interest income
3,545 
5,131 
 
860 
1,354 
1,273 

Notes:
(1)
For the purposes of net interest margin (NIM) calculations, a decrease of £12 million arising in Central items (nine months ended 30 September 2014 - £35 million; Q3 2015 - £4 million; Q2 2015 - £3 million; Q3 2014 - £7 million) was made in respect of interest on financial assets and liabilities designated as at fair value through profit or loss. Related interest-earning assets and interest-bearing liabilities have also been adjusted.
(2)
PBB NIM Q3 2015 was 3.23% and Q2 2015 was 3.29%. CPB NIM for Q3 2015 was 2.87% and Q2 2015 was 2.92%.

Analysis of results

Key points
·
Net interest income of £2,187 million was down £183 million from Q3 2014. While there has been good volume growth in some segments during the quarter, average interest-earnings assets remain 4% lower than Q3 2014. Higher yielding assets such as credit card balances and personal unsecured loans have declined in volume, reflecting RBS’s positioning in these products. Good progress in the run-down of CIB Capital Resolution assets has amplified the bank’s excess liquidity position.
   
·
NIM for RBS of 2.09% continues to compress modestly, down 4 basis points from Q2 2015 and 8 basis points from Q3 2014. RBS’s previously reported NIM included Citizens, whose exclusion results in a lower bank NIM.
   
·
In UK PBB, NIM declined by 4 basis points during Q3 2015, principally reflecting more competitive front book pricing in combination with increased switching from the standard variable rate book (15% of the overall mortgage book at 30 September 2015 compared with 23% a year earlier and 18% at the end of Q2 2015).
   
·
Non-interest income totalled £860 million, down £413 million from Q3 2014. This was principally driven by the planned reshaping of CIB (down £306 million) and reduced trading income and disposal gains in RCR (down £144 million). Equity gains were also lower in Commercial Banking, which had recorded significant disposal gains in previous quarters. Interchange fee income in UK PBB remains under pressure.
   
·
Compared with Q2 2015, non-interest income was £494 million lower. This included a movement of £331 million in volatile items under IFRS, which represented a charge of £126 million in the quarter compared with a credit of £205 million in Q2 2015.

Analysis of results

 
Nine months ended
 
Quarter ended
 
30 September
30 September
 
30 September
30 June
30 September
2015
2014 
 
2015
2015 
2014 
Operating expenses
£m
£m
 
£m
£m
£m
 
 
 
 
 
 
 
Staff costs
3,776 
4,184 
 
1,265 
1,242 
1,356 
Premises and equipment
1,061 
1,360 
 
352 
298 
423 
Other
1,338 
1,418 
 
477 
481 
396 
Restructuring costs*
2,317 
612 
 
847 
1,023 
167 
Litigation and conduct costs
1,444 
1,030 
 
129 
459 
780 
 
 
 
 
 
 
 
Administrative expenses
9,936 
8,604 
 
3,070 
3,503 
3,122 
Depreciation and amortisation
608 
724 
 
190 
186 
261 
Write down of intangible assets
- 
82 
 
- 
- 
- 
 
 
 
 
 
 
 
Operating expenses
10,544 
9,410 
 
3,260 
3,689 
3,383 
 
 
 
 
 
 
 
Adjusted operating expenses (1)
6,783 
7,768 
 
2,284 
2,207 
2,436 
 
 
 
 
 
 
 
*Restructuring costs comprise:
 
 
 
 
 
 
  - staff expenses
625 
248 
 
281 
288 
79 
  - premises, equipment, depreciation and amortisation
705 
244 
 
375 
42 
52 
  - other
987 
120 
 
191 
693 
36 
 
 
 
 
 
 
 
Restructuring costs
2,317 
612 
 
847 
1,023 
167 
 
 
 
 
 
 
 
Staff costs as a % of total income
37%
35%
 
42%
35%
37%
Cost:income ratio
104%
78%
 
107%
103%
93%
Cost:income ratio - adjusted (1)
67%
65%
 
75%
62%
67%
Employee numbers (FTE - thousands)
92.4 
93.3 
 
92.4 
91.6 
93.3 

Note:
(1)
Excluding restructuring costs and litigation and conduct costs.


Key points
·
Staff costs totalled £1,265 million, down £91 million or 7%, compared with Q3 2014, principally driven by declining headcount. Premises and equipment expenses were down £71 million from Q3 2014 as RBS’s property portfolio is managed down.
   
·
Adjusted operating expenses in the nine months ended 30 September 2015 totalled £6,783 million, down £985 million or 13%, compared with the same period of 2014. RBS expects to exceed £900 million of cost savings for the full year. However, Q4 2015 will include the annual bank levy charge; in addition, £190 million of accrual reversals were recorded in Q4 2014.
   
·
Restructuring costs totalled £847 million for Q3 2015, principally relating to CIB (£637 million, including £276 million of property related charges) and to Williams & Glyn separation (£190 million). Restructuring costs in the first nine months of 2015 were £2.3 billion, approaching half of the expected c.£5 billion of total restructuring costs from 2015 to 2019.
   
·
Litigation and conduct costs of £129 million were lower than recorded in recent quarters and related principally to a charge in CIB in relation to certain mortgage-backed securities litigation.


Analysis of results

 
Nine months ended
 
Quarter ended
 
30 September
30 September
 
30 September
30 June
30 September
2015 
2014 
 
2015 
2015 
2014 
Impairment (releases)/losses
£m
£m
 
£m
£m
£m
 
 
 
 
 
 
 
Loan impairment (releases)/losses
 
 
 
 
 
 
  - individually assessed
(135)
(321)
 
(15)
(105)
(415)
  - collectively assessed
(8)
293 
 
(13)
(7)
16 
  - latent
(380)
(642)
 
(64)
(91)
(450)
 
 
 
 
 
 
 
Customer loans
(523)
(670)
 
(92)
(203)
(849)
Bank loans
(4)
(10)
 
(4)
- 
- 
 
 
 
 
 
 
 
Total loan impairment releases
(527)
(680)
 
(96)
(203)
(849)
Securities
127 
(2)
 
17 
11 
2 
 
 
 
 
 
 
 
Total impairment releases
(400)
(682)
 
(79)
(192)
(847)

 
30 September 
30 June 
31 December 
Credit metrics (1)
2015 
2015 
2014 
 
 
 
 
Gross customer loans
£322,957m
£390,781m
£412,801m
Loan impairment provisions
£9,277m
£11,303m
£18,040m
Risk elements in lending (REIL)
£14,643m
£18,714m
£28,219m
Provisions as a % of REIL
63%
60%
64%
REIL as a % of gross customer loans
4.5%
4.8%
6.8%

 
 
 
 
Credit metrics excluding Citizens
 
 
 
 
 
 
 
Gross customer loans
£322,957m
£328,821m
£352,659m
Loan impairment provisions
£9,277m
£10,771m
£17,504m
Risk elements in lending (REIL)
£14,643m
£17,474m
£26,889m
Provisions as a % of REIL
63%
62%
65%
REIL as a % of gross customer loans
4.5%
5.3%
7.6%

Note:
(1)
Includes disposal groups. Citizens is included in disposal groups at 30 June 2015 and 31 December 2014.

Key points
·
Loan impairment releases in Q3 2015 were £96 million compared with £849 million in Q3 2014.
   
·
Excluding Citizens, provision coverage increased from 62% at 30 June 2015 to 63% at 30 September 2015, largely reflecting the £2.8 billion reduction in REIL, principally driven by RCR disposals.


Analysis of results

Selected credit risk portfolios
 
 
 
 
 
 
 
 
 
 
30 September 2015
 
30 June 2015 (1)
 
31 December 2014 (1)
 
CRA (2)
TCE (2)
EAD (2)
 
CRA (2)
TCE (2)
EAD (2)
 
CRA (2)
TCE (2)
EAD (2)
Natural resources
£m
£m
£m
 
£m
£m
£m
 
£m
£m
£m
 
 
 
 
 
 
 
 
 
 
 
 
Oil and gas
4,632 
9,181 
7,224 
 
6,664 
15,499 
11,318 
 
9,421 
22,014 
15,877 
Mining and metals
1,397 
2,516 
1,934 
 
1,717 
2,914 
2,543 
 
2,660 
4,696 
3,817 
Electricity
3,323 
9,145 
6,282 
 
4,361 
11,935 
7,933 
 
4,927 
16,212 
9,984 
Water and waste
4,901 
5,955 
5,906 
 
5,006 
6,174 
6,041 
 
5,281 
6,718 
6,466 
 
 
 
 
 
 
 
 
 
 
 
 
Natural resources
14,253 
26,797 
21,346 
 
17,748 
36,522 
27,835 
 
22,289 
49,640 
36,144 
 
 
 
 
 
 
 
 
 
 
 
 
Commodity traders (3)
884 
1,239 
1,355 
 
1,136 
1,835 
1,996 
 
1,968 
2,790 
3,063 
Of which: natural resources
662 
915 
922 
 
706 
1,083 
1,197 
 
1,140 
1,596 
1,852 
Shipping
7,937 
8,568 
8,266 
 
8,258 
8,874 
8,616 
 
10,087 
10,710 
10,552 

Notes:
(1)
Prior period data excludes Citizens for comparative purposes: Citizens totals for natural resources and shipping were 30 June 2015 - TCE £4.4 billion, EAD £3.6 billion; 31 December 2014 - TCE £4.2 billion, EAD £3.4 billion.
(2)
Credit risk assets (CRA) consist of lending gross of impairment provisions, derivative exposures after netting and contingent obligations. Total committed exposure (TCE) comprises CRA, securities financing transactions after netting, banking book debt securities and committed undrawn facilities. Exposure at default (EAD) is gross of credit provisions and is after credit risk mitigation. EAD reflects an estimate of the extent to which a bank will be exposed under a specific facility on the default of a customer or counterparty. Uncommitted undrawn facilities are excluded from TCE but included within EAD; therefore EAD can exceed TCE.
(3)
Commodity traders represents customers in a number of industry sectors, predominately natural resources above.

Key points
·
Oil and gas: total exposure has more than halved during 2015 and decreased significantly during Q3 2015. This primarily reflected continued loan sales and run-off across the CIB portfolio in Asia-Pacific and the US.
·
Mining and metals: the reduction in exposure during 2015 reflected proactive management of more vulnerable sub-sectors. The majority of the exposure is to large international customers and matures within five years.
·
Commodity traders: total exposure has more than halved during 2015 and is primarily to the largest physical commodity traders, the exposure is predominantly short-dated, collateralised and uncommitted facilities used for working capital.
·
Shipping: exposure is in CIB Capital Resolution and RCR. The decrease in exposure in Q3 2015 principally reflected sales in RCR.

 
 
 
 
 
 
 
 
 
 
30 September 2015
 
30 June 2015
 
31 December 2014
 
Balance
Total
 
Balance
Total
 
Balance
Total
 
sheet
exposure
 
sheet
exposure
 
sheet
exposure
Emerging markets (1)
£m
£m
 
£m
£m
 
£m
£m
 
 
 
 
 
 
 
 
 
India
1,952 
2,456 
 
1,680 
2,225 
 
1,989 
2,628 
China
1,588 
1,651 
 
2,358 
2,510 
 
3,548 
4,079 
Russia
953 
1,028 
 
1,618 
1,709 
 
1,830 
1,997 

Note:
(1)
Balance sheet and total exposures include banking and trading book debt securities and are net of impairment provisions in respect of lending - refer to the Country risk section of the 2014 Annual Report and Accounts for detailed definitions.



Key point
·
Exposure to most emerging markets decreased in 2015 as RBS continues to implement its strategy to withdraw from non-strategic countries. The drop in Chinese exposure in Q3 2015 reflected corporate loan sales and reductions in cash collateral due to reduced volumes of foreign exchange trading. Total exposure to Russia has halved during 2015 and the reduction in Q3 2015 was mostly due to corporate loan sales.

Analysis of results

Capital and leverage ratios
 
 
 
 
 
 
 
 
End-point CRR basis (1)
 
PRA transitional basis
 
30 September 
30 June 
31 December 
 
30 September 
30 June 
31 December 
 
2015 
2015 
2014 
 
2015 
2015 
2014 
Risk asset ratios
% 
% 
% 
 
% 
% 
% 
 
 
 
 
 
 
 
 
CET1
12.7 
12.3 
11.2 
 
12.7 
12.3 
11.1 
Tier 1
13.3 
12.3 
11.2 
 
15.5 
14.3 
13.2 
Total
16.0 
14.8 
13.7 
 
19.8 
18.5 
17.1 
 
 
 
 
 
 
 
 
Capital
£m
£m
£m
 
£m
£m
£m
 
 
 
 
 
 
 
 
Tangible equity
44,442 
43,919 
44,368 
 
44,442 
43,919 
44,368 
Expected loss less impairment provisions
(1,185)
(1,319)
(1,491)
 
(1,185)
(1,319)
(1,491)
Prudential valuation adjustment
(392)
(366)
(384)
 
(392)
(366)
(384)
Deferred tax assets
(1,159)
(1,206)
(1,222)
 
(1,159)
(1,206)
(1,222)
Own credit adjustments
208 
345 
500 
 
208 
345 
500 
Pension fund assets
(256)
(250)
(238)
 
(256)
(250)
(238)
Other deductions
(1,478)
(1,070)
(1,614)
 
(1,456)
(1,047)
(1,884)
 
 
 
 
 
 
 
 
Total deductions
(4,262)
(3,866)
(4,449)
 
(4,240)
(3,843)
(4,719)
 
 
 
 
 
 
 
 
CET1 capital
40,180 
40,053 
39,919 
 
40,202 
40,076 
39,649 
AT1 capital
1,997 
- 
- 
 
8,716 
6,709 
7,468 
Tier 1 capital
42,177 
40,053 
39,919 
 
48,918 
46,785 
47,117 
Tier 2 capital
8,331 
8,181 
8,717 
 
13,742 
13,573 
13,626 
 
 
 
 
 
 
 
 
Total regulatory capital
50,508 
48,234 
48,636 
 
62,660 
60,358 
60,743 
 
 
 
 
 
 
 
 
Risk-weighted assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Credit risk
 
 
 
 
 
 
 
  - non-counterparty
237,800 
245,000 
264,700 
 
237,800 
245,000 
264,700 
  - counterparty
26,900 
27,500 
30,400 
 
26,900 
27,500 
30,400 
Market risk
19,700 
22,300 
24,000 
 
19,700 
22,300 
24,000 
Operational risk
31,600 
31,600 
36,800 
 
31,600 
31,600 
36,800 
 
 
 
 
 
 
 
 
Total RWAs
316,000 
326,400 
355,900 
 
316,000 
326,400 
355,900 
 
 
 
 
 
 
 
 
Leverage (2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivatives
296,500 
282,300 
354,000 
 
 
 
 
Loans and advances
402,300 
402,800 
419,600 
 
 
 
 
Reverse repos
52,100 
67,800 
64,700 
 
 
 
 
Other assets
207,700 
211,800 
212,500 
 
 
 
 
 
 
 
 
 
 
 
 
Total assets
958,600 
964,700 
1,050,800 
 
 
 
 
Derivatives
 
 
 
 
 
 
 
  - netting
(280,300)
(266,600)
(330,900)
 
 
 
 
  - potential future exposures
82,200 
83,500 
98,800 
 
 
 
 
Securities financing transactions gross up
6,600 
6,200 
25,000 
 
 
 
 
Undrawn commitments
78,900 
84,700 
96,400 
 
 
 
 
Regulatory deductions and other
 
 
 
 
 
 
 
  adjustments
500 
2,000 
(600)
 
 
 
 
 
 
 
 
 
 
 
 
Leverage exposure
846,500 
874,500 
939,500 
 
 
 
 
 
 
 
 
 
 
 
 
Tier 1 capital
42,177 
40,053 
39,919 
 
 
 
 
 
 
 
 
 
 
 
 
Leverage ratio %
5.0 
4.6 
4.2 
 
 
 
 

Notes:
(1)
Capital Requirements Regulation (CRR) as implemented by the Prudential Regulation Authority in the UK, with effect from 1 January 2014. All regulatory adjustments and deductions to CET1 have been applied in full for the end-point CRR basis with the exception of unrealised gains on AFS securities which has been included from 2015 under the PRA transitional basis.
(2)
Based on end-point CRR Tier 1 capital and leverage exposure under the revised 2014 Basel III leverage ratio framework and the CRR Delegated Act.

Analysis of results

Key points
·
RBS’s CET1 ratio strengthened to 12.7% at 30 September 2015, up 40 basis points from 30 June 2015 and 150 basis points since the start of the year. The increase was principally driven by a further reduction in RWAs, which fell by £10.4 billion during Q3 2015. Excluding the impact of movements in both US dollar and euro exchange rates, the RWA reduction would have been £14.9 billion.
   
·
CIB Capital Resolution RWAs decreased by £6.7 billion from 30 June 2015 due to portfolio reduction of £7 billion, including further sale to Mizuho of £1.3 billion and ongoing GTS exit activity of £1.5 billion, partly offset by foreign exchange movements as sterling weakened against the dollar.
   
·
CIB Go-forward RWAs decreased by £3.3 billion from 30 June 2015 principally due to a decrease of £2.2 billion in market risk RWAs.
   
·
RCR RWAs reduced by £2.0 billion from 30 June 2015 reflecting ongoing disposal and run-off strategy.
   
·
The leverage ratio improved to 5.0% at 30 September 2015, up 40 basis points from 30 June 2015, assisted by the successful issue of US$3.15 billion (£2 billion) Additional Tier 1 capital notes in August 2015 and reduced leverage exposure driven by lower reverse repos and undrawn commitments.
   
·
On a pro-forma basis, assuming full deconsolidation of Citizens credit and counterparty risk RWAs at 30 September 2015, RBS’s CET1 ratio would have been 16.2% and its leverage ratio 5.6%.

Segment performance

On 3 August 2015, RBS’s interest in Citizens fell to 20.9% and Citizens Financial Group (CFG) ceased to be a reportable segment. The following segment disclosures have been restated accordingly. Refer to pages 2 and 31 for further information.
 
Nine months ended 30 September 2015
 
PBB
 
CPB
 
CIB
 
 
 
 
Ulster
 
 
Commercial
Private
 
 
 
Central
 
Total
 
UK PBB
Bank
Total
 
Banking
Banking
Total
 
 
 items (1)
RCR
RBS
 
£m
£m
£m
 
£m
£m
£m
 
£m
£m
£m
£m
 
 
 
 
 
 
 
 
 
 
 
 
 
Income statement
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
3,460 
392 
3,852 
 
1,673 
377 
2,050 
 
518 
227 
(42)
6,605 
Non-interest income
920 
190 
1,110 
 
871 
248 
1,119 
 
1,243 
(114)
187 
3,545 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total income
4,380 
582 
4,962 
 
2,544 
625 
3,169 
 
1,761 
113 
145 
10,150 
 
 
 
 
 
 
 
 
 
 
 
 
 
Direct expenses - staff costs
(694)
(179)
(873)
 
(377)
(209)
(586)
 
(461)
(1,778)
(78)
(3,776)
                           - other costs
(221)
(54)
(275)
 
(166)
(49)
(215)
 
(209)
(2,294)
(14)
(3,007)
Indirect expenses
(1,379)
(196)
(1,575)
 
(657)
(289)
(946)
 
(1,571)
4,139 
(47)
- 
Restructuring costs - direct
(5)
(21)
(26)
 
(11)
(1)
(12)
 
(404)
(1,875)
- 
(2,317)
                                 - indirect
(72)
(3)
(75)
 
(8)
(83)
(91)
 
(1,258)
1,428 
(4)
- 
Litigation and conduct costs
(362)
6 
(356)
 
(59)
(28)
(87)
 
(980)
(21)
- 
(1,444)
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses
(2,733)
(447)
(3,180)
 
(1,278)
(659)
(1,937)
 
(4,883)
(401)
(143)
(10,544)
 
 
 
 
 
 
 
 
 
 
 
 
 
Profit/(loss) before impairment losses
1,647 
135 
1,782 
 
1,266 
(34)
1,232 
 
(3,122)
(288)
2 
(394)
Impairment releases/(losses)
6 
110 
116 
 
(42)
(1)
(43)
 
35 
(47)
339 
400 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating profit/(loss)
1,653 
245 
1,898 
 
1,224 
(35)
1,189 
 
(3,087)
(335)
341 
6 
 
 
 
 
 
 
 
 
 
 
 
 
 
Additional information
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses - adjusted (2)
(2,294)
(429)
(2,723)
 
(1,200)
(547)
(1,747)
 
(2,241)
67 
(139)
(6,783)
Operating profit/(loss) - adjusted (2)
2,092 
263 
2,355 
 
1,302 
77 
1,379 
 
(445)
133 
345 
3,767 
Return on equity (3)
26.2%
10.1%
20.7%
 
11.6%
(4.5%)
9.6%
 
(26.0%)
nm
nm
2.4%
Return on equity - adjusted (2,3)
33.7%
10.8%
26.0%
 
12.5%
4.1%
11.4%
 
(5.1%)
nm
nm
11.7%
Cost:income ratio
62%
77%
64%
 
50%
105%
61%
 
277%
nm
nm
104%
Cost:income ratio - adjusted (2)
52%
74%
55%
 
47%
88%
55%
 
127%
nm
nm
67%
Total assets (£bn)
139.1 
28.0 
167.1 
 
95.9 
16.8 
112.7 
 
464.1 
119.6 
12.9 
876.4 
Funded assets (£bn)
139.1 
27.9 
167.0 
 
95.9 
16.7 
112.6 
 
177.4 
116.9 
6.5 
580.4 
Net loans and advances to customers (£bn)
132.5 
20.6 
153.1 
 
91.6 
13.5 
105.1 
 
50.8 
0.4 
4.3 
313.7 
Risk elements in lending (£bn)
3.0 
4.0 
7.0 
 
2.2 
0.1 
2.3 
 
0.2 
- 
5.1 
14.6 
Impairment provisions (£bn)
(2.0)
(2.3)
(4.3)
 
(0.8)
(0.1)
(0.9)
 
(0.1)
(0.1)
(3.9)
(9.3)
Customer deposits (£bn)
152.9 
19.2 
172.1 
 
98.9 
29.1 
128.0 
 
47.8 
3.7 
0.9 
352.5 
Risk-weighted assets (RWAs) (£bn)
39.4 
21.5 
60.9 
 
67.2 
9.8 
77.0 
 
78.0 
87.7 
12.4 
316.0 
RWA equivalent (£bn) (4)
43.2 
21.7 
64.9 
 
72.1 
9.8 
81.9 
 
79.7 
88.1 
13.9 
328.5 
Employee numbers (FTEs - thousands)
25.6 
4.2 
29.8 
 
6.0 
2.7 
8.7 
 
2.8 
50.6 
0.5 
92.4 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the notes to this table refer to page 22. nm = not meaningful
 
 
 
 
 
 
 
 
 
 
 

Segment performance
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter ended 30 September 2015
 
PBB
 
CPB
 
CIB
 
 
 
 
 
Ulster
 
 
Commercial
Private
 
 
 
Central
 
Total
 
UK PBB
Bank
Total
 
Banking
Banking
Total
 
 
 items (1)
RCR
RBS
 
£m
£m
£m
 
£m
£m
£m
 
£m
£m
£m
£m
 
 
 
 
 
 
 
 
 
 
 
 
 
Income statement
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
1,170 
127 
1,297 
 
565 
123 
688 
 
142 
77 
(17)
2,187 
Non-interest income
289 
87 
376 
 
265 
81 
346 
 
295 
(154)
(3)
860 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total income
1,459 
214 
1,673 
 
830 
204 
1,034 
 
437 
(77)
(20)
3,047 
 
 
 
 
 
 
 
 
 
 
 
 
 
Direct expenses - staff costs
(238)
(59)
(297)
 
(122)
(66)
(188)
 
(139)
(619)
(22)
(1,265)
                            - other costs
(81)
(21)
(102)
 
(56)
(23)
(79)
 
(60)
(777)
(1)
(1,019)
Indirect expenses
(466)
(70)
(536)
 
(224)
(95)
(319)
 
(510)
1,380 
(15)
- 
Restructuring costs - direct
(5)
(3)
(8)
 
(1)
2 
1 
 
(193)
(647)
- 
(847)
                                 - indirect
(22)
(3)
(25)
 
- 
(3)
(3)
 
(444)
476 
(4)
- 
Litigation and conduct costs
2 
(2)
- 
 
- 
- 
- 
 
(107)
(22)
- 
(129)
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses
(810)
(158)
(968)
 
(403)
(185)
(588)
 
(1,453)
(209)
(42)
(3,260)
 
 
 
 
 
 
 
 
 
 
 
 
 
Profit/(loss) before impairment losses
649 
56 
705 
 
427 
19 
446 
 
(1,016)
(286)
(62)
(213)
Impairment (losses)/releases
(11)
58 
47 
 
(15)
(4)
(19)
 
4 
1 
46 
79 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating profit/(loss)
638 
114 
752 
 
412 
15 
427 
 
(1,012)
(285)
(16)
(134)
 
 
 
 
 
 
 
 
 
 
 
 
 
Additional information
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses - adjusted (2)
(785)
(150)
(935)
 
(402)
(184)
(586)
 
(709)
(16)
(38)
(2,284)
Operating profit/(loss) - adjusted (2)
663 
122 
785 
 
413 
16 
429 
 
(268)
(92)
(12)
842 
Return on equity (3)
31.8%
14.1%
25.5%
 
11.7%
1.7%
10.5%
 
(29.2%)
nm
nm
8.8%
Return on equity - adjusted (2,3)
33.1%
15.1%
26.7%
 
11.7%
1.9%
10.6%
 
(9.1%)
nm
nm
15.8%
Cost:income ratio
56%
74%
58%
 
49%
91%
57%
 
332%
nm
nm
107%
Cost:income ratio - adjusted (2)
54%
70%
56%
 
48%
90%
57%
 
162%
nm
nm
75%
Total assets (£bn)
139.1 
28.0 
167.1 
 
95.9 
16.8 
112.7 
 
464.1 
119.6 
12.9 
876.4 
Funded assets (£bn)
139.1 
27.9 
167.0 
 
95.9 
16.7 
112.6 
 
177.4 
116.9 
6.5 
580.4 
Net loans and advances to customers (£bn)
132.5 
20.6 
153.1 
 
91.6 
13.5 
105.1 
 
50.8 
0.4 
4.3 
313.7 
Risk elements in lending (£bn)
3.0 
4.0 
7.0 
 
2.2 
0.1 
2.3 
 
0.2 
- 
5.1 
14.6 
Impairment provisions (£bn)
(2.0)
(2.3)
(4.3)
 
(0.8)
(0.1)
(0.9)
 
(0.1)
(0.1)
(3.9)
(9.3)
Customer deposits (£bn)
152.9 
19.2 
172.1 
 
98.9 
29.1 
128.0 
 
47.8 
3.7 
0.9 
352.5 
Risk-weighted assets (RWAs) (£bn)
39.4 
21.5 
60.9 
 
67.2 
9.8 
77.0 
 
78.0 
87.7 
12.4 
316.0 
RWA equivalent (£bn) (4)
43.2 
21.7 
64.9 
 
72.1 
9.8 
81.9 
 
79.7 
88.1 
13.9 
328.5 
Employee numbers (FTEs - thousands)
25.6 
4.2 
29.8 
 
6.0 
2.7 
8.7 
 
2.8 
50.6 
0.5 
92.4 
For the notes to this table refer to page 22. nm = not meaningful
 
 
 
 
 
 
 
 
 
 
 

Segment performance
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine months ended 30 September 2014
 
PBB
 
CPB
 
CIB
 
 
 
 
 
Ulster
 
 
Commercial
Private
 
 
 
Central
 
Total
 
UK PBB
Bank
Total
 
Banking
Banking
Total
 
 
 items (1)
RCR
RBS
 
£m
£m
£m
 
£m
£m
£m
 
£m
£m
£m
£m
 
 
 
 
 
 
 
 
 
 
 
 
 
Income statement
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
3,474 
486 
3,960 
 
1,520 
516 
2,036 
 
595 
312 
(24)
6,879 
Non-interest income
1,031 
140 
1,171 
 
859 
299 
1,158 
 
2,663 
(115)
254 
5,131 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total income
4,505 
626 
5,131 
 
2,379 
815 
3,194 
 
3,258 
197 
230 
12,010 
 
 
 
 
 
 
 
 
 
 
 
 
 
Direct expenses - staff costs
(705)
(182)
(887)
 
(390)
(227)
(617)
 
(666)
(1,889)
(126)
(4,185)
                           - other costs
(305)
(55)
(360)
 
(176)
(47)
(223)
 
(300)
(2,644)
(56)
(3,583)
Indirect expenses
(1,423)
(187)
(1,610)
 
(598)
(326)
(924)
 
(1,773)
4,386 
(79)
- 
Restructuring costs - direct
(8)
8 
- 
 
(40)
(2)
(42)
 
(44)
(526)
- 
(612)
                                - indirect
(76)
(34)
(110)
 
(40)
(8)
(48)
 
(163)
325 
(4)
- 
Litigation and conduct costs
(268)
- 
(268)
 
(50)
- 
(50)
 
(612)
(100)
- 
(1,030)
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses
(2,785)
(450)
(3,235)
 
(1,294)
(610)
(1,904)
 
(3,558)
(448)
(265)
(9,410)
 
 
 
 
 
 
 
 
 
 
 
 
 
Profit/(loss) before impairment losses
1,720 
176 
1,896 
 
1,085 
205 
1,290 
 
(300)
(251)
(35)
2,600 
Impairment (losses)/releases
(227)
261 
34 
 
(43)
4 
(39)
 
51 
11 
625 
682 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating profit/(loss)
1,493 
437 
1,930 
 
1,042 
209 
1,251 
 
(249)
(240)
590 
3,282 
 
 
 
 
 
 
 
 
 
 
 
 
 
Additional information
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses - adjusted (2)
(2,433)
(424)
(2,857)
 
(1,164)
(600)
(1,764)
 
(2,739)
(147)
(261)
(7,768)
Operating profit - adjusted (2)
1,845 
463 
2,308 
 
1,172 
219 
1,391 
 
570 
61 
594 
4,924 
Return on equity (3)
22.1%
16.2%
19.6%
 
10.4%
12.3%
10.7%
 
(2.4%)
nm
nm
7.3%
Return on equity - adjusted (2,3)
27.6%
17.2%
23.6%
 
11.8%
12.9%
12.0%
 
2.2%
nm
nm
11.9%
Cost:income ratio
62%
72%
63%
 
54%
75%
60%
 
109%
nm
nm
78%
Cost:income ratio - adjusted (2)
54%
68%
56%
 
49%
74%
55%
 
84%
nm
nm
65%
Total assets (£bn)
134.2 
26.5 
160.7 
 
89.7 
21.1 
110.8 
 
572.9 
170.4 
31.3 
1,046.1 
Funded assets (£bn)
134.2 
26.3 
160.5 
 
89.7 
21.0 
110.7 
 
274.9 
168.1 
17.9 
732.1 
Net loans and advances to customers (£bn)
127.0 
22.0 
149.0 
 
85.0 
16.7 
101.7 
 
73.1 
57.1 
13.2 
394.1 
Risk elements in lending (£bn)
4.1 
4.8 
8.9 
 
2.6 
0.2 
2.8 
 
0.1 
1.3 
17.4 
30.5 
Impairment provisions (£bn)
(2.7)
(2.9)
(5.6)
 
(1.0)
(0.1)
(1.1)
 
(0.2)
(0.5)
(12.6)
(20.0)
Customer deposits (£bn)
146.0 
19.7 
165.7 
 
87.0 
36.2 
123.2 
 
57.1 
58.4 
1.2 
405.6 
Risk-weighted assets (RWAs) (£bn)
44.7 
23.9 
68.6 
 
64.9 
12.2 
77.1 
 
123.2 
82.2 
30.6 
381.7 
RWA equivalent (£bn) (4)
47.3 
21.4 
68.7 
 
71.6 
12.2 
83.8 
 
125.0 
82.2 
38.3 
398.0 
Employee numbers (FTEs - thousands)
25.0 
4.5 
29.5 
 
6.8 
3.4 
10.2 
 
4.0 
48.8 
0.8 
93.3 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the notes to this table refer to page 22. nm = not meaningful
 
 
 
 
 
 
 
 
 
 

Segment performance
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter ended 30 June 2015
 
PBB
 
CPB
 
CIB
 
 
 
 
 
Ulster
 
 
Commercial
Private
 
 
 
Central
 
Total
 
UK PBB
Bank
Total
 
Banking
Banking
Total
 
 
 items (1)
RCR
RBS
 
£m
£m
£m
 
£m
£m
£m
 
£m
£m
£m
£m
 
 
 
 
 
 
 
 
 
 
 
 
 
Income statement
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
1,147 
132 
1,279 
 
562 
126 
688 
 
174 
88 
(14)
2,215 
Non-interest income
322 
46 
368 
 
330 
81 
411 
 
346 
170 
59 
1,354 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total income
1,469 
178 
1,647 
 
892 
207 
1,099 
 
520 
258 
45 
3,569 
 
 
 
 
 
 
 
 
 
 
 
 
 
Direct expenses  - staff costs
(231)
(60)
(291)
 
(126)
(67)
(193)
 
(142)
(585)
(31)
(1,242)
                            - other costs
(69)
(16)
(85)
 
(56)
(14)
(70)
 
(71)
(732)
(7)
(965)
Indirect expenses
(463)
(63)
(526)
 
(208)
(96)
(304)
 
(521)
1,366 
(15)
- 
Restructuring costs - direct
- 
(18)
(18)
 
(10)
(3)
(13)
 
(195)
(797)
- 
(1,023)
                                 - indirect
(20)
(1)
(21)
 
(7)
(81)
(88)
 
(539)
648 
- 
- 
Litigation and conduct costs
(10)
8 
(2)
 
(59)
(26)
(85)
 
(373)
1 
- 
(459)
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses
(793)
(150)
(943)
 
(466)
(287)
(753)
 
(1,841)
(99)
(53)
(3,689)
 
 
 
 
 
 
 
 
 
 
 
 
 
Profit/(loss) before impairment losses
676 
28 
704 
 
426 
(80)
346 
 
(1,321)
159 
(8)
(120)
Impairment (losses)/releases
(9)
52 
43 
 
(26)
2 
(24)
 
(13)
2 
184 
192 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating profit/(loss)
667 
80 
747 
 
400 
(78)
322 
 
(1,334)
161 
176 
72 
 
 
 
 
 
 
 
 
 
 
 
 
 
Additional information
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses - adjusted (2)
(763)
(139)
(902)
 
(390)
(177)
(567)
 
(734)
49 
(53)
(2,207)
Operating profit/(loss) - adjusted (2)
697 
91 
788 
 
476 
32 
508 
 
(227)
309 
176 
1,554 
Return on equity (3)
32.1%
9.9%
24.7%
 
11.3%
(20.1%)
7.5%
 
(33.0%)
nm
nm
2.7%
Return on equity - adjusted (2,3)
33.6%
11.3%
26.1%
 
13.7%
5.6%
12.7%
 
(6.9%)
nm
nm
14.1%
Cost:income ratio
54%
84%
57%
 
52%
139%
69%
 
354%
nm
nm
103%
Cost:income ratio - adjusted (2)
52%
78%
55%
 
44%
86%
52%
 
141%
nm
nm
62%
Total assets (£bn)
135.4 
26.5 
161.9 
 
94.5 
17.0 
111.5 
 
482.4 
192.4 
16.5 
964.7 
Funded assets (£bn)
135.4 
26.4 
161.8 
 
94.5 
16.9 
111.4 
 
211.1 
189.7 
8.4 
682.4 
Net loans and advances to customers (£bn)
128.6 
20.2 
148.8 
 
90.1 
13.5 
103.6 
 
57.8 
63.4 
5.9 
379.5 
Risk elements in lending (£bn)
3.2 
4.2 
7.4 
 
2.3 
0.2 
2.5 
 
0.2 
1.2 
7.4 
18.7 
Impairment provisions (£bn)
(2.1)
(2.4)
(4.5)
 
(0.9)
- 
(0.9)
 
(0.1)
(0.7)
(5.1)
(11.3)
Customer deposits (£bn)
151.0 
18.7 
169.7 
 
97.0 
29.8 
126.8 
 
49.2 
65.8 
1.0 
412.5 
Risk-weighted assets (RWAs) (£bn)
41.0 
21.2 
62.2 
 
66.9 
9.8 
76.7 
 
88.0 
85.1 
14.4 
326.4 
RWA equivalent (£bn) (4)
44.6 
20.7 
65.3 
 
72.0 
9.8 
81.8 
 
89.7 
85.4 
17.9 
340.1 
Employee numbers (FTEs - thousands)
25.4 
4.2 
29.6 
 
6.2 
2.7 
8.9 
 
3.1 
49.5 
0.5 
91.6 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the notes to this table refer to page 22. nm= not meaningful
 
 
 
 
 
 
 
 
 
 
 

Segment performance
 
Quarter ended 30 September 2014
 
PBB
 
CPB
 
CIB
 
 
 
 
 
Ulster
 
 
Commercial
Private
 
 
 
Central
 
Total
 
UK PBB
Bank
Total
 
Banking
Banking
Total
 
 
 items (1)
RCR
RBS
 
£m
£m
£m
 
£m
£m
£m
 
£m
£m
£m
£m
 
 
 
 
 
 
 
 
 
 
 
 
 
Income statement
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
1,198 
163 
1,361 
 
521 
172 
693 
 
230 
109 
(23)
2,370 
Non-interest income
345 
51 
396 
 
290 
98 
388 
 
601 
(257)
145 
1,273 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total income
1,543 
214 
1,757 
 
811 
270 
1,081 
 
831 
(148)
122 
3,643 
 
 
 
 
 
 
 
 
 
 
 
 
 
Direct expenses  - staff costs
(236)
(57)
(293)
 
(124)
(76)
(200)
 
(179)
(647)
(37)
(1,356)
                             - other costs
(81)
(20)
(101)
 
(54)
(18)
(72)
 
(50)
(833)
(24)
(1,080)
Indirect expenses
(465)
(61)
(526)
 
(196)
(109)
(305)
 
(593)
1,448 
(24)
- 
Restructuring costs - direct
(2)
- 
(2)
 
- 
- 
- 
 
(22)
(143)
- 
(167)
                                 - indirect
(63)
(12)
(75)
 
(18)
(7)
(25)
 
6 
98 
(4)
- 
Litigation and conduct costs
(118)
- 
(118)
 
- 
- 
- 
 
(562)
(100)
- 
(780)
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses
(965)
(150)
(1,115)
 
(392)
(210)
(602)
 
(1,400)
(177)
(89)
(3,383)
 
 
 
 
 
 
 
 
 
 
 
 
 
Profit/(loss) before impairment losses
578 
64 
642 
 
419 
60 
479 
 
(569)
(325)
33 
260 
Impairment (losses)/releases
(79)
318 
239 
 
(12)
4 
(8)
 
12 
(1)
605 
847 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating profit/(loss)
499 
382 
881 
 
407 
64 
471 
 
(557)
(326)
638 
1,107 
 
 
 
 
 
 
 
 
 
 
 
 
 
Additional information
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses - adjusted (2)
(782)
(138)
(920)
 
(374)
(203)
(577)
 
(822)
(32)
(85)
(2,436)
Operating profit/(loss) - adjusted (2)
682 
394 
1,076 
 
425 
71 
496 
 
21 
(181)
642 
2,054 
Return on equity (3)
22.8%
47.1%
28.5%
 
12.3%
11.1%
12.2%
 
(11.3%)
nm
nm
8.2%
Return on equity - adjusted (2,3)
31.5%
48.5%
35.0%
 
12.9%
12.5%
12.9%
 
(0.8%)
nm
nm
16.0%
Cost:income ratio
63%
70%
63%
 
48%
78%
56%
 
168%
nm
nm
93%
Cost:income ratio - adjusted (2)
51%
64%
52%
 
46%
75%
53%
 
99%
nm
nm
67%
Total assets (£bn)
134.2 
26.5 
160.7 
 
89.7 
21.1 
110.8 
 
572.9 
170.4 
31.3 
1,046.1 
Funded assets (£bn)
134.2 
26.3 
160.5 
 
89.7 
21.0 
110.7 
 
274.9 
168.1 
17.9 
732.1 
Net loans and advances to customers (£bn)
127.0 
22.0 
149.0 
 
85.0 
16.7 
101.7 
 
73.1 
57.1 
13.2 
394.1 
Risk elements in lending (£bn)
4.1 
4.8 
8.9 
 
2.6 
0.2 
2.8 
 
0.1 
1.3 
17.4 
30.5 
Impairment provisions (£bn)
(2.7)
(2.9)
(5.6)
 
(1.0)
(0.1)
(1.1)
 
(0.2)
(0.5)
(12.6)
(20.0)
Customer deposits (£bn)
146.0 
19.7 
165.7 
 
87.0 
36.2 
123.2 
 
57.1 
58.4 
1.2 
405.6 
Risk-weighted assets (RWAs) (£bn)
44.7 
23.9 
68.6 
 
64.9 
12.2 
77.1 
 
123.2 
82.2 
30.6 
381.7 
RWA equivalent (£bn) (4)
47.3 
21.4 
68.7 
 
71.6 
12.2 
83.8 
 
125.0 
82.2 
38.3 
398.0 
Employee numbers (FTEs - thousands)
25.0 
4.5 
29.5 
 
6.8 
3.4 
10.2 
 
4.0 
48.8 
0.8 
93.3 
 
 
 
 
 
 
 
 
 
 
 
 
 
nm = not meaningful
 
 
 
 
 
 
 
 
 
 

Notes:
(1)
Central items include unallocated transactions, principally Treasury AFS portfolio sales of £67 million loss in the nine months ended 30 September 2015 (nine months ended 30 September 2014 - £143 million gain; Q3 2015 - £2 million gain; Q2 2015 - £42 million loss; Q3 2014 - £73 million loss) and profit and loss on hedges that do not qualify for hedge accounting. Balance sheet items for periods up to and including June 2015 include Citizens which was within assets of disposal groups.
(2)
Excluding restructuring costs and litigation and conduct costs.
(3)
Segmental return on equity based on operating profit after tax adjusted for preference share dividends divided by average notional equity (based on 13% of the monthly average RWA equivalents (RWAe)).
(4)
RWAe is an internal metric based on target CET 1 ratio of 13%, for all segments except RCR, set at 10% at creation. RWAe converts performing and non-performing exposures into a consistent capital measure comprising RWAs and capital deductions.

Segment performance

Key points

UK Personal & Business Banking
●
UK PBB operating profit of £638 million was up 28% from Q3 2014. Return on equity in the quarter was 32%, compared with 23% in the prior year principally due to lower litigation and conduct costs.
●
Mortgage activity strengthened further in Q3, with applications up 66% from £6.2 billion in Q3 2014 to £10.2 billion and new business market share of approvals increasing to 15%. Total loans and advances increased by £3.8 billion during the quarter, with total mortgage balances at 30 September 2015 up 6% compared with Q3 2014.
●
In Q3 our existing private and packaged current account customers were invited to receive 3% cash back on their household direct debits, for free, until the end of the year in advance of the launch of our new current account range. Around one million customers are now enrolled in this free offer. Those on the free offer can opt into the paid-for new product at the turn of the year. The fee for this product will be £3 per account per month. The new Reward current accounts launched on 12 October 2015 to non-packaged and new customers.
●
Income trends were slightly weaker. Net interest margin was 4 basis points lower than Q2 2015 and 18 basis points lower than in Q3 2014, largely driven by the significantly increased proportion of lower margin secured lending in the portfolio mix. New business mortgage margins have fallen as a result of increasingly competitive pricing. Standard variable rate balances continued to transfer to lower rate products and represented 15% of the mortgage book at 30 September 2015 compared with 23% a year earlier. Non-interest income was lower, reflecting reduced interchange fees on credit and debit cards, reduced advisory income and the non-repeat of a £7 million profit on the sale of NatWest Stockbrokers in Q3 2014.
●
Operating expenses were down 16% from Q3 2014, with minimal net conduct expenses in the quarter. Staff costs were 1% lower, with headcount down 2%. The cost:income ratio was 56% compared with 63% in Q3 2014.
●
Credit conditions remained stable, with the charge from bad debt flows down 26% from Q3 2014. The net impairment charge of £11 million continued to benefit from provision releases, though at lower levels than seen in the first half of the year.

Ulster Bank
●
Improving economic conditions across the island of Ireland have contributed to stronger new business volumes, particularly in the corporate and personal mortgage segments. However, this has been offset by continued customer deleveraging and the sale of a portfolio of buy-to-let mortgages. Balances also reflect the weakening of the euro over the last year. Excluding the impact of euro exchange rate movements, net loans and advances were down £0.2 billion from Q2 2015. The low yielding tracker mortgage book reduced by £0.3 billion to £9.4 billion with associated RWAs of £8.1 billion.
●
Operating profit of £114 million was down 70% from Q3 2014, which benefited from materially larger net impairment provision releases.
●
The Q3 2015 results included a £23 million profit on the sale of the buy-to-let mortgage portfolio, as well as a £24 million gain realised on the closure of a foreign exchange exposure. Return on equity was 14%.
●
Income was flat against Q3 2014 as the income benefits from these one-off items were offset by exchange rate movements and a lower return on free funds. While deposit margins have improved steadily from Q3 2014, new business lending margins have begun to tighten across the market.
●
Operating expenses have increased by £8 million from Q3 2014 with headcount reductions partly  offsetting the impact of higher pension costs and regulatory levies. The cost:income ratio was 74%, slightly higher than Q3 2014.
●
Results benefited from a further £58 million release of impairment provisions, compared with £318 million in Q3 2014. This reflects continued positive trends on collections and Irish property prices albeit the pace of improvement has slowed since Q3 2014.
Segment performance

Commercial Banking
●
Commercial Banking reported an operating profit of £412 million, up 1% from Q3 2014. Return on equity was stable at 12%.
●
New business volumes in Q3 were strong, with net new lending of £1.5 billion during the quarter. Further enhancements to Commercial Banking’s lending capability are expected with the launch of a new lending platform in Q4 2015.
●
Comparisons with prior periods are affected by a number of internal business transfers, including the transfer to Commercial Banking of RBS International (RBSI) from Private Banking on 1 January 2015 and the CIB UK corporate loan portfolio on 1 May 2015(1,3). The transfers of the Western Europe loan portfolio and UK Transaction Services from CIB to Commercial Banking are on track for completion in Q4 2015.
●
Total income was 2% higher than in Q3 2014, benefiting from increased loan and deposit volumes combined with higher deposit margins partially offset by lower asset margins. Non-interest income was lower, principally reflecting lower equity gains.
●
Total expenses were up 3% from Q3 2014, reflecting higher indirect costs. Staff costs were flat, with reduced headcount offsetting normal inflation adjustments. The cost:income ratio was stable at 49%.
●
Net impairment losses increased £3 million, reflecting increased individual charges and lower net provision releases.

Private Banking
●
Operating profit of £15 million was down 77% from Q3 2014. Return on equity was 2%. Coutts remains an area of management focus.
●
The disposal of Private Banking International continues to make good progress, with the sale of the European, the Middle East and Africa business, including Switzerland, scheduled to close in Q4 2015 and the sale of the business in the Far East scheduled to close next year.
●
On 1 January 2015, the RBSI business in Private Banking was transferred to Commercial Banking. This transfer affects comparisons with prior periods(2,3).
●
Operating performance was adversely affected by financial market conditions and also reflected the business transfer. Adjusting for this transfer, income was £31 million lower principally as a result of hedging activities and lower investment and transactional income.
●
Total expenses were 12% lower than Q3 2014 due to the transfer of the RBSI business. The cost:income ratio was 91% compared with 78% in Q3 2014.
●
Assets under management were down £1.5 billion from Q2 2015 and £3.3 billion from Q3 2014, principally reflecting lower stock market valuations.

Corporate & Institutional Banking
●
The reshaping of the Go-forward business is proceeding in line with plans. Funded assets fell by £23 billion during the quarter, including the £17 billion transfer(3) of the Short Term Markets Business to  Treasury. The business remains on track to achieve the previously disclosed income target of £1.3 billion in the full year.
●
Adjusted operating loss for the first nine months of 2015 for CIB was £445 million compared with a profit of £570 million for the same period in 2014 and for Q3 2015 a loss of £268 million compared with a profit of £21 million for Q3 2014, reflecting CIB's planned reshaping as income declined and disposal losses were incurred.

Notes:
(1)
The business transfers included: total income of £158 million (nine months ended 30 September 2014 - £153 million; Q3 2015 - £49 million; Q2 2015 - £56 million; Q3 2014 - £54 million); operating expenses of £67 million (nine months ended 30 September 2014 - £87 million; Q3 2015 - £21 million; Q2 2015 - £24 million; Q3 2014 - £29 million); net loans and advances to customers of £4.7 billion (30 June 2015 - £4.5 billion; 31 December 2014 - £4.4 billion); customer deposits of £6.3 billion (30 June 2015 - £6.4 billion; 31 December 2014 - £6.5 billion); and RWAs of £4.4 billion (30 June 2015 - £3.8 billion; 31 December 2014 - £3.5 billion).
(2)
The business transfer included: total income of £111 million (nine months ended 30 September 2014 - £109 million; Q3 2015 - £35 million; Q2 2015 - £37 million; Q3 2014 - £40 million); operating expenses of £64 million (nine months ended 30 September 2014 - £80 million; Q3 2015 - £20 million; Q2 2015 - £23 million; Q3 2014 - £27 million); net loans and advances to customers of £2.6 billion (30 June 2015 - £2.4 billion; 31 December 2014 - £2.6 billion); customer deposits of £6.3 billion (30 June 2015 - £6.4 billion; 31 December 2014 - £6.5 billion); and RWAs of £1.9 billion (30 June 2015 - £1.5 billion; 31 December 2014 - £1.4 billion).
(3)
Comparatives have not been restated.
Segment performance

Corporate & Institutional Banking
●
Adjusted operating profit in the Go-forward business for the first nine months of 2015 was £125 million and for Q3 2015 a loss of £5 million. Adjusted profit in the Go-forward business for the first nine months of the year, excluding the Western Europe loan portfolio and the UK Transaction Services business that will transfer to Commercial Banking in Q4 2015, was broadly breakeven(1).
●
Compared with Q2 2015, Go-forward income was flat, notwithstanding the seasonal slow-down in client activity and uncertain market conditions. Rates and Currencies were broadly in line with Q2 with some weakness in Credit, principally due to lower levels of primary issuance. In line with the reduction in risk and resources allocated to CIB, Go-forward income was down 28% compared with Q3 2014.
●
The transfer to Commercial Banking of the CIB UK corporate loan portfolio on 1 May 2015(2) and the transfer of the Short Term Markets Business to Treasury on 1 August 2015 affects comparisons with prior periods.
●
Adjusted expenses for CIB were down £113 million compared with Q3 2014 to £709 million with staff costs down £40 million from Q3 2014 reflecting a reduction in headcount. Restructuring costs were £637 million, down slightly from £734 million the prior quarter as the business reshapes.
●
CIB Capital Resolution made good progress in Q3 2015, with the sale of North American portfolios to Mizuho largely complete and a further APAC portfolio sale announced to China Construction Bank Corporation. Disposal losses for the quarter were £77 million.
●
A charge of $150 million (£95 million) was incurred in Q3 2015 in relation to US mortgage-backed securities litigation, but overall litigation and conduct charges were significantly lower than in Q3 2014.
●
RWAs were reduced by £10 billion during Q3 2015 and have fallen by £29 billion since 31 December 2014 (£26 billion excluding the impact of the transferred businesses following the strategic changes announced in February 2015). The business has now achieved its previously announced target of a £25 billion reduction in 2015 three months ahead of schedule. In the Go-forward business RWAs of £39 billion as at 30 September 2015 include £8 billion that will transfer out during Q4 2015 to Commercial Banking. The steady state RWAs of the Go-forward business are expected to be around £30 billion.

RBS Capital Resolution
●
RCR funded assets have fallen to £6.5 billion, down 83% since the initial pool of assets was identified. RCR is targeting an 85% reduction by the end of 2015, a year earlier than originally planned.
●
During Q3 2015 RWA equivalents fell by £4.0 billion to £13.9 billion, driven by disposals and repayments. Disposal activity continues across the portfolio, with 101 deals completed during Q3 2015 at an average price of 104% of book value.
●
An operating loss of £16 million was recorded in Q3 2015, compared with an operating profit of £638 million in Q3 2014. This reflected significantly reduced impairment releases as well as lower realisations on disposals and fair value gains.
●
The net effect of the operating loss of £16 million and RWA equivalent reduction of £4.0 billion (3) was CET1 accretion of £0.4 billion.

Central items
●
Central items not allocated represented a charge of £285 million compared with a charge of £326 million in Q3 2014. This includes volatile items under IFRS, which were a charge of £126 million in the quarter, in line with Q3 2014 but a movement of £331 million compared with Q2 2015. A £190 million restructuring charge was incurred relating to Williams & Glyn.

Notes:
    (1)
The CIB segment is being restructured into CIB Go-forward and CIB Capital Resolution elements. The split is subject to further refinement.
  
    (2)
 The business transfer from CIB to Commercial Banking was effective from 1 May 2015. Comparatives were not restated and for the whole period the financials of the UK large corporate business were: total income of £47 million for the nine months ended 30 September 2015 (nine months ended 30 September 2014 - £44 million; Q3 2015 - £14 million; Q2 2015 - £19 million; Q3 2014 - £14 million); operating expenses of £3 million for the nine months ended 30 September 2015 (nine months ended 30 September 2014 - £7 million; Q3 2015 - £1 million; Q2 2015 - £1 million; Q3 2014 - £2 million); net loans and advances to customers of £2.1 billion (30 June 2015 - £2.1 billion; 31 December 2014 - £1.8 billion); and RWAs of £2.5 billion (30 June 2015 - £2.3 billion; 31 December 2014 - £2.1 billion).
 
 
  
 
(3)            Capital equivalent £400million at an internal CETI ratio of 10%.
 

Selected statutory financial statements

Condensed consolidated income statement for the period ended 30 September 2015

 
Nine months ended
 
Quarter ended
 
30 September
30 September
 
30 September
30 June
30 September
2015
2014
 
2015
2015
2014
 
£m
£m
 
£m
£m
£m
 
 
 
 
 
 
 
Interest receivable
9,070 
9,841 
 
2,963 
3,031 
3,297 
Interest payable
(2,465)
(2,965)
 
(776)
(816)
(927)
 
 
 
 
 
 
 
Net interest income
6,605 
6,876 
 
2,187 
2,215 
2,370 
 
 
 
 
 
 
 
Fees and commissions receivable
2,838 
3,359 
 
880 
969 
1,116 
Fees and commissions payable
(558)
(671)
 
(195)
(186)
(196)
Income from trading activities
1,045 
1,688 
 
170 
545 
238 
Gain on redemption of own debt
- 
20 
 
- 
- 
- 
Other operating income
509 
913 
 
141 
194 
108 
 
 
 
 
 
 
 
Non-interest income
3,834 
5,309 
 
996 
1,522 
1,266 
 
 
 
 
 
 
 
Total income
10,439 
12,185 
 
3,183 
3,737 
3,636 
 
 
 
 
 
 
 
Staff costs
(4,401)
(4,432)
 
(1,546)
(1,530)
(1,435)
Premises and equipment
(1,380)
(1,601)
 
(635)
(326)
(475)
Other administrative expenses
(3,096)
(2,569)
 
(730)
(1,027)
(1,212)
Depreciation and amortisation
(994)
(727)
 
(282)
(200)
(261)
Write down of goodwill and other intangible assets
(673)
(212)
 
(67)
(606)
- 
 
 
 
 
 
 
 
Operating expenses
(10,544)
(9,541)
 
(3,260)
(3,689)
(3,383)
 
 
 
 
 
 
 
(Loss)/profit before impairment releases
(105)
2,644 
 
(77)
48 
253 
Impairment releases
400 
682 
 
79 
192 
847 
 
 
 
 
 
 
 
Operating profit before tax
295 
3,326 
 
2 
240 
1,100 
Tax charge
(294)
(869)
 
(1)
(100)
(277)
 
 
 
 
 
 
 
Profit from continuing operations
1 
2,457 
 
1 
140 
823 
Profit from discontinued operations, net of tax (2)
1,451 
437 
 
1,093 
674 
117 
 
 
 
 
 
 
 
Profit for the period
1,452 
2,894 
 
1,094 
814 
940 
Non-controlling interests
(389)
11 
 
(45)
(428)
53 
Preference shares
(223)
(231)
 
(80)
(73)
(91)
Other owners
(41)
(33)
 
(17)
(20)
(6)
Dividend access share
- 
(320)
 
- 
- 
- 
 
 
 
 
 
 
 
Profit attributable to ordinary and B shareholders
799 
2,321 
 
952 
293 
896 
 
 
 
 
 
 
 
Earnings/(loss) per ordinary and equivalent
 
 
 
 
 
 
 B share (EPS) (3)
 
 
 
 
 
 
Basic EPS from continuing and discontinued operations
6.9p
20.5p
 
8.2p
2.5p
7.9p
Basic EPS from continuing operations
(2.8p)
16.9p
 
(0.9p)
0.2p
6.9p

Notes:
(1)
A reconciliation between income statement lines in the statutory income statement above and the non-statutory income statement on page 8 is given in Appendix 3 to this announcement.
(2)
Refer to Note 2 on page 31 for further details.
(3)
Diluted EPS from continuing operations and from continuing and discontinued operations were less than basic EPS in the nine months ended 30 September 2014 (0.2p) and the quarter ended 30 September 2014 (0.1p). There was no dilution in any other period.

Selected statutory financial statements

Condensed consolidated statement of comprehensive income
for the period ended 30 September 2015
 
Nine months ended
 
Quarter ended
 
30 September
30 September
 
30 September
30 June
30 September
2015
2014
 
2015
2015
2014
 
£m
£m
 
£m
£m
£m
 
 
 
 
 
 
 
Profit for the period
1,452 
2,894 
 
1,094 
814 
940 
 
 
 
 
 
 
 
Items that do qualify for reclassification
 
 
 
 
 
 
Available-for-sale financial assets
 (95)
608 
 
 (50)
 (247)
79 
Cash flow hedges
 (302)
455 
 
408 
 (834)
207 
Currency translation
 (1,177)
 (117)
 
 (604)
 (584)
616 
Tax
106 
 (191)
 
 (38)
246 
 (31)
 
 
 
 
 
 
 
Other comprehensive (loss)/income after tax
 (1,468)
755 
 
 (284)
 (1,419)
871 
 
 
 
 
 
 
 
Total comprehensive (loss)/income for the period
 (16)
3,649 
 
810 
 (605)
1,811 
 
 
 
 
 
 
 
Total comprehensive (loss)/income is
 
 
 
 
 
 
  attributable to:
 
 
 
 
 
 
Non-controlling interests
357 
42 
 
58 
252 
12 
Preference shareholders
223 
231 
 
80 
73 
91 
Paid-in equity holders
41 
33 
 
17 
20 
6 
Dividend access share
- 
320 
 
- 
- 
- 
Ordinary and B shareholders
 (637)
3,023 
 
655 
 (950)
1,702 
 
 
 
 
 
 
 
 
 (16)
3,649 
 
810 
 (605)
1,811 

Key points
●
The movement in available-for-sale financial assets in the nine months ended 30 September 2015 reflects unrealised losses on available-for-sale UK, US and Dutch securities, partially offset by realised losses on available-for-sale bonds.
   
●
Cash flow hedging gains in the quarter largely result from decreases in sterling and euro swap rates across the maturity profile of the portfolio.
   
●
Currency translation losses for the nine months ended 30 September 2015 are predominantly related to the reclassification of foreign exchange reserves on loss of control of Citizens and the strengthening of sterling against the euro. In the quarter, the reclassification losses were partially offset by gains from the weakening of sterling against the euro and US dollar.

Selected statutory financial statements

Condensed consolidated balance sheet at 30 September 2015
 
30 September
30 June
31 December
2015 
2015 
2014 
 
£m 
£m 
£m 
 
 
 
 
Assets
 
 
 
Cash and balances at central banks
77,220 
81,900 
74,872 
Net loans and advances to banks
22,681 
20,714 
23,027 
Reverse repurchase agreements and stock borrowing
15,255 
20,807 
20,708 
Loans and advances to banks
37,936 
41,521 
43,735 
Net loans and advances to customers
311,383 
314,993 
334,251 
Reverse repurchase agreements and stock borrowing
36,545 
46,799 
43,987 
Loans and advances to customers
347,928 
361,792 
378,238 
Debt securities
81,307 
77,187 
86,649 
Equity shares
2,199 
3,363 
5,635 
Settlement balances
9,397 
9,630 
4,667 
Derivatives
296,019 
281,857 
353,590 
Intangible assets
7,151 
7,198 
7,781 
Property, plant and equipment
4,607 
4,874 
6,167 
Deferred tax
1,434 
1,479 
1,540 
Prepayments, accrued income and other assets
4,928 
4,829 
5,878 
Assets of disposal groups
6,300 
89,071 
82,011 
 
 
 
 
Total assets
876,426 
964,701 
1,050,763 
 
 
 
 
Liabilities
 
 
 
Bank deposits
30,543 
30,978 
35,806 
Repurchase agreements and stock lending
12,800 
21,612 
24,859 
Deposits by banks
43,343 
52,590 
60,665 
Customer deposits
346,267 
342,023 
354,288 
Repurchase agreements and stock lending
30,555 
44,750 
37,351 
Customer accounts
376,822 
386,773 
391,639 
Debt securities in issue
37,360 
41,819 
50,280 
Settlement balances
8,401 
7,335 
4,503 
Short positions
20,108 
24,561 
23,029 
Derivatives
288,905 
273,589 
349,805 
Accruals, deferred income and other liabilities
14,324 
13,962 
13,346 
Retirement benefit liabilities
1,955 
1,869 
2,579 
Deferred tax
376 
363 
500 
Subordinated liabilities
20,184 
19,683 
22,905 
Liabilities of disposal groups
6,401 
80,388 
71,320 
 
 
 
 
Total liabilities
818,179 
902,932 
990,571 
 
 
 
 
Equity
 
 
 
Non-controlling interests
703 
5,705 
2,946 
Owners’ equity*
 
 
 
  Called up share capital
6,984 
6,981 
6,877 
  Reserves
50,560 
49,083 
50,369 
 
 
 
 
Total equity
58,247 
61,769 
60,192 
 
 
 
 
Total liabilities and equity
876,426 
964,701 
1,050,763 
 
 
 
 
* Owners’ equity attributable to:
 
 
 
Ordinary and B shareholders
51,593 
51,117 
52,149 
Other equity owners
5,951 
4,947 
5,097 
 
 
 
 
 
57,544 
56,064 
57,246 

The company’s distributable reserves at 30 September 2015 were £16.6 billion (31 December 2014 - £17.5 billion).
Selected statutory financial statements

Condensed consolidated statement of changes in equity for the period ended 30 September 2015
 
 
 
 
 
 
 
 
 
 
Nine months ended
 
Quarter ended
 
30 September
30 September
 
30 September
30 June
30 September
2015
2014
 
2015
2015
2014
£m
£m
 
£m
£m
£m
 
 
 
 
 
 
 
Called-up share capital
 
 
 
 
 
 
At beginning of period
6,877 
6,714 
 
6,981 
6,925 
6,811 
Ordinary shares issued
108 
118 
 
4 
56 
21 
Preference shares redeemed (1)
(1)
- 
 
(1)
- 
- 
 
 
 
 
 
 
 
At end of period
6,984 
6,832 
 
6,984 
6,981 
6,832 
 
 
 
 
 
 
 
Paid-in equity
 
 
 
 
 
 
At beginning of period
784 
979 
 
634 
634 
979 
Reclassification (2)
(150)
- 
 
- 
- 
- 
Additional Tier 1 capital notes issued
2,012 
- 
 
2,012 
- 
- 
 
 
 
 
 
 
 
At end of period
2,646 
979 
 
2,646 
634 
979 
 
 
 
 
 
 
 
Share premium account
 
 
 
 
 
 
At beginning of period
25,052 
24,667 
 
25,306 
25,164 
24,885 
Ordinary shares issued
263 
267 
 
9 
142 
49 
 
 
 
 
 
 
 
At end of period (1)
25,315 
24,934 
 
25,315 
25,306 
24,934 
 
 
 
 
 
 
 
Merger reserve
 
 
 
 
 
 
At beginning and end of period
13,222 
13,222 
 
13,222 
13,222 
13,222 
 
 
 
 
 
 
 
Available-for-sale reserve
 
 
 
 
 
 
At beginning of period
299 
(308)
 
244 
371 
138 
Unrealised (losses)/gains
(108)
807 
 
6 
(153)
(37)
Realised losses/(gains)
25 
(314)
 
(38)
(43)
52 
Tax
28 
(40)
 
(11)
65 
28 
Reclassified to profit or loss on disposal of businesses (3)
- 
36 
 
- 
- 
- 
Reclassified to profit or loss on ceding control of Citizens (4)
9 
- 
 
9 
- 
- 
Transfer to retained earnings
(43)
(9)
 
- 
4 
(9)
 
 
 
 
 
 
 
At end of period
210 
172 
 
210 
244 
172 
 
 
 
 
 
 
 
Cash flow hedging reserve
 
 
 
 
 
 
At beginning of period
1,029 
(84)
 
435 
1,109 
94 
Amount recognised in equity
777 
1,543 
 
803 
(524)
575 
Amount transferred from equity to earnings
(1,021)
(1,088)
 
(316)
(319)
(368)
Tax
52 
(114)
 
(76)
169 
(44)
Reclassified to profit or loss on ceding control of Citizens (5)
(36)
- 
 
(36)
- 
- 
Transfer to retained earnings
9 
34 
 
- 
- 
34 
 
 
 
 
 
 
 
At end of period
810 
291 
 
810 
435 
291 
 
 
 
 
 
 
 
 
Foreign exchange reserve
 
 
 
 
 
 
At beginning of period
3,483 
3,691 
 
2,317 
2,779 
2,963 
Retranslation of net assets
(39)
(96)
 
509 
(1,042)
776 
Foreign currency (losses)/gains on hedges of net assets
(150)
(6)
 
(188)
604 
(161)
Tax
(11)
(26)
 
3 
- 
(15)
Reclassified to profit or loss on ceding control of Citizens
(962)
- 
 
(962)
- 
- 
Transfer to retained earnings
(642)
(390)
 
- 
(24)
(390)
 
 
 
 
 
 
 
At end of period
1,679 
3,173 
 
1,679 
2,317 
3,173 
 
 
 
 
 
 
 
 
Capital redemption reserve
 
 
 
 
 
 
At beginning of period
9,131 
9,131 
 
9,131 
9,131 
9,131 
Preference shares redeemed (1)
1 
- 
 
1 
- 
- 
 
 
 
 
 
 
 
 
At end of period
9,132 
9,131 
 
9,132 
9,131 
9,131 

Notes:
(1)
Non-cumulative dollar preference shares totalling $1.9 billion were redeemed in September 2015. Upon redemption, share premium previously attributable to preference shareholders was reclassified to ordinary shareholders.
(2)
Paid-in equity reclassified to liabilities as a result of the call of RBS Capital Trust IV in January 2015.
(3)
Net of tax - £11 million charge.
(4)
Net of tax - £6 million charge.
(5)
Net of tax - £16 million credit.
(6)
Includes £2,491 million relating to the secondary offering of Citizens in March 2015.
 
Selected statutory financial statements

Condensed consolidated statement of changes in equity for the period ended 30 September 2015
 
 
 
 
 
 
 
 
 
Nine months ended
 
Quarter ended
 
30 September
30 September
 
30 September
30 June
30 September
2015
2014
 
2015
2015
2014
 
£m
£m
 
£m
£m
£m
 
 
 
 
 
 
 
Retained earnings
 
 
 
 
 
 
At beginning of period
(2,518)
867 
 
(2,098)
(2,416)
2,258 
(Loss)/profit attributable to ordinary and B shareholders
 
 
 
 
 
 
  and other equity owners
 
 
 
 
 
 
  - continuing operations
(54)
2,497 
 
(4)
111 
887 
  - discontinued operations
1,117 
408 
 
1,053 
275 
106 
Equity preference dividends paid
(223)
(231)
 
(80)
(73)
(91)
Paid-in equity dividends paid, net of tax
(41)
(33)
 
(17)
(20)
(6)
Dividend access share dividend
- 
(320)
 
- 
- 
- 
Transfer from available-for-sale reserve
43 
9 
 
- 
(4)
9 
Transfer from cash flow hedging reserve
(9)
(34)
 
- 
- 
(34)
Transfer from foreign exchange reserve
642 
390 
 
- 
24 
390 
Costs of placing Citizens equity
(29)
(45)
 
- 
- 
(45)
Redemption of equity preference shares (1)
(1,214)
- 
 
(1,214)
- 
- 
Shares issued under employee share schemes
(57)
(41)
 
- 
(1)
- 
Share-based payments
 
 
 
 
 
 
  - gross
24 
26 
 
14 
6 
18 
  - tax
- 
- 
 
- 
- 
1 
Reclassification of paid in equity
(27)
- 
 
- 
- 
- 
 
 
 
 
 
 
 
At end of period
(2,346)
3,493 
 
(2,346)
(2,098)
3,493 
 
 
 
 
 
 
 
Own shares held
 
 
 
 
 
 
At beginning of period
(113)
(137)
 
(108)
(111)
(136)
Disposal of own shares
5 
1 
 
- 
3 
- 
 
 
 
 
 
 
 
At end of period
(108)
(136)
 
(108)
(108)
(136)
 
 
 
 
 
 
 
Owners’ equity at end of period
57,544 
62,091 
 
57,544 
56,064 
62,091 
 
 
 
 
 
 
 
Non-controlling interests
 
 
 
 
 
 
At beginning of period
2,946 
473 
 
5,705 
5,473 
618 
Currency translation adjustments and other movements
2 
(15)
 
65 
(146)
1 
Profit/(loss) attributable to non-controlling interests
 
 
 
 
 
 
  - continuing operations
55 
(40)
 
5 
29 
(64)
  - discontinued operations
334 
29 
 
40 
399 
11 
Dividends paid
(31)
- 
 
- 
(20)
- 
Movements in available-for-sale securities
 
 
 
 
 
 
  - unrealised gains/(losses)
24 
(6)
 
12 
(45)
(4)
  - realised (gains)/losses
(6)
74 
 
- 
(6)
68 
  - tax
(5)
- 
 
- 
16 
- 
Movements in cash flow hedging reserve
 
 
 
 
 
 
  - amount recognised in equity
32 
- 
 
11 
9 
- 
  - tax
(4)
- 
 
- 
(4)
- 
  - amounts transferred from equity to earnings
 
 
 
 
 
 
Equity raised (6)
2,537 
2,232 
 
46 
- 
2,117 
Equity withdrawn and disposals
(24)
- 
 
(24)
- 
- 
Loss of control of Citizens
(5,157)
- 
 
(5,157)
- 
- 
 
 
 
 
 
 
 
At end of period
703 
2,747 
 
703 
5,705 
2,747 
 
 
 
 
 
 
 
Total equity at end of period
58,247 
64,838 
 
58,247 
61,769 
64,838 
 
 
 
 
 
 
 
Total equity is attributable to:
 
 
 
 
 
 
Non-controlling interests
703 
2,747 
 
703 
5,705 
2,747 
Preference shareholders
3,305 
4,313 
 
3,305 
4,313 
4,313 
Paid-in equity holders
2,646 
979 
 
2,646 
634 
979 
Ordinary and B shareholders
51,593 
56,799 
 
51,593 
51,117 
56,799 
 
 
 
 
 
 
 
 
58,247 
64,838 
 
58,247 
61,769 
64,838 

For the notes to this table refer to the previous page.
Notes

1. Basis of preparation
The condensed consolidated financial statements should be read in conjunction with RBS’s 2014 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
There have been no significant changes to RBS’s principal accounting policies as set out on pages 349 to 357 of the 2014 Annual Report and Accounts. Amendments to IFRSs effective for 2015 have not had a material effect on RBS’s 2015 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 pensions, goodwill, provisions for liabilities, deferred tax, loan impairment provisions and fair value of financial instruments. These critical accounting policies and judgments are described on pages 357 to 359 of RBS’s 2014 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 2015 have been prepared on a going concern basis.

2. Citizens Financial Group
Citizens was classified as a disposal group on 31 December 2014 and its assets and liabilities from that date to 3 August 2015 have been aggregated and presented as separate lines in accordance with IFRS 5. Citizens was also reclassified as a discontinued operation in 2014 and comparatives for all periods re-presented accordingly.

In March 2015, RBS sold 155.25 million shares in Citizens and in April 2015, Citizens purchased 10.5 million of its shares from RBS.

In July 2015, RBS sold 86 million shares in Citizens to underwriters and sold an additional 12.9 million shares on 3 August 2015 through an over-allotment option in the underwriting agreement. Concurrently, Citizens repurchased 9.6 million shares from RBS. RBS now owns 110.5 million shares - 20.9% of Citizens’ common stock.

Following these share sales, RBS no longer controls Citizens and has ceased to consolidate it for accounting purposes. On loss of control, RBS derecognised Citizens’ net assets and recognised its retained interest in Citizens at fair value recording a gain (in discontinued operations) of £1.1 billion. Included in the gain is the reclassification of £1.0 billion previously recognised in other comprehensive income in relation to Citizens; principally foreign exchange translation differences. RBS’s retained interest in Citizens qualifies as an associate and is classified as held for sale. Its fair value less costs to sell at 30 September 2015 was £1.6 billion.
Notes

3. Provisions for liabilities and charges
 
 
 
 
 
 
 
 
 
 
 
 
Regulatory and legal actions
 
 
 
 
 
Other
FX
Other
 
 
 
 
 
 
 customer
investigations/
regulatory
 
Property
 
 
PPI
IRHP
 redress (1)
litigation
provisions
Litigation
and other
Total
 
£m
£m
£m
£m
£m
£m
£m
£m
 
 
 
 
 
 
 
 
 
At 1 January 2015
799 
424 
580 
320 
183 
1,805 
663 
4,774 
Transfer
- 
- 
- 
50 
(50)
- 
- 
- 
Currency translation and other movements
- 
- 
- 
(12)
1 
(34)
94 
49 
Charge to income statement (2)
100 
81 
279 
334 
27 
517 
390 
1,728 
Releases to income statement (2)
-
(12)
(14)
-
-
(6)
(138)
(170)
Provisions utilised
(202)
(210)
(146)
(178)
(1)
(41)
(181)
(959)
 
 
 
 
 
 
 
 
 
At 30 June 2015
697 
283 
699 
514 
160 
2,241 
828 
5,422 
Transfer
- 
- 
- 
(65)
- 
65 
- 
- 
Currency translation and other movements
- 
- 
- 
20 
1 
91 
46 
158 
Charge to income statement (2)
- 
- 
13 
- 
- 
125 
511 
649 
Releases to income statement (2)
- 
- 
(4)
- 
- 
(5)
(77)
(86)
Provisions utilised
(84)
(86)
(70)
- 
- 
(111)
(131)
(482)
 
 
 
 
 
 
 
 
 
At 30 September 2015
613 
197 
638 
469 
161 
2,406 
1,177 
5,661 

Notes:
(1)
Closing provision primarily relates to investment advice and packaged accounts.
(2)
Relates to continuing operations.

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. RBS will continue to monitor the position closely and refresh the underlying assumptions.

4. Litigation, investigations and reviews
RBS's 2015 interim results issued on 30 July 2015 included comprehensive disclosures about RBS's litigation, investigations and reviews in Note 16. There have been no material developments in these matters since the 2015 interim results were published other than those set out below.

Litigation
The charge in respect of mortgage-backed securities (MBS) related litigation was £0.1 billion (see Note 3) during Q3 2015, bringing the total charge for MBS related litigation claims and investigations for the nine months ended 30 September 2015 to £0.6 billion. Although RBS has established provisions with respect to MBS litigation, the final outcomes of such litigation and MBS related governmental investigations could result in the future outflow of resources in respect of such matters ultimately proving to be substantially greater than the aggregate provisions RBS has recognised.

Other securitisation and securities related litigation in the United States
The National Credit Union Administration Board (NCUA) is litigating two MBS cases against RBS companies (on behalf of US Central Federal Credit Union and Western Corporate Federal Credit Union). The original principal balance of the MBS at issue in these two NCUA cases is US$3.25 billion. In September 2015, in a third case brought by NCUA (on behalf of Southwest Corporate Federal Credit Union and Members United Corporate Federal Credit Union), the NCUA accepted RBS’s offer of judgment for US$129.6 million, plus attorney’s fees, to resolve the matter, which concerned US$312 million in MBS. RBS has paid to the plaintiff the agreed US$129.6 million.

Notes

4. Litigation, investigations and reviews (continued)

Credit default swap antitrust litigation
As previously disclosed, certain members of the Group, as well as a number of other financial institutions, are defendants in a consolidated antitrust class action pending in the United States District Court for the Southern District of New York. The plaintiffs allege that defendants violated the US antitrust laws by restraining competition in the market for credit default swaps through various means and thereby causing inflated bid-ask spreads for credit default swaps. The RBS defendants have reached an agreement to settle this matter for US$33 million, subject to approval of the court. The settlement amount is covered by an existing provision.

FX antitrust litigation
As previously disclosed, RBS and RBS Securities Inc., as well as a number of other financial institutions, are defendants in class actions on behalf of US based plaintiffs that are pending in the United States District Court for the Southern District of New York. In August 2015, the original complaint asserting antitrust claims on behalf of plaintiffs who entered into Foreign Exchange (FX) transactions with RBS or other defendant banks was consolidated with several additional class action complaints filed on behalf of plaintiffs who transacted in exchange-traded foreign exchange futures contracts and/or options on foreign exchange futures contracts, which asserted both antitrust and Commodities Exchange Act claims. RBS and RBS Securities Inc. have settled all claims that are or could be asserted on behalf of the classes in the consolidated action, subject to approval of the Court. The total settlement amount (US$255 million) is covered by an existing provision. Other class action complaints purporting to be on behalf of US-based plaintiffs who engaged in FX transactions, including a complaint asserting Employee Retirement Income Security Act claims on behalf of employee benefit plans that engaged in FX transactions, name certain members of the Group as defendants.

In September 2015, certain members of the Group, as well as a number of other financial institutions, were named as defendants in two purported class actions filed in Ontario and Quebec on behalf of persons in Canada who entered into foreign exchange transactions or who invested in funds that entered into foreign exchange transactions. The plaintiffs allege that the defendants violated the Canadian Competition Act by conspiring to manipulate the prices of currency trades.

Investigations and reviews

Payment Protection Insurance
As previously disclosed, RBS is monitoring developments following the UK Supreme Court’s decision in the case of Plevin v Paragon in November 2014. That decision was that the sale of a single premium PPI policy could create an ‘unfair relationship’ under s.140A of the Consumer Credit Act 1974 (the ‘Consumer Credit Act’) because the premium contained a particularly high level of undisclosed commission. The Financial Ombudsman Service (FOS) has confirmed on its website that unfair relationship provisions in the Consumer Credit Act and the Plevin judgment are ’potentially relevant considerations’ in some of the PPI complaints referred to FOS. On 27 May 2015, the FCA announced that it was considering whether additional rules and/or guidance are required to deal with the impact of the Plevin decision on complaints about PPI generally. RBS is in active dialogue with FOS and the FCA on this issue.

On 2 October 2015, the FCA announced that it would issue a consultation paper by the end of 2015 on proposed rules and guidance about how firms should handle PPI complaints fairly in light of the Plevin decision and how the FOS should consider relevant PPI complaints. The FCA also intends to consult on the introduction of a time bar for handling PPI complaints.
Notes

4. Litigation, investigations and reviews (continued)
At this stage, as there remains considerable uncertainty regarding the application of the Plevin decision and the impact of any time bar, it is not practicable reliably to estimate the potential impact on RBS, which may be material.

UK personal current accounts/retail banking
As previously disclosed, on 11 March 2014, the Competition & Markets Authority (CMA) announced that it would be undertaking an update of the OFT’s 2013 personal current account (PCA) review, in parallel with its market study into small and medium-sized enterprise (SME) banking. In July 2014 the CMA published its preliminary findings in respect of both the PCA and SME market studies. The CMA provisionally decided to make a market investigation reference (MIR) for both the PCA and SME market studies. On 6 November 2014, the CMA made its final decision to proceed with a MIR. On 22 October 2015 the CMA published a summary of its provisional findings and notice of possible remedies. The CMA has provisionally concluded there are a number of competition concerns in the provision of PCAs, business current accounts and SME lending, particularly around low levels of customer switching, resulting in banks not being put under enough competitive pressure, and new products and new banks not attracting customers quickly enough. The notice of possible remedies sets out 15 potential measures to address these concerns, including measures to make it easier for consumers and businesses to compare bank products, and requiring banks to help raise public awareness of, and confidence in, switching bank accounts. The MIR is a wide-ranging 18-24 month Phase 2 inquiry with the final report expected to be published in April 2016.

At this stage as there remains uncertainty around the outcome of this matter, it is not practicable reliably to estimate the potential impact on RBS, which may be material.
 
Notes

5. Recent developments

Conversion of B shares
On 8 October 2015, the company received a valid notice from HM Treasury to convert 51 billion Series 1 B shares of 1p each into 5.1 billion new RBSG plc ordinary shares of £1 each. The new ordinary shares were admitted to the Official List and to trading on the London Stock Exchange on 14 October 2015. HM Treasury’s holding in the company’s ordinary shares is currently 72.9%.

Finance Bill 2015 - 2016
The Finance Bill 2015 - 2016 was substantively enacted on 26 October 2015 and introduced a number of previously announced changes to the UK corporate tax system. In accordance with IFRS these changes will be accounted for in Q4 2015.

The most relevant measures include:
●
Cuts in the rate of corporation tax from 20% to 19% from 1 April 2017 and to 18% from 1 April 2020. Existing temporary differences on which deferred tax has been provided may reverse at these reduced rates;
   
●
A corporation tax surcharge of 8% on UK banking entities from 1 January 2016. This is expected to increase RBS’s corporation tax liabilities and vary the carrying value of its deferred tax balances;
   
●
A reduction in the bank levy rate from 0.21% to 0.18% from 1 January 2016 and subsequent annual reductions to 0.1% from 1 January 2021; and
   
●
Making compensation in relation to misconduct non-deductible for corporation tax.

As outlined in our 2015 Interim results, it is expected that these measures will increase the normalised tax rate to around 27% in the medium term and trending lower thereafter and the annual bank levy charge for 2015 is expected to be £280 million, projected to fall progressively to £150 million by 2019.

6. Exchange rates
The following table shows the principal exchange rates:

£1 = €
Nine month average
Quarter average
Period end
       
30 September 2015
1.374
1.392
1.355
30 June 2015
  
1.385
1.411
31 December 2014
  
1.268
1.285
30 September 2014
1.232
1.260
1.285
       
£1 = US$
Nine month average
Quarter average
Period end
       
30 September 2015
1.532
1.549
1.514
30 June 2015
  
1.532
1.572
31 December 2014
  
1.582
1.562
30 September 2014
1.669
1.669
1.622

7. Post balance sheet events
There have been no significant events between 30 September 2015 and the date of approval of this announcement which would require a change to or additional disclosure in the announcement.
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’, ‘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: The Royal Bank of Scotland Group plc’s (RBS) transformation plan (which includes RBS’s 2013/2014 strategic plan relating to the implementation of its new divisional and functional structure and the continuation of its balance sheet reduction programme including its proposed divestments of CFG and Williams & Glyn, RBS’s information technology and operational investment plan, the proposed restructuring of RBS’s CIB business and the restructuring of RBS as a result of the implementation of the regulatory ring-fencing regime, together the “Transformation Plan”), as well as restructuring, capital and strategic plans, divestments, capitalisation, portfolios, net interest margin, capital and leverage ratios, liquidity, risk-weighted assets (RWAs), RWA equivalents (RWAe), return on equity (ROE), profitability, cost:income ratios, loan:deposit ratios, AT1 and other capital raising plans, funding and risk profile; litigation, government and regulatory investigations including investigations relating to the setting of interest rates and foreign exchange trading and rate setting activities; costs or exposures borne by RBS arising out of the origination or sale of mortgages or mortgage-backed securities in the US; investigations relating to business conduct and the costs of resulting customers redress and legal proceedings; RBS’s future financial performance; the level and extent of future impairments and write-downs; and RBS’s exposure to political risks, credit rating risk and to various types of market risks, such as interest rate risk, foreign exchange rate risk and commodity and equity price risk. These statements are based on current plans, estimates, targets and projections, and are subject to inherent risks, uncertainties and other factors which could cause actual results to differ materially from the future results expressed or implied by such forward-looking statements. For example, certain market risk and other disclosures are dependent on choices relying on key model characteristics and assumptions and are subject to various limitations. By their nature, certain of the market risk disclosures are only estimates and, as a result, actual future gains and losses could differ materially from those that have been estimated.

Other factors that could adversely affect our results and the accuracy of forward-looking statements in this document include the risk factors and other uncertainties discussed in the 2014 Annual Report and Accounts and this document. These include the significant risks for RBS presented by the execution of the Transformation Plan; RBS’s ability to successfully implement the various initiatives that are comprised in the Transformation Plan, particularly the balance sheet reduction programme including the divestment of Williams & Glyn and its remaining stake in CFG, the proposed restructuring of its CIB business and the significant restructuring undertaken by RBS as a result of the implementation of the ring fence; whether RBS will emerge from implementing the Transformation Plan as a viable, competitive, customer focused and profitable bank; RBS’s ability to achieve its capital targets which depend on RBS’s success in reducing the size of its business; the cost and complexity of the implementation of the ring-fence and the extent to which it will have a material adverse effect on RBS; the risk of failure to realise the benefit of RBS’s substantial investments in its information technology and operational infrastructure and systems, the significant changes, complexity and costs relating to the implementation of the Transformation Plan, the risks of lower revenues resulting from lower customer retention and revenue generation as RBS refocuses on the UK as well as increasing competition. In addition, there are other risks and uncertainties. These include RBS’s ability to attract and retain qualified personnel; uncertainties regarding the outcomes of legal, regulatory and governmental actions and investigations that RBS is subject to (including active civil and criminal investigations) and any resulting material adverse effect on RBS of unfavourable outcomes; heightened regulatory and governmental scrutiny and the increasingly regulated environment in which RBS operates; uncertainty relating to the referendum on the UK’s membership of the EU and the consequences arising from it; operational risks that are inherent in RBS’s business and that could increase as RBS implements its Transformation Plan; the potential negative impact on RBS’s business of actual or perceived global economic and financial market conditions and other global risks; how RBS will be increasingly impacted by UK developments as its operations become gradually more focused on the UK; uncertainties regarding RBS exposure to any weakening of economies within the EU and renewed threat of default or exit by certain countries in the Eurozone; the risks resulting from RBS implementing the State Aid restructuring plan including with respect to the disposal of certain assets and businesses as announced or required as part of the State Aid restructuring plan; the achievement of capital and costs reduction targets; ineffective management of capital or changes to regulatory requirements relating to capital adequacy and liquidity; the ability to access sufficient sources of capital, liquidity and funding when required; deteriorations in borrower and counterparty credit quality; the extent of future write-downs and impairment charges caused by depressed asset valuations; the value and effectiveness of any credit protection purchased by RBS; the impact of unanticipated turbulence in interest rates, yield curves, foreign currency exchange rates, credit spreads, bond prices, commodity prices, equity prices; basis, volatility and correlation risks; changes in the credit ratings of RBS; changes to the valuation of financial instruments recorded at fair value; competition and consolidation in the banking sector; regulatory or legal changes (including those requiring any restructuring of RBS’s operations); changes to the monetary and interest rate policies of central banks and other governmental and regulatory bodies and continued prolonged periods of low interest rates; changes in UK and foreign laws, regulations, accounting standards and taxes; impairments of goodwill; the high dependence of RBS’s operations on its information technology systems and its increasing exposure to cyber security threats; the reputational risks inherent in RBS’s operations; the risk that RBS may suffer losses due to employee misconduct; pension fund shortfalls; the recoverability of deferred tax assets; HM Treasury exercising influence over the operations of RBS; limitations on, or additional requirements imposed on, RBS’s activities as a result of HM Treasury’s investment in RBS; and the success of RBS in managing the risks involved in the foregoing.

The forward-looking statements contained in this document speak only as of the date of this announcement, and RBS does not undertake 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 solicitation of any offer to buy any securities or financial instruments or any advice or recommendation with respect to such securities or other financial instruments.








Appendix 1

Additional segment information


Appendix 1 UK Personal & Business Banking
 
 
 
 
 
 
 
 
Nine months ended
 
Quarter ended
 
30 September
30 September
 
30 September
30 June
30 September
 
2015
2014
 
2015
2015
2014
Income statement
£m
£m
 
£m
£m
£m
 
 
 
 
 
 
 
Net interest income
3,460 
3,474 
 
1,170 
1,147 
1,198 
Non-interest income
920 
1,031 
 
289 
322 
345 
 
 
 
 
 
 
 
Total income
4,380 
4,505 
 
1,459 
1,469 
1,543 
Operating expenses
(2,733)
(2,785)
 
(810)
(793)
(965)
 
 
 
 
 
 
 
Profit before impairment losses
1,647 
1,720 
 
649 
676 
578 
Impairment releases/(losses)
6 
(227)
 
(11)
(9)
(79)
 
 
 
 
 
 
 
Operating profit
1,653 
1,493 
 
638 
667 
499 
 
 
 
 
 
 
 
Operating profit - adjusted (1)
2,092 
1,845 
 
663 
697 
682 
 
 
 
 
 
 
 
Analysis of income by product
 
 
 
 
 
 
Personal advances
652 
698 
 
219 
217 
231 
Personal deposits
601 
496 
 
201 
210 
194 
Mortgages
1,871 
1,944 
 
637 
617 
657 
Cards
504 
561 
 
167 
162 
187 
Business banking
816 
751 
 
269 
278 
261 
Other
(64)
55 
 
(34)
(15)
13 
 
 
 
 
 
 
 
Total income
4,380 
4,505 
 
1,459 
1,469 
1,543 
 
 
 
 
 
 
 
Analysis of impairments by sector
 
 
 
 
 
 
Personal advances
67 
125 
 
14 
18 
46 
Mortgages
(12)
(3)
 
(10)
- 
(8)
Business banking
(74)
50 
 
5 
(13)
20 
Cards
13 
55 
 
2 
4 
21 
 
 
 
 
 
 
 
Total impairment (releases)/losses
(6)
227 
 
11 
9 
79 
 
 
 
 
 
 
 
Williams & Glyn (3)
 
 
 
 
 
 
Total income
625 
637 
 
211 
211 
214 
Operating expenses
(261)
(256)
 
(93)
(90)
(87)
Impairment releases/(losses)
5 
(46)
 
(5)
(11)
(15)
 
 
 
 
 
 
 
Operating profit
369 
335 
 
113 
110 
112 

 
 
 
 
 
30 September 
30 June 
31 December 
 
2015 
2015 
2014 
Capital and balance sheet
£bn 
£bn 
£bn 
 
 
 
 
Loans and advances to customers (gross)
 
 
 
  - personal advances
6.9 
7.2 
7.4 
  - mortgages
109.2 
105.4 
103.2 
  - business banking
14.1 
13.7 
14.3 
  - cards
4.3 
4.4 
4.9 
 
 
 
 
Total loans and advances to customers (gross)
134.5 
130.7 
129.8 
 
 
 
 
Williams & Glyn (3)
 
 
 
 
 
 
 
Total assets
20.1 
19.5 
19.6 
Net loans and advances to customers
20.0 
19.5 
19.5 
Customer deposits
23.6 
23.4 
22.0 
Risk-weighted assets (2)
10.1 
10.3 
10.1 

Notes:
(1)
Excluding restructuring costs and litigation and conduct costs.
(2)
RWAs on an end-point CRR basis.
(3)
Williams & Glyn has not operated as a separate legal entity therefore these figures are not necessarily indicative of results that would have occurred if Williams & Glyn had been standalone.
(4)
International private banking business reclassified to disposal groups.
(5)
Transfers to other areas comprises the UK Portfolio which was transferred to Commercial Banking on 1 May 2015, the Western European Portfolio which is expected to transfer to Commercial Banking during Q4 2015 and UK Transaction services which is expected to transfer to Commercial Banking in Q4 2015.
(6)
The CIB segment is being restructured into CIB Go-forward and CIB Capital Resolution elements. The split is subject to further refinement.
Appendix 1 Ulster Bank
 
 
 
 
 
 
 
 
Nine months ended
 
Quarter ended
 
30 September
30 September
 
30 September
30 June
30 September
 
2015
2014
 
2015
2015
2014
Income statement
£m
£m
 
£m
£m
£m
 
 
 
 
 
 
 
Net interest income
392 
486 
 
127 
132 
163 
Non-interest income
190 
140 
 
87 
46 
51 
 
 
 
 
 
 
 
Total income
582 
626 
 
214 
178 
214 
Operating expenses
(447)
(450)
 
(158)
(150)
(150)
 
 
 
 
 
 
 
Profit before impairment releases
135 
176 
 
56 
28 
64 
Impairment releases
110 
261 
 
58 
52 
318 
 
 
 
 
 
 
 
Operating profit
245 
437 
 
114 
80 
382 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating profit - adjusted (1)
263 
463 
 
122 
91 
394 
 
 
 
 
 
 
 
Average exchange rate
1.374 
1.232 
 
1.392 
1.385 
1.260 
 
 
 
 
 
 
 
Analysis of income by business
 
 
 
 
 
 
Corporate
147 
199 
 
52 
45 
65 
Retail
346 
301 
 
125 
112 
111 
Other
89 
126 
 
37 
21 
38 
 
 
 
 
 
 
 
Total income
582 
626 
 
214 
178 
214 
 
 
 
 
 
 
 
Analysis of impairments by sector
 
 
 
 
 
 
Mortgages
(86)
(133)
 
(35)
(38)
(168)
Commercial real estate
 
 
 
 
 
 
  - investment
9 
(9)
 
(3)
11 
(18)
  - development
13 
(15)
 
(5)
18 
(9)
Other corporate
(43)
(122)
 
(18)
(37)
(130)
Other lending
(3)
18 
 
3 
(6)
7 
 
 
 
 
 
 
 
Total impairment (releases)/losses
(110)
(261)
 
(58)
(52)
(318)
 
 
 
 
 
30 September 
30 June 
31 December 
 
2015 
2015 
2014 
Balance sheet
£bn 
£bn 
£bn 
 
 
 
 
Loans and advances to customers (gross)
 
 
 
Mortgages
16.1 
15.9 
17.5 
Commercial real estate
 
 
 
  - investment
0.9 
0.8 
1.0 
  - development
0.3 
0.3 
0.3 
Other corporate
4.7 
4.7 
4.9 
Other lending
0.9 
0.9 
1.0 
 
 
 
 
Total loans and advances to customers (gross)
22.9 
22.6 
24.7 
Spot exchange rate
1.355 
1.411 
1.285 

For the notes to this table refer to page 1.
Appendix 1 Commercial Banking

 
Nine months ended
 
Quarter ended
 
30 September
30 September
 
30 September
30 June
30 September
2015
2014
 
2015
2015
2014
Income statement
£m
£m
 
£m
£m
£m
 
 
 
 
 
 
 
Net interest income
1,673 
1,520 
 
565 
562 
521 
Non-interest income
871 
859 
 
265 
330 
290 
 
 
 
 
 
 
 
Total income
2,544 
2,379 
 
830 
892 
811 
Operating expenses
(1,278)
(1,294)
 
(403)
(466)
(392)
Of which: operating lease costs
(105)
(103)
 
(34)
(35)
(35)
 
 
 
 
 
 
 
Profit before impairment losses
1,266 
1,085 
 
427 
426 
419 
Impairment losses
(42)
(43)
 
(15)
(26)
(12)
 
 
 
 
 
 
 
Operating profit
1,224 
1,042 
 
412 
400 
407 
 
 
 
 
 
 
 
Operating profit - adjusted (1)
1,302 
1,172 
 
413 
476 
425 
 
 
 
 
 
 
 
Analysis of income by business
 
 
 
 
 
 
Commercial lending
1,378 
1,353 
 
430 
499 
459 
Deposits
367 
248 
 
127 
124 
95 
Asset and invoice finance
542 
554 
 
184 
180 
188 
Other
257 
224 
 
89 
89 
69 
 
 
 
 
 
 
 
Total income
2,544 
2,379 
 
830 
892 
811 
 
 
 
 
 
 
 
Analysis of impairments by sector
 
 
 
 
 
 
Commercial real estate
13 
(7)
 
5 
10 
(1)
Asset and invoice finance
1 
4 
 
(2)
2 
2 
Private sector services (education, health, etc)
5 
(8)
 
2 
- 
2 
Banks & financial institutions
1 
- 
 
- 
1 
(1)
Wholesale and retail trade repairs
3 
16 
 
3 
2 
2 
Hotels and restaurants
- 
1 
 
1 
2 
2 
Manufacturing
1 
9 
 
1 
(1)
2 
Construction
5 
8 
 
3 
2 
4 
Other
13 
20 
 
2 
8 
- 
 
 
 
 
 
 
 
Total impairment losses
42 
43 
 
15 
26 
12 

 
30 September 
30 June 
31 December 
 
2015 
2015 
2014 
Balance sheet
£bn 
£bn 
£bn 
 
 
 
 
Loans and advances to customers (gross)
 
 
 
  - Commercial real estate
18.2 
17.9 
18.3 
  - Asset and invoice finance
14.3 
14.1 
14.2 
  - Private sector services (education, health etc)
7.1 
7.0 
6.9 
  - Banks & financial institutions
7.8 
7.2 
7.0 
  - Wholesale and retail trade repairs
6.7 
6.6 
6.0 
  - Hotels and restaurants
3.2 
3.2 
3.4 
  - Manufacturing
4.4 
4.6 
3.7 
  - Construction
1.8 
1.8 
1.9 
  - Other
28.9 
28.6 
24.7 
 
 
 
 
Total loans and advances to customers (gross)
92.4 
91.0 
86.1 

For the notes to this table refer to page 1.
Appendix 1 Private Banking

 
Nine months ended
 
Quarter ended
 
30 September
30 September
 
30 September
30 June
30 September
2015
2014
 
2015
2015
2014
Income statement
£m
£m
 
£m
£m
£m
 
 
 
 
 
 
 
Net interest income
377 
516 
 
123 
126 
172 
Non-interest income
248 
299 
 
81 
81 
98 
 
 
 
 
 
 
 
Total income
625 
815 
 
204 
207 
270 
Operating expenses
(659)
(610)
 
(185)
(287)
(210)
 
 
 
 
 
 
 
(Loss)/profit before impairment losses
(34)
205 
 
19 
(80)
60 
Impairment (losses)/releases
(1)
4 
 
(4)
2 
4 
 
 
 
 
 
 
 
Operating (loss)/profit
(35)
209 
 
15 
(78)
64 
 
 
 
 
 
 
 
Operating profit - adjusted (1)
77 
219 
 
16 
32 
71 
 
 
 
 
 
 
 
Analysis of income by business
 
 
 
 
 
 
Investments
108 
134 
 
34 
35 
44 
Banking
517 
681 
 
170 
172 
226 
 
 
 
 
 
 
 
Total income
625 
815 
 
204 
207 
270 
 
 
 
 
 
 
 
International private banking activities (4)
 
 
 
 
 
 
 
 
 
 
 
 
 
Total income
147 
171 
 
47 
48 
53 
Operating expenses
(226)
(197)
 
(69)
(89)
(68)
 
 
 
 
 
 
 
Operating loss
(79)
(26)
 
(22)
(41)
(15)
 
 
 
 
 
30 September 
30 June 
31 December 
 
2015 
2015 
2014 
Capital and balance sheet
£bn 
£bn 
£bn 
 
 
 
 
Loans and advances to customers (gross)
 
 
 
  - Personal
4.7 
4.8 
5.4 
  - Mortgages
6.7 
6.6 
8.9 
  - Other
2.2 
2.1 
2.3 
 
 
 
 
Total loans and advances to customers (gross)
13.6 
13.5 
16.6 
 
 
 
 
International private banking activities (4)
£bn 
£bn 
£bn 
 
 
 
 
Total assets
7.9 
8.2 
8.9 
Net loans and advances to customers
2.5 
2.7 
3.1 
Assets under management
12.2 
13.6 
14.6 
Customer deposits
6.5 
6.8 
7.4 
Risk-weighted assets (2)
1.7 
1.9 
2.1 

For the notes to this table refer to page 1.
Appendix 1 Corporate & Institutional Banking
 
 

 
 
 

 
Nine months ended
 
Quarter ended
 
30 September
30 September
 
30 September
30 June
30 September
2015 
2014
 
2015 
2015 
2014
Income statement
£m
£m
 
£m
£m
£m
 
 
 
 
 
 
 
Net interest income from banking activities
518 
595 
 
142 
174 
230 
Non-interest income
1,243 
2,663 
 
295 
346 
601 
 
 
 
 
 
 
 
Total income
1,761 
3,258 
 
437 
520 
831 
Operating expenses
(4,883)
(3,558)
 
(1,453)
(1,841)
(1,400)
 
 
 
 
 
 
 
Loss before impairment losses
(3,122)
(300)
 
(1,016)
(1,321)
(569)
Impairment releases/(losses)
35 
51 
 
4 
(13)
12 
 
 
 
 
 
 
 
Operating loss
(3,087)
(249)
 
(1,012)
(1,334)
(557)
 
 
 
 
 
 
 
Operating (loss)/profit - adjusted (1)
(445)
570 
 
(268)
(227)
21 
 
 
 
 
 
 
 
Analysis of income by product
 
 
 
 
 
 
Rates
544 
723 
 
172 
164 
200 
Currencies
291 
385 
 
96 
107 
138 
Credit
277 
494 
 
35 
86 
110 
Banking/Other
(72)
(111)
 
3 
(48)
(25)
 
 
 
 
 
 
 
Total CIB (Go-forward)
1,040 
1,491 
 
306 
309 
423 
 
 
 
 
 
 
 
Transfers to other areas (5)
316 
401 
 
88 
103 
127 
 
 
 
 
 
 
 
CIB Capital Resolution excluding disposal losses
623 
1,366 
 
120 
221 
281 
Disposal losses
(218)
- 
 
(77)
(113)
- 
 
 
 
 
 
 
 
Total CIB Capital Resolution (6)
405 
1,366 
 
43 
108 
281 
 
 
 
 
 
 
 
Total income
1,761 
3,258 
 
437 
520 
831 
 
 
 
 
 
30 September 
30 June 
31 December 
 
2015 
2015 
2014 
Capital and balance sheet
£bn 
£bn 
£bn 
 
 
 
 
Loans and advances to customer (gross, excluding reverse repos)
50.9 
57.9 
73.0 
Loan impairment provisions
(0.1)
(0.1)
(0.2)
 
 
 
 
Net loans and advances to customers (excluding reverse repos)
50.8 
57.8 
72.8 
 
 
 
 
Loans and advances to banks (excluding reverse repos)
14.8 
13.6 
16.9 
Reverse repos
49.7 
63.0 
61.6 
Securities
33.8 
40.8 
57.0 
Cash and eligible bills
15.2 
22.4 
23.2 
Other
13.1 
13.5 
9.6 
 
 
 
 
Funded assets
177.4 
211.1 
241.1 
 
 
 
 
CIB Capital Resolution (6)
 
 
 
 
 
 
 
Funded assets
50.5 
60.7 
92.9 
Risk-weighted assets (2)
38.7 
45.4 
64.1 


 

 

For the notes to this table refer to page 1.
Appendix 1 RBS Capital Resolution

RCR is managed and analysed in four asset management groups - Ulster Bank (RCR Ireland), Real Estate Finance, Corporate and Markets. Real Estate Finance excludes commercial real estate lending in Ulster Bank.
 
Nine months ended
 
Quarter ended
30 September 
30 September 
 
30 September 
30 June 
30 September 
 
2015 
2014 
 
2015 
2015 
2014 
Income statement
£m 
£m 
 
£m 
£m 
£m 
 
 
 
 
 
 
 
Net interest income
(36)
(7)
 
(16)
(12)
(18)
Non-interest income (1)
181 
237 
 
(4)
57 
140 
 
 
 
 
 
 
 
Total income
145 
230 
 
(20)
45 
122 
Operating expenses
(143)
(265)
 
(42)
(53)
(89)
 
 
 
 
 
 
 
Profit/(loss) before impairment losses
2 
(35)
 
(62)
(8)
33 
Impairment releases (1)
339 
625 
 
46 
184 
605 
 
 
 
 
 
 
 
Operating profit/(loss)
341 
590 
 
(16)
176 
638 
 
 
 
 
 
 
 
Operating profit/(loss) - adjusted (2)
345 
594 
 
(12)
176 
642 
 
 
 
 
 
 
 
Total income
 
 
 
 
 
 
Ulster Bank
(15)
(28)
 
17 
(15)
(29)
Real Estate Finance
102 
163 
 
42 
35 
67 
Corporate
(26)
58 
 
(101)
(16)
72 
Markets
84 
37 
 
22 
41 
12 
 
 
 
 
 
 
 
Total income
145 
230 
 
(20)
45 
122 
 
 
 
 
 
 
 
Impairment (releases)/losses
 
 
 
 
 
 
Ulster Bank
(271)
(394)
 
(99)
(33)
(379)
Real Estate Finance
(91)
(193)
 
(19)
(44)
(159)
Corporate
(56)
(31)
 
51 
(117)
(70)
Markets
79 
(7)
 
21 
10 
3 
 
 
 
 
 
 
 
Total impairment releases
(339)
(625)
 
(46)
(184)
(605)
 
 
 
 
 
 
 
Loan impairment charge as % of gross loans
 
 
 
 
 
 
  and advances (3)
 
 
 
 
 
 
Ulster Bank
(11.0%)
(4.2%)
 
(12.0%)
(2.8%)
(12.0%)
Real Estate Finance
(6.1%)
(4.7%)
 
(3.8%)
(6.8%)
(11.6%)
Corporate
(3.1%)
(0.6%)
 
8.5%
(15.1%)
(4.0%)
Markets
(1.1%)
(1.9%)
 
- 
(0.7%)
(0.6%)
 
 
 
 
 
 
 
Total
(6.9%)
(3.3%)
 
(3.3%)
(7.1%)
(9.5%)

Notes:
(1)
Asset disposals contributed £349 million in the nine months ended 30 September 2015 and £66 million in Q3 2015 (nine months ended 30 September 2014 - £614 million; Q2 2015 - £164 million; Q3 2014 - £332 million) to RCR’s operating profit: impairment provision releases of £306 million in the nine months ended 30 September 2015 and £75 million in Q3 2015 (nine months ended 30 September 2014 - £552 million; Q2 2015 - £167 million; Q3 2014 - £232 million); loss in income from trading activities of £36 million in the nine months ended 30 September 2015 and £11 million loss in Q3 2015 (nine months ended 30 September 2014 - £99 million gain; Q2 2015 - £6 million loss; Q3 2014 - £97 million gain) and gain in other operating income of £79 million in the nine months ended 30 September 2015 and £2 million gain in Q3 2015 (nine months ended 30 September 2014 - £37 million loss; Q2 2015 - £3 million gain; Q3 2014 - £3 million gain).
(2)
Excluding restructuring costs.
(3)
Includes disposal groups.

Appendix 1 RBS Capital Resolution

 
30 September 
30 June 
31 December 
2015 
2015 
2014 
Capital and balance sheet
£bn 
£bn 
£bn 
 
 
 
 
Loans and advances to customers (gross) (1)
8.2 
11.0 
21.9 
Loan impairment provisions
(3.9)
(5.1)
(10.9)
 
 
 
 
Net loans and advances to customers
4.3 
5.9 
11.0 
Debt securities
0.6 
0.6 
1.0 
Total assets
12.9 
16.5 
29.0 
Funded assets
6.5 
8.4 
14.9 
 
 
 
 
Risk elements in lending (1)
5.1 
7.4 
15.4 
Provision coverage (2)
76%
69%
71%
Risk-weighted assets
 
 
 
  - Credit risk
 
 
 
    - non-counterparty
6.0 
7.8 
13.6 
    - counterparty
2.8 
3.0 
4.0 
  - Market risk
4.0 
4.0 
4.4 
  - Operational risk
(0.4)
(0.4)
- 
 
 
 
 
Total risk-weighted assets
12.4 
14.4 
22.0 
 
 
 
 
Total RWA equivalent (3)
13.9 
17.9 
27.3 
 
 
 
 
Gross loans and advances to customers (1)
 
 
 
Ulster Bank
3.3 
4.7 
11.0 
Real Estate Finance
2.0 
2.6 
4.1 
Corporate
2.4 
3.1 
6.2 
Markets
0.5 
0.6 
0.6 
 
 
 
 
 
8.2 
11.0 
21.9 
 
 
 
 
Funded assets - Ulster Bank
 
 
 
Commercial real estate - investment
0.2 
0.6 
1.2 
Commercial real estate - development
0.1 
0.2 
0.7 
Other corporate
0.2 
0.2 
0.7 
 
 
 
 
 
0.5 
1.0 
2.6 
 
 
 
 
Funded assets - Real Estate Finance (4)
 
 
 
UK
1.2 
1.7 
2.5 
Germany
0.1 
0.2 
0.4 
Spain
0.3 
0.3 
0.5 
Other
0.2 
0.3 
0.8 
 
 
 
 
 
1.8 
2.5 
4.2 
 
 
 
 
Funded assets - Corporate
 
 
 
Structured finance
0.5 
0.6 
1.7 
Shipping
0.8 
1.1 
1.8 
Other
1.2 
1.5 
2.3 
 
 
 
 
 
2.5 
3.2 
5.8 
 
 
 
 
Funded assets - Markets
 
 
 
Securitised products
1.3 
1.3 
1.8 
Emerging markets
0.4 
0.4 
0.5 
 
 
 
 
 
1.7 
1.7 
2.3 

Notes:
(1)
Includes disposal groups.
(2)
Provision coverage represents loan impairment provisions as a percentage of risk elements in lending.
(3)
RWA equivalent (RWAe) is an internal metric that measures the equity capital employed in segments. RWAe converts both performing and non-performing exposures into a consistent capital measure, being the sum of the regulatory RWAs and the regulatory capital deductions, the latter converted to RWAe by applying a multiplier. RBS applies a CET1 ratio of 10% for RCR; this results in an end point CRR RWAe conversion multiplier of 10.
(4)
Includes investment properties.

Appendix 1 - RBS Capital Resolution

Funded assets
 
 
 
 
 
 
1 January
 
 
 
 
30 September
 
2014 
Repayments
Disposals (1)
Impairments 
Other
2015 
Life to date
£bn 
£bn 
£bn 
£bn 
£bn 
£bn 
 
 
 
 
 
 
 
Ulster Bank
4.8 
(0.2)
(5.2)
1.4 
(0.3)
0.5 
Real Estate Finance
9.5 
(2.9)
(4.7)
0.1 
(0.2)
1.8 
Corporate
9.8 
(3.4)
(4.2)
- 
0.3 
2.5 
Markets
4.8 
(1.4)
(1.8)
- 
0.1 
1.7 
 
 
 
 
 
 
 
Total
28.9 
(7.9)
(15.9)
1.5 
(0.1)
6.5 

Risk-weighted assets
 
 
 
 
 
 
1 January
 
 
Risk
 
Other (3)
30 September
 
2014 
Repayments
Disposals (1)
parameters (2)
Impairments 
2015 
Life to date
£bn 
£bn 
£bn 
£bn 
£bn 
£bn 
£bn 
 
 
 
 
 
 
 
 
Ulster Bank
3.3 
(0.5)
(1.0)
(1.3)
- 
(0.1)
0.4 
Real Estate Finance
13.5 
(2.8)
(2.5)
(6.5)
- 
(0.1)
1.6 
Corporate
16.4 
(2.9)
(5.3)
(4.9)
(0.4)
0.6 
3.5 
Markets
13.5 
(3.5)
(3.2)
- 
(0.2)
0.3 
6.9 
 
 
 
 
 
 
 
 
Total
46.7 
(9.7)
(12.0)
(12.7)
(0.6)
0.7 
12.4 

Capital deductions
 
 
 
 
 
1 January
 
 
Risk
Impairments 
Other (3)
30 September
 
2014 
Repayments
Disposals (1)
parameters (2)
2015 
Life to date
£m 
£m 
£m 
£m 
£m 
£m 
£m 
 
 
 
 
 
 
 
 
Ulster Bank
559 
(31)
(439)
(154)
183 
(29)
89 
Real Estate Finance
505 
(446)
(872)
776 
68 
(31)
- 
Corporate
477 
(250)
(179)
110 
(138)
16 
36 
Markets
291 
(30)
(86)
(146)
1 
(6)
24 
 
 
 
 
 
 
 
 
Total
1,832 
(757)
(1,576)
586 
114 
(50)
149 

RWA equivalent (4)
 
 
 
 
 
1 January
 
 
Risk
Impairments 
Other (3)
30 September
 
2014 
Repayments
Disposals (1)
parameters (2)
2015 
Life to date
£bn 
£bn 
£bn 
£bn 
£bn 
£bn 
£bn 
 
 
 
 
 
 
 
 
Ulster Bank
8.9 
(0.8)
(5.4)
(2.8)
1.8 
(0.4)
1.3 
Real Estate Finance
18.6 
(7.3)
(11.3)
1.3 
0.7 
(0.4)
1.6 
Corporate
21.1 
(5.4)
(7.1)
(3.8)
(1.8)
0.8 
3.8 
Markets
16.4 
(3.7)
(4.1)
(1.4)
(0.2)
0.2 
7.2 
 
 
 
 
 
 
 
 
Total
65.0 
(17.2)
(27.9)
(6.7)
0.5 
0.2 
13.9 

Notes:
(1)
Includes all effects relating to disposals, including associated removal of deductions from regulatory capital.
(2)
Principally reflects credit migration and other technical adjustments.
(3)
Includes fair value adjustments and foreign exchange movements.
(4)
RWA equivalent (RWAe) is an internal metric that measures the equity capital employed in segments. RWAe converts both performing and non-performing exposures into a consistent capital measure, being the sum of the regulatory RWAs and the regulatory capital deductions, the latter converted to RWAe by applying a multiplier. RBS applies a CET1 ratio of 10% for RCR; this results in an end point CRR RWAe conversion multiplier of 10.

Appendix 1 RBS Capital Resolution
 
 
 
 
 
 
 
 
 
 
Gross loans and advances, REIL and impairments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Credit metrics
 
Year-to-date
 
 
 
 
REIL as a
Provisions
Provisions
 
Impairment
 
 
Gross
 
 
% of gross
as a %
as a % of
 
(releases)/
Amounts
 
loans
REIL
Provisions
loans
of REIL
gross loans
 
losses (2)
written-off
30 September 2015 (1)
£bn
£bn
£bn
%
%
%
 
£m
£m
 
 
 
 
 
 
 
 
 
 
By sector:
 
 
 
 
 
 
 
 
 
Commercial real estate
 
 
 
 
 
 
 
 
 
  - investment
2.4 
1.7 
1.1 
71 
65 
46 
 
(152)
1,649 
  - development
2.2 
2.1 
1.9 
95 
90 
86 
 
(69)
2,959 
Asset finance
0.9 
0.3 
0.1 
33 
33 
11 
 
8 
273 
Other corporate
2.7 
1.0 
0.8 
37 
80 
30 
 
(123)
1,265 
 
 
 
 
 
 
 
 
 
 
Total
8.2 
5.1 
3.9 
62 
76 
48 
 
(336)
6,146 
 
 
 
 
 
 
 
 
 
 
By donating segment
 
 
 
 
 
 
 
 
 
  and sector
 
 
 
 
 
 
 
 
 
Ulster Bank
 
 
 
 
 
 
 
 
 
Commercial real estate
 
 
 
 
 
 
 
 
 
 - investment
0.7 
0.7 
0.6 
100 
86 
86 
 
(35)
1,320 
 - development
2.0 
2.0 
1.9 
100 
95 
95 
 
(121)
2,847 
Other corporate
0.6 
0.5 
0.4 
83 
80 
67 
 
(115)
861 
 
 
 
 
 
 
 
 
 
 
Total Ulster Bank
3.3 
3.2 
2.9 
97 
91 
88 
 
(271)
5,028 
 
 
 
 
 
 
 
 
 
 
Commercial Banking
 
 
 
 
 
 
 
 
 
Commercial real estate
 
 
 
 
 
 
 
 
 
  - investment
0.6 
0.3 
0.1 
50 
33 
17 
 
(26)
164 
  - development
0.1 
0.1 
- 
100 
- 
- 
 
(7)
79 
Other corporate
0.4 
0.2 
0.1 
50 
50 
25 
 
(60)
114 
 
 
 
 
 
 
 
 
 
 
Total Commercial Banking
1.1 
0.6 
0.2 
55 
33 
18 
 
(93)
357 
 
 
 
 
 
 
 
 
 
 
CIB
 
 
 
 
 
 
 
 
 
Commercial real estate
 
 
 
 
 
 
 
 
 
  - investment
1.1 
0.7 
0.4 
64 
57 
36 
 
(91)
165 
  - development
0.1 
- 
- 
- 
- 
- 
 
59 
33 
Asset finance
0.9 
0.3 
0.1 
33 
33 
11 
 
8 
273 
Other corporate
1.7 
0.3 
0.3 
18 
100 
18 
 
52 
290 
 
 
 
 
 
 
 
 
 
 
Total CIB
3.8 
1.3 
0.8 
34 
62 
21 
 
28 
761 
 
 
 
 
 
 
 
 
 
 
Total
8.2 
5.1 
3.9 
62 
76 
48 
 
(336)
6,146 
 
 
 
 
 
 
 
 
 
 
Of which:
 
 
 
 
 
 
 
 
 
UK
4.5 
2.4 
1.4 
53 
58 
31 
 
(71)
2,605 
Europe
3.5 
2.6 
2.4 
74 
92 
69 
 
(323)
3,431 
US
0.1 
- 
- 
- 
- 
- 
 
68 
1 
RoW
0.1 
0.1 
0.1 
100 
100 
100 
 
(10)
109 
 
 
 
 
 
 
 
 
 
 
Customers
8.2 
5.1 
3.9 
62 
76 
48 
 
(336)
6,146 
Banks
0.5 
- 
- 
- 
- 
- 
 
(3)
33 
 
 
 
 
 
 
 
 
 
 
Total
8.7 
5.1 
3.9 
59 
76 
45 
 
(339)
6,179 

Notes:
(1)           Include disposal groups.
 
(2)           Impairment (releases)/losses include those relating to AFS securities; sector analyses above include allocation of latent impairment charges.
  
 









Appendix 2

Go-forward Bank profile



Appendix 2 Go-forward Bank profile

RBS is committed to becoming a leaner, less volatile business based around its core franchises of PBB and CPB. To achieve this goal a number of initiatives have been announced which include, but are not limited to, the restructuring of CIB into CIB Go-forward and CIB Capital Resolution, the divestment of the remaining stake in Citizens, the sale of the international private banking business, the exit of Williams & Glyn and the continued run down of RCR. Significant progress towards these exits is expected by the end of 2015. The following table illustrates the impact on certain key performance measures of these initiatives by showing the ‘Go-forward’ profile of the bank and the segments, businesses and portfolios which it intends to exit. This information is presented to illustrate the strategy and its impact on the business and is on a non-statutory basis and should be read in conjunction with the notes below as well as the section titled Forward-looking statements.
 

 
Go-forward Bank profile
 
Exit Bank
 
 
 
 
 
 
 
 
 
 
CIB
 
International
 
 
Total
 
 
UK
Ulster
Commercial
Private
CIB Go-
Other Go-
Total Go-
 
Capital
Williams
private
 
Other
Exit
Total
Quarter ended
PBB (1)
Bank
Banking
Banking (2)
forward (3)
forward (4)
forward
 
Resolution (3)
& Glyn (5)
banking
RCR
investments (6)
 Bank
RBS
30 September 2015
£bn
£bn
£bn
£bn
£bn
£bn
£bn
 
£bn
£bn
£bn
£bn
£bn
£bn
£bn
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total income
1.2 
0.2 
0.8 
0.2 
0.4 
(0.1)
2.7 
 
- 
0.3 
- 
- 
0.1 
0.4 
3.1 
Operating expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  - adjusted (7)
(0.7)
(0.1)
(0.4)
(0.2)
(0.4)
- 
(1.8)
 
(0.3)
(0.1)
- 
(0.1)
- 
(0.5)
(2.3)
Impairment (losses)/releases
- 
0.1 
- 
- 
- 
(0.1)
- 
 
- 
- 
- 
0.1 
- 
0.1 
0.1 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating profit/(loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  - adjusted (7)
0.5 
0.2 
0.4 
- 
- 
(0.2)
0.9 
 
(0.3)
0.2 
- 
- 
0.1 
- 
0.9 
Return on equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  - adjusted (7,8,9)
36%
15%
12%
8%
nm
nm
10%
 
nm
nm
nm
nm
nm
nm
5%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine months ended
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
30 September 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total income
3.7 
0.6 
2.5 
0.5 
1.4 
- 
8.7 
 
0.4 
0.7 
0.1 
0.2 
0.1 
1.5 
10.2 
Operating expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  - adjusted (7)
(2.0)
(0.4)
(1.2)
(0.4)
(1.2)
0.1 
(5.1)
 
(1.0)
(0.3)
(0.2)
(0.2)
- 
(1.7)
(6.8)
Impairment (losses)/releases
- 
0.1 
- 
- 
- 
(0.1)
- 
 
- 
- 
- 
0.4 
- 
0.4 
0.4 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating profit/(loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  - adjusted (7)
1.7 
0.3 
1.3 
0.1 
0.2 
- 
3.6 
 
(0.6)
0.4 
(0.1)
0.4 
0.1 
0.2 
3.8 
Return on equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   - adjusted (7,8,9)
36%
11%
12%
10%
nm
nm
13%
 
nm
nm
nm
nm
nm
nm
8%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As at 30 September 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                               
Funded assets
119 
28 
96 
12 
127 
114 
496 
 
50 
20 
5 
7 
2 
84 
580 
Net loans and advances to
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  customers
112 
21 
92 
11 
24 
- 
260 
 
27 
20 
3 
4 
- 
54 
314 
Customer deposits
129 
19 
99 
23 
19 
4 
293 
 
29 
24 
6 
1 
- 
60 
353 
Risk-weighted assets (10)
29 
22 
67 
8 
39 
10 
175 
 
39 
10 
2 
12 
78 
141 
316 
 

Appendix 2 Go-forward Bank profile

Notes:
(1)
Excluding Williams & Glyn.
(2)
Excluding international private banking business reclassified to disposal groups.
(3)
The CIB segment is being restructured into CIB Go-forward and CIB Capital Resolution elements. The split is subject to further refinement. In Q4 2015 the Western European loan portfolio and the UK Transaction Services business will transfer to Commercial Banking.
(4)
Other Go-forward is primarily Centre, which includes the liquidity portfolio.
(5)
Does not reflect the cost base, funding and capital profile of a standalone bank. Operating expenses include charges based on an attribution of support provided by RBS to Williams & Glyn. Expenses incurred by Williams & Glyn were £96 million in Q3 2015 (nine months ended 30 September 2015 - £267 million).
(6)
Includes Citizens RWAs of £72 billion which remain consolidated for regulatory reporting purposes and the interest in associate in relation to Citizens funded assets.
(7)
Excluding restructuring costs and litigation and conduct costs.
(8)
ROE is based on operating profit after tax on a non-statutory basis adjusted for preference share dividends divided by average notional equity (based on 13% of the monthly average of segmental RWAe).
(9)
PBB adjusted ROE Q3 2015 - 27% (nine months ended 30 September 2015 - 26%). CPB adjusted ROE Q3 2015 - 11% (nine months ended 30 September 2015 - 12%). Excluding IFRS volatility loss of Q3 2015 - £126 million (nine months ended 30 September 2015 - loss £44 million), the Go-forward Bank’s adjusted return on equity was Q3 2015 - 13% (nine months ended 30 September 2015 - 13%).
(10)
CIB RWAs of £39 billion includes £8 billion of RWAs related to businesses that will transfer out of CIB in Q4 2015, comprising the Western European loan portfolio and the UK Transaction Services business.


 
30 September 2015
 
31 December 2014
 
Funded assets
RWAs
 
Funded assets
RWAs
CIB Capital Resolution by product
£bn
£bn
 
£bn
£bn
 
 
 
 
 
 
APAC portfolio (1)
3.2 
2.0 
 
7.7 
4.2 
Americas portfolio
1.5 
2.4 
 
4.7 
7.8 
EMEA portfolio (2)
4.4 
2.9 
 
9.9 
6.8 
Shipping
5.3 
4.4 
 
5.7 
4.4 
Markets
30.5 
19.8 
 
52.1 
28.9 
GTS
4.4 
6.6 
 
11.3 
11.1 
Other
1.2 
0.6 
 
1.5 
0.9 
 
 
 
 
 
 
Total
50.5 
38.7 
 
92.9 
64.1 

Notes:
(1)
Asia-Pacific portfolio.
(2)
European, the Middle East and Africa portfolio.









Appendix 3

Income statement reconciliations


Appendix 3 Income statement reconciliations

Operating profit on a non-statutory basis is presented before certain items, namely own credit adjustments, gain on redemption of own debt, write-down of goodwill and strategic disposals. RFS Holdings minority interest was also a reconciling item for the periods ended 30 September 2014.

In addition, restructuring costs and litigation and conduct costs are presented separately within operating expenses on a non-statutory basis.

The following table shows how these items are presented in the statutory income statement.

 
Nine months ended
 
Quarter ended
 
30 September
30 September
 
30 September
30 June
30 September
 
2015
2014 
 
2015 
2015 
2014 
 
£m
£m
 
£m
£m
£m
 
 
 
 
 
 
 
Reallocation of one-off items
 
 
 
 
 
 
Net interest income
 
 
 
 
 
 
RFS Holdings minority interest
- 
(3)
 
- 
- 
- 
 
 
 
 
 
 
 
Non-interest income
 
 
 
 
 
 
Own credit adjustments
424 
(2)
 
136 
168 
49 
Gain on redemption of own debt
- 
20 
 
- 
- 
- 
Strategic disposals
(135)
191 
 
- 
- 
- 
RFS Holdings minority interest
- 
(31)
 
- 
- 
(56)
 
 
 
 
 
 
 
Operating expenses
 
 
 
 
 
 
Write down of goodwill
- 
(130)
 
- 
- 
- 
RFS Holdings minority interest
- 
(1)
 
- 
- 
- 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Presentational adjustments
 
 
 
 
 
 
Staff costs
 
 
 
 
 
 
Restructuring costs
(625)
(248)
 
(281)
(288)
(79)
 
 
 
 
 
 
 
Premises and equipment
 
 
 
 
 
 
Restructuring costs
(319)
(241)
 
(283)
(28)
(52)
 
 
 
 
 
 
 
Other administrative expenses
 
 
 
 
 
 
Restructuring costs
(314)
(120)
 
(124)
(87)
(36)
Litigation and conduct costs
(1,444)
(1,030)
 
(129)
(459)
(780)
 
 
 
 
 
 
 
Depreciation and amortisation
 
 
 
 
 
 
Restructuring costs
(386)
(3)
 
(92)
(14)
- 
 
 
 
 
 
 
 
Write down of goodwill and other intangible assets
 
 
 
 
 
 
Restructuring costs
(673)
- 
 
(67)
(606)
- 


 
Signatures

 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



 
 
Date: 30 October 2015
 
 
THE ROYAL BANK OF SCOTLAND GROUP plc (Registrant)
 
 
 
By:
/s/ Jan Cargill
 
 
Name:
Title:
Jan Cargill
Deputy Secretary