TIDMRBS
RNS Number : 7223C
Royal Bank of Scotland Group PLC
04 May 2012
Highlights
RBS reports a Q1 2012 Group operating profit(1) of GBP1,184
million
Core RBS Q1 operating profit GBP1,667 million, return on
tangible equity 11%
UK Retail, UK Corporate and Markets performed strongly
Non-Core run-down continues, funded assets down GBP11 billion to
GBP83 billion
Group Core Tier 1 ratio 10.8%, liquidity metrics strong
"We are happy with progress in the first quarter though the
economic and regulatory backdrop remains tough. RBS continues,
markedly, to regain strength and resilience. Our focus is on
improving the future for customers and our business whilst ensuring
that the bank's past issues are dealt with."
Stephen Hester, Group Chief Executive
Highlights
The Royal Bank of Scotland Group (RBS) continued on the recovery path, delivering
stable returns from Core businesses while improving further its strong capital,
liquidity and funding position.
During Q1 2012, RBS continued to prioritise the task of strengthening and
de-risking its balance sheet. The Core Tier 1 capital ratio rose to 10.8%,
while strong liquidity metrics improved even further. The Group reduced
its short-term wholesale funding by GBP23 billion to GBP80 billion, which
compares with a liquidity portfolio of GBP153 billion. The Group loan:deposit
ratio improved to 106%. The run-off of Non-Core and the consistent elimination
of legacy risks continued, with Non-Core funded assets down GBP11 billion
to GBP83 billion.
The improving strength of the Group's balance sheet and funding has enabled
RBS to take actions consistent with a return to standalone strength. RBS
will have repaid GBP75 billion of Special Liquidity Scheme and Credit Guarantee
Scheme (CGS) funding since 2009, including the last CGS repayment of GBP5.7
billion due to be repaid in May. RBS will resume discretionary coupons and
dividend payments on hybrid capital instruments, which have been deferred
for the last two years.
During the quarter, the Group delivered a solid operating performance from
its Core businesses. Retail & Commercial has been challenged by a weak economy
and persistently low interest rates, but delivered a return on equity (ROE)
of 13%, excluding the still loss-making Ulster Bank. The Markets business
rebounded to deliver a ROE of 21%, despite a reduced balance sheet and staff
numbers, giving encouraging support for the restructuring announced in January.
Non-Core operating losses were lower at GBP483 million, compared with GBP1,282
million in the prior quarter.
RBS remains committed to serving its customers and supporting economic recovery,
with GBP14.3 billion of gross new loans and facilities to UK businesses
during Q1 2012, including GBP7.9 billion to SMEs - up 18% from Q1 2011.
The Group has supported a number of Government initiatives, including the
NewBuy mortgage scheme and the National Loan Guarantee Scheme aimed at stimulating
SME borrowing.
Excluding own credit adjustments, pre-tax profit totalled GBP1,052 million.
Own credit adjustments represented a pre-tax charge of GBP2,456 million
during Q1 2012 as RBS's credit strengthened, leaving a statutory pre-tax
loss of GBP1,404 million and attributable loss of GBP1,524 million.
Highlights (continued)
-- Operating profit - Group operating profit in Q1 2012 totalled GBP1,184
million, compared with a loss of GBP144 million in the previous quarter
and a profit of GBP1,133 million in Q1 2011. Core RBS operating profit
rose 46% from the previous quarter to GBP1,667 million, with Retail
& Commercial businesses delivering GBP903 million, down 13%, while
Markets recovered to a profit of GBP824 million, compared with a loss
of GBP109 million in the prior quarter. Non-Core losses were GBP483
million, compared with GBP1,282 million in the prior quarter.
-- Returns - Retail & Commercial ROE was 8.6%, 13% excluding Ulster Bank.
Allocated equity has been increased to a 10% Core Tier 1 ratio following
the upward revision to Group target capital ratios announced at 2011
year end. Markets ROE recovered to 21%, leaving Core ROE at 11%, 14%
excluding Ulster Bank. The Group continues to target sustainable returns
in excess of the cost of equity. Tangible net asset value per share
(TNAV) was slightly lower at 48.8p as of 31 March 2012, reflecting
the own credit adjustment.
-- Efficiency - Group operating expenses were GBP3,984 million, down 3%
from Q1 2011. Excluding the litigation settlement in US Retail & Commercial,
expenses were down 5% versus a year ago, as the Group continues to
focus on becoming more efficient. Core cost:income ratio was 60% (62%
in Q4 2011, 55% in Q1 2011).
-- Risk - Impairment losses totalled GBP1,314 million, down 33% year-on-year
and 22% from Q4 2011, with reduced bad debt flows, particularly in
UK Retail. Provision coverage of risk elements in lending improved
further to 51% compared with 49% at the end of 2011. REIL declined
by GBP1 billion or 3%, in the quarter.
-- Balance sheet - The Group's funded balance sheet decreased by a further
GBP27 billion in Q1 2012 to GBP950 billion at 31 March 2012. Non-Core
continued to exceed its run-off targets, with funded assets down GBP11
billion to GBP83 billion and a further GBP5 billion of signed transactions
in the pipeline.
-- Liquidity and funding - The Group loan:deposit ratio was 106%, compared
with 108% at 31 December 2011 and 116% at 31 March 2011. Short-term
wholesale funding was reduced by GBP23 billion to GBP80 billion reflecting
deleveraging in Markets and in Non-Core. The liquidity portfolio was
maintained above target levels at GBP153 billion.
-- Capital - The Group Core Tier 1 ratio was 10.8%, compared with 10.6%
at the end of 2011. Risk-weighted assets (RWAs), excluding the effect
of the Asset Protection Scheme (APS), fell GBP12 billion to GBP496
billion, largely reflecting further asset deleveraging.
Note:
(1) Operating profit before tax, own credit adjustments, Asset
Protection Scheme, Payment Protection Insurance costs, sovereign
debt impairment and related interest rate hedge adjustments,
amortisation of purchased intangible assets, integration
and restructuring costs, gain on redemption of own debt,
strategic disposals, write-down of goodwill and other intangible
assets, bonus tax, bank levy and RFS Holdings minority interest
('operating profit'). Statutory operating loss before tax
of GBP1,404 million for the quarter ended 31 March 2012.
Key financial data
Quarter ended
===============================
31 March 31 December 31 March
2012 2011 2011
GBPm GBPm GBPm
================================================= ======== =========== ========
Core
Total income (1) 6,862 5,999 7,678
Operating expenses (2) (3,721) (3,330) (3,798)
Insurance net claims (649) (590) (784)
Operating profit before impairment losses (3) 2,492 2,079 3,096
Impairment losses (4) (825) (941) (872)
Core operating profit (3) 1,667 1,138 2,224
Non-Core operating loss (3) (483) (1,282) (1,091)
Group operating profit/(loss) (3) 1,184 (144) 1,133
Own credit adjustments (2,456) (472) (560)
Asset Protection Scheme (43) (209) (469)
Payment Protection Insurance costs (125) - -
Sovereign debt impairment - (224) -
Bank levy - (300) -
Other items (5) 36 (627) (220)
Loss before tax (1,404) (1,976) (116)
Loss attributable to ordinary and B shareholders (1,524) (1,798) (528)
Memo: APS after tax cost (6) (32) (154) (345)
================================================= ======== =========== ========
31 March 31 December 31 March
2012 2011 2011
========================================= ======== =========== ==========
Capital and balance sheet
Funded balance sheet (7) GBP950bn GBP977bn GBP1,052bn
Loan:deposit ratio (Group) (8) 106% 108% 116%
Loan:deposit ratio (Core) (8) 93% 94% 96%
Core Tier 1 ratio 10.8% 10.6% 11.2%
Tangible equity per ordinary and B share
(9) 48.8p 50.1p 50.1p
========================================= ======== =========== ==========
Notes:
(1) Excluding own credit adjustments, Asset Protection Scheme, gain on
redemption of own debt, strategic disposals and RFS Holdings minority
interest.
(2) Excluding Payment Protection Insurance costs, amortisation of purchased
intangible assets, integration and restructuring costs, write-down
of goodwill and other intangible assets, bonus tax, bank levy and RFS
Holdings minority interest.
(3) Operating profit/(loss) before tax, own credit adjustments, Asset Protection
Scheme, Payment Protection Insurance costs, sovereign debt impairment,
bank levy and other items (see note 5 below).
(4) Excluding sovereign debt impairment and related interest rate hedge
adjustments.
(5) Other items comprise amortisation of purchased intangible assets, integration
and restructuring costs, gain on redemption of own debt, strategic
disposals, write-down of goodwill and other intangible assets, bonus
tax, RFS Holdings minority interest and interest rate hedge adjustments
on impaired available-for-sale government bonds. Refer to page 17 of
the main announcement for further details.
(6) Asset Protection Scheme, net of tax.
(7) Funded balance sheet is total assets less derivatives.
(8) Net of provisions, including disposal groups and excluding repurchase
agreements.
(9) Tangible equity per ordinary and B share is total tangible equity divided
by number of ordinary and B shares in issue.
Comment
Stephen Hester, Group Chief Executive, commented:
The start of 2012 has shown pleasing progress at RBS within the
context of a flat economic environment.
RBS has two jobs. Excellent progress continues in removing
"mistakes" of the past. Non-Core assets have fallen, again.
Liquidity is stronger, again. Next week the bank will repay the
last of the UK Government-backed funding support we received during
the crisis. We will also recommence paying dividends/couponson
hybrid capital. These are important recovery milestones.
Our second job is running the new RBS well and better. Here the
bank also shows continued progress, though held back by economic
conditions. In January we announced a restructuring in our
wholesale banking activities and this is proceeding well. The
Markets business rebounded to a 21% ROE in the seasonally strong Q1
whilst allocated resources were reduced. Retail and Commercial
businesses remain solid - still impacted by subdued income trends
and Irish losses, but cash-generative and competitively robust.
Extensive restructuring activity continues apace across the
Group to achieve future improvement. Customer service and support
remain at the forefront of our priorities for the tens of millions
who rely on us.
Highlights
First quarter 2012 results summary
RBS made further progress towards its strategic goals during Q1
2012. The Group has continued to deleverage and de-risk its balance
sheet, with Non-Core funded assets falling by GBP11 billion to
GBP83 billion and Markets funded assets falling by GBP13
billion.
With growth prospects muted in the major economies in which the
Group operates, and with fragilities persisting in European
financial markets, the focus has remained on improving balance
sheet strength and a strong liquidity position. RBS has prioritised
stable sources of deposit funding, with the Group loan:deposit
ratio improving 200 basis points to 106% at the end of Q1 2012.
Utilisation of short-term wholesale funding was cut by GBP23
billion during the quarter to GBP80 billion, which represents c.8%
of funded assets and more than meets the Group's medium-term
target. The Group will next week repay the final tranche of notes
issued under the Government's CGS; over the last three years RBS
will have repaid GBP75 billion of funding under the CGS and the
Special Liquidity Scheme. The capital position remains robust, with
a Core Tier 1 ratio of 10.8% and a Tier 1 leverage ratio of
16.3x.
As the Group works through its legacy issues it has continued to
generate solid earnings from its Core operations, with Core
pre-impairment operating profits totalling GBP2,492 million in Q1
2012, up 20% from Q4 2011. With impairments also continuing to
fall, Retail & Commercial, excluding Ulster Bank, produced a
ROE of 13%, while the Markets division generated a 21% ROE.
Operating profit
Group operating profit in Q1 2012 totalled GBP1,184 million,
compared with a loss of GBP144 million in the previous quarter and
a profit of GBP1,133 million in Q1 2011. Income was up 25% to
GBP7,131 million, while expenses rose 9% to GBP3,984 million, and
impairments fell by 22% to GBP1,314 million. Core operating profits
were GBP1,667 million, up 46% from Q4 2011, while Non-Core
operating losses fell to GBP483 million (Q4 2011 - GBP1,282
million).
The improvement in Core results was driven by Markets, where
operating profits rose to GBP824 million from a loss of GBP109
million in Q4 2011. Retail & Commercial operating performance
remained resilient in challenging economic conditions, with overall
operating profit of GBP903 million (Q4 2011 - GBP1,033 million)
which includes a GBP77 million sequential quarter decline in Ulster
Bank due to higher impairments.
-- UK Retail operating profit was up 4% at GBP477 million. While the low
interest rate environment creates some income challenges, this has
been more than offset by favourable impairment trends.
-- UK Corporate delivered stable pre-impairment profits and a strong improvement
in operating profit to GBP492 million, in the absence of any large
impairments as were incurred in Q4 2011.
-- Wealth operating profit totalled GBP45 million. Adjusting for the release
of deposit insurance levies in Q4 2011 and for a regulatory fine in
Q1 2012, profits were broadly stable.
-- Ulster Bank still faces exceedingly difficult market conditions, with
operating losses of GBP310 million driven by the continuing deterioration
in retail mortgage credit metrics.
-- US Retail & Commercial operating profits rose again on an underlying
basis. However they fell 43% to $160 million, due to the impact of
a litigation settlement of $138 million.
Highlights (continued)
First quarter 2012 results summary (continued)
-- International Banking delivered good income from its cash management
and trade finance businesses, offset by reduced revenue from outstanding
loans, reflecting the Group's focused reduction of capital-intensive
activities.
-- The restructured Markets division benefited from improved market conditions
in the first quarter, with a strong performance in rates and a recovery
in credit markets and asset backed products. Operating profit totalled
GBP824 million, compared with a loss of GBP109 million in Q4 2011.
-- Direct Line Group's operating profit of GBP84 million was down 33%
from Q4 2011, largely reflecting seasonal weather claims, but up 25%
relative to Q1 2011.
Non-Core achieved a significant reduction in operating losses,
largely reflecting lower trading losses than those incurred in the
restructure and divestment of a number of capital-intensive
exposures during Q4 2011. Impairment losses were 35% lower,
primarily reflecting lower commercial real estate provisioning.
Non-operating items and statutory results
Restructuring costs were GBP460 million during the quarter,
slightly lower than in Q4. This includes c.GBP271 million relating
to the Markets and International Banking restructuring. This cost
was offset by a gain of GBP577 million from a liability management
exercise whereby the Group exchanged GBP2.8 billion of new Lower
Tier 2 (LT2) instruments for GBP3.4 billion of existing LT2
instruments during March. A charge of GBP43 million was booked in
respect of the APS, which is accounted for as a credit derivative.
A total of GBP2.5 billion has now been expensed for the APS, which
equals the minimum fee payable. The Group took an additional
reserve of GBP125 million for PPI claims during Q1 and has now
accrued GBP1.2 billion for PPI claims, through new and pre-existing
reserves, of which GBP501 million has been paid out as of 31 March
2012.
As RBS's credit spreads tightened during the quarter, a charge
of GBP2,456 million was booked for own credit adjustments, compared
with a charge of GBP472 million in Q4 2011.
After these non-operating items the Group's pre-tax loss
totalled GBP1,404 million and loss attributable to shareholders was
GBP1,524 million. Excluding own credit adjustments, pre-tax profit
was GBP1,052 million.
Efficiency
Core expenses were up 12% from Q4 2011, but down 2% compared
with Q1 2011. This largely reflects the variability of staff
expense accruals, as accruals of deferred compensation are more
heavily weighted to the first quarter. Markets' compensation to
revenue ratio was 29%, compared with 33% in Q1 2011. Non-Core
expenses, meanwhile, were down 16%, leaving Group expenses in Q1
2012 at GBP3,984 million, up 9% from Q4 2011 but down 3% from Q1
2011.
Highlights (continued)
First quarter 2012 results summary (continued)
The Core Group's cost:income ratio in Q1 2012 was 60%, compared
with 62% in Q4 2011 and 55% in Q1 2011. The improvement compared to
Q4 2011 was driven by the improved income performance in Markets,
while Retail & Commercial's cost:income ratio weakened to 60%,
compared with 56% in Q4 2011.
Risk
Impairment losses totalled GBP1,314 million, down 22% from Q4
2011 and 33% from Q1 2011, with improvements across all divisions
except Ulster Bank. UK Retail and US R&C showed continuing
favourable credit quality trends. UK Corporate impairments were
lower than in Q4 2011, with fewer individual impairment charges.
Credit conditions in Ireland, however, remain challenging, and this
was reflected both in Core Ulster Bank impairments and in Non-Core,
which combined totalled GBP654 million in Q1 2012 compared with
GBP570 million in Q4 2011 and GBP1,294 million in Q1 2011.
Overall, Core Q1 2012 annualised impairments represented 0.8% of
loans and advances, compared with 0.9% in Q4 2011. For the Group as
a whole, annualised impairments represented 1.1% of loans and
advances, down from 1.3% in Q4 2011 and 1.5% in Q1 2011.
Balance sheet
The Group's funded balance sheet decreased by a further GBP27
billion in Q1 to GBP950 billion at 31 March 2012. Non-Core
continued to exceed its run-off targets, as funded assets decreased
GBP11 billion to GBP83 billion and a further GBP5 billion of signed
transactions are pending, principally the sale of the Group's
aviation finance business which is expected to complete by the end
of Q3 2012. Markets reduced funded assets by GBP13 billion,
reflecting the Group's decision to exit certain businesses and
reduce balance sheet consumption in a number of other
capital-intensive areas.
Since the end of 2008 the Group has reduced its funded balance
sheet by GBP276 billion.
Liquidity and funding
Since embarking on its Strategic Plan in 2009 RBS has targeted a
more stable deposit-led funding position with reduced dependence on
wholesale funding sources. During Q1 2012, the Group has achieved
significant progress towards this objective.
One key measure, the Group loan:deposit ratio, improved 200
basis points to 106% at the end of Q1 2012. This was driven by the
continuing run-off of Non-Core and accelerated deleveraging in
International Banking. The Core loan:deposit ratio improved
further, by 1%, to 93%. UK Retail customer deposits grew strongly,
up GBP2.3 billion in Q1 2012 and up 8% from Q1 2011, while
Corporate deposits were stable year-on-year.
Another key focus has been to lower the amount of short-term
wholesale funding while increasing the amount of liquidity
coverage. During Q1 2012, short-term wholesale funding decreased by
GBP23 billion to GBP80 billion. This represents c.8% of funded
assets, and is already within the Group's medium-term target for
short-term wholesale funding of less than 10%. Liquidity reserves
were GBP153 billion, or 1.9 times the short-term wholesale funding,
also above the Group's medium-term target of 150% coverage.
Highlights (continued)
First quarter 2012 results summary (continued)
Funding sources have been diversified, with usage of Moody's
rated US money market funds reduced from 15% of unsecured
short-term funding to less than 3%. The liquidity portfolio was
maintained above target levels at GBP153 billion, which covers
outstanding commercial paper and certificates of deposit five times
over.
Net term issuance during the quarter totalled GBP2.3 billion. In
addition, the Group issued GBP2.8 billion of lower tier 2
securities as part of a liability management exercise. The Group
plans no further unsecured term issuance over the balance of the
year.
The final tranche of notes issued under the Government's Credit
Guarantee Scheme will be repaid next week; as a result the Group
will have repaid a total of GBP75 billion of funding under the CGS
and the Special Liquidity Scheme.
Capital
The Group's capital position remains robust, with a Core Tier 1
ratio of 10.8% at 31 March 2012, compared with 10.6% at 31 December
2011. The increase reflects retained profits, net of changes in
fair value of debt, as well as a reduction in RWAs of GBP12 billion
in the quarter to GBP496 billion, excluding the effect of the APS.
The Core Tier 1 benefit arising from the APS was 85bp. RBS's Tier 1
leverage ratio was 16.3x at 31 March 2012.
Strategic Plan
Worst Medium-
Key Measures point 2011 Q1 2012 term target
============================================= =========== ======== ======== ============
Value drivers Core Core Core
* Return on equity (1) (31%)(2) 10.5% 11.0% >12%
* Cost:income ratio (3) 97%(4) 60% 60% <55%
Risk measures Group Group Group
* Core Tier 1 ratio 4%(5) 10.6% 10.8% >10%
* Loan:deposit ratio 154%(6) 108% 106% c.100%
* Short-term wholesale funding (STWF) GBP297bn(7) GBP102bn GBP80bn <10% TPAs
* Liquidity portfolio (8) GBP90bn(7) GBP155bn GBP153bn >1.5x STWF
* Leverage ratio (9) 28.7x(10) 16.9x 16.3x <18x
============================================= =========== ======== ======== ============
Notes:
(1) Based on indicative Core attributable profit taxed at standard rates
and Core average tangible equity per the average balance sheet (c.75% of
Group tangible equity based on RWAs at 31 March 2012); (2) Group return
on tangible equity for 2008; (3) Cost:income ratio net of insurance claims;
(4) Year ended 31 December 2008; (5) As at 1 January 2008; (6) As at October
2008; (7) As at December 2008; (8) Eligible assets held for contingent liquidity
purposes including cash, Government issued securities and other eligible
securities with central banks; (9) Funded tangible assets divided by total
Tier 1 capital; (10) As at June 2008.
Highlights (continued)
First quarter 2012 results summary (continued)
Preference dividends
On 26 November 2009, RBS entered into a State Aid Commitment
Deed with HM Treasury containing commitments and undertakings that
were designed to ensure that HM Treasury was able to comply with
the commitments to be given by it to the European Commission for
the purposes of obtaining approval for the State aid provided to
RBS. As part of these commitments and undertakings, RBS agreed not
to pay discretionary coupons and dividends on its existing hybrid
capital instruments for a period of two years. This period
commenced on 30 April 2010 for RBS Group instruments (the two year
deferral period for RBS Holdings N.V. instruments commenced on 1
April 2011). On 30 April 2012 this period ended for RBS Group
instruments. RBS has determined that it is now in a position to
recommence payments on the RBS Group instruments.
The Core Tier 1 capital impact of discretionary amounts that
will be payable over the remainder of 2012 on the RBS Group
instruments on which payments have previously been stopped is
c.GBP350 million. In the context of recent macro-prudential policy
discussions, the Board of RBS has decided to neutralise any impact
on Core Tier 1 capital through equity issuance. Approximately
GBP250 million of this is ascribed to equity funding of employee
incentive awards through the sale of surplus shares held by the
Group's Employee Benefit Trust, which is now substantially
complete. An additional c.GBP100 million will be raised through the
issue of new ordinary shares, which is expected to take place over
time during the second half of 2012.
The Directors have declared the discretionary dividends on
Series M, N, P, Q, R, S, and T non-cumulative dollar preference
shares of US$0.01 each for the three months to 30 June 2012, and
the discretionary dividend on the Series 2 non-cumulative Euro
preference shares of EUR0.01 for the 12 months to 30 June 2012.
These discretionary dividends as well as the discretionary
distributions on the RBSG/RBS innovative securities RBS Capital
Trust A, RBS Capital Trust B, RBS Capital Trust D, RBS Capital
Trust I, RBS Capital Trust II and RBS Capital Trust IV will be paid
on their scheduled payment dates in June 2012. Future coupons and
dividends on RBS Group hybrid capital instruments will only be paid
subject to, and in accordance with, the terms of the relevant
instruments.
Share consolidation
The Group's Annual General Meeting on 30 May 2012 will consider
resolutions which, if approved, will sub-divide and consolidate the
Group's ordinary shares. As the Group currently has a very large
number of ordinary shares in issue, a small movement in the share
price can result in large percentage movements and considerable
volatility in the Group's shares. The Board believes that the
sub-division and consolidation will result in a share price and
nominal value more appropriate for a company of the Group's size in
the UK market and may assist in reducing volatility, thereby
enabling a more consistent valuation.
Highlights (continued)
First quarter 2012 results summary (continued)
Disposals
The Group continues to target the second half of 2012 for the
sale of the first tranche in Direct Line Group through a public
flotation, subject to market conditions. Preparations for Direct
Line Group's separation have continued, with good progress on the
business's new name and identity and the appointment of Mike Biggs
as chairman.
Planning and integration work for the carve out and sale to
Santander of the RBS England and Wales and NatWest Scotland
branch-based businesses, along with certain SME and corporate
activities across the UK, continues to progress as expected.
These two disposals will substantially complete the series of
divestments the Group agreed to make to comply with EC state aid
requirements.
Customer franchises
RBS's first priority is to serve its customers well. Full year
2011 results of both UK Retail and Ulster Bank's customer charters
were published in Q1 2012, with UK Retail achieving 23 of the 25
goals and Ulster Bank achieving 28 of their 29 objectives. Further
improvements are still needed in service and in resolving
complaints fairly, consistently and promptly.
US Retail & Commercial completed the rollout of its core
customer commitments during the quarter.
Following the success of mobile applications launched in a
number of the Group's retail businesses during 2011, UK Corporate
launched a new iPhone application for business banking customers
during Q1 2012. The application allows customers to manage multiple
accounts without the need to log in and out, view an extended
transaction list and make intra-account transfers.
UK lending
RBS continues to support economic recovery in the UK and remains
committed to providing the credit UK businesses need in order to
achieve this.
In Q1 2012, RBS provided GBP14.3 billion of gross new loans and
facilities to UK businesses, of which GBP7.9 billion was to SME
customers, and GBP6.4 billion of overdraft renewals, including
GBP1.5 billion to SME customers. Gross new loans and facilities to
SMEs were up 18% from Q1 2011 and broadly flat to Q4 2011.
SME customers remained cautious in their economic outlook at the
start of 2012 but Q1 2012 did indicate a small improvement in
sentiment with Core drawn balances, excluding real estate and
construction, falling only 1% from Q4 2011. This compares with a 5%
quarterly fall into Q4 2011. Overdraft utilisation also increased
marginally in the quarter, although largely reflecting seasonal
fluctuations. Overall, utilisation remained below 50% as it has for
over two years. The Group has seen a steady increase in the demand
for invoice and asset financing by SME customers, with Core net
advances from these sources a significant component of gross
lending and up 6% year-on-year.
Highlights (continued)
First quarter 2012 results summary (continued)
Gross new loans and facilities provided to mid and large
corporates fell quarter on quarter, and compared with Q1 2011,
reflecting many businesses' decision to bring re-financing forward
into 2011 and also the continuing low level of merger &
acquisition activity in the market.
The UK Government's National Loan Guarantee Scheme (NLGS) was
launched in March, with support from a number of the UK's leading
banks, including RBS. RBS is the only bank to offer the 1% pricing
discount to customers for loans from GBP1,000 in value, thus
ensuring that we use NLGS to support as wide a range of customers
as possible. Six weeks after launch, the Group has provided 1,600
loans and asset finance facilities under the scheme, with two
thirds of these being for amounts under GBP25,000.
The Group also participates in the Regional Growth Fund,
Business Growth Fund and the Enterprise Finance Guarantee for UK
businesses. It also offers mortgages under the NewBuy scheme
announced at the start of March 2012 which provide first time
buyers, and other movers unable to raise a large deposit, with a
more affordable way to move onto, or up, the property ladder.
Gross new mortgage lending in Q1 2012 was GBP4.0 billion, with
the proportion of mortgages provided to first time buyers
increasing to almost a quarter during March 2012, largely
reflecting higher demand prior to the end of the stamp duty
holiday.
Outlook
Economic and regulatory challenges should continue throughout
2012.
Against this backdrop, we nonetheless expect Retail and
Commercial performance to remain resilient.
Markets, while off to a good start, will remain
market-dependent.
Group net interest margin outlook is stable with the first
quarter of 2012.
We expect to achieve further progress in our balance sheet
'safety and soundness' agenda. Non-Core is on track to hit asset
targets within our loss tolerance, and funding and liquidity
momentum should continue.
Contacts
For analyst enquiries:
Richard O'Connor Head of Investor Relations +44 (0) 20 7672 1758
For media enquiries:
Group Media Centre +44 (0) 131 523 4205
==================================================== ====================
Analysts' presentation
The Royal Bank of Scotland Group will be hosting a conference
call following the release of the results for the quarter ended 31
March 2012. The details are as follows:
Date: Friday 4 May 2012
Time: 9.00 am UK time
Webcast: www.rbs.com/ir
Dial in details: International - +44 (0) 1452 568 172
UK Free Call - 0800 694 8082
US Toll Free - 1 866 966 8024
Slides
Slides accompanying this document, which will not be formally
presented at the analysts' conference call, will be available on
www.rbs.com/ir
Financial supplement
A financial supplement will be available on www.rbs.com/ir This
supplement shows published income and balance sheet financial
information by quarter for the last nine quarters to assist
analysts for modelling purposes.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IMSAJMBTMBMMTJT
Natwest (LSE:NWG)
Historical Stock Chart
From Apr 2024 to May 2024
Natwest (LSE:NWG)
Historical Stock Chart
From May 2023 to May 2024