2011 annual results - Investors - RBS.com

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Analysis of results (continued) Year ended Quarter ended 31 December 31 December 31 December 30 September 31 December 2011 2010 2011 2011 2010 One-off and other items £m £m £m £m £m Fair value of own debt* 1,846 174 (370) 2,357 582 Asset Protection Scheme (906) (1,550) (209) (60) (725) Payment Protection Insurance costs (850) - - - - Sovereign debt impairment (1) (1,099) - (224) (142) - Amortisation of purchased intangible assets (222) (369) (53) (69) (96) Integration and restructuring costs (1,064) (1,032) (478) (233) (299) Gain/(loss) on redemption of own debt 255 553 (1) 1 - Strategic disposals** (104) 171 (82) (49) 502 Bank levy (300) - (300) - - Write-down of goodwill and other intangible assets (11) (10) (11) - (10) Other - Bonus tax (27) (99) - (5) (15) - Interest rate hedge adjustments on impaired available-for-sale Greek government bonds (169) - - (60) - - RFS Holdings minority interest (7) (150) (2) (3) (2) RBS Group – Annual Results 2011 (2,658) (2,312) (1,730) 1,737 (63) * Fair value of own debt impact: Income from trading activities 225 (75) (170) 470 110 Other operating income 1,621 249 (200) 1,887 472 Fair value of own debt (FVOD) 1,846 174 (370) 2,357 582 **Strategic disposals (Loss)/gain on sale and provision for loss on disposal of investments in: - RBS Asset Management’s investment strategies business - 80 - - - - Global Merchant Services 47 837 - - 837 - Life assurance business - (231) - - - - Non-Core project finance assets - (221) - - (221) - Goodwill relating to UK branch-based businesses (80) - (80) - - - Other (71) (294) (2) (49) (114) (104) 171 (82) (49) 502 Note: (1) The Group holds Greek government bonds with a notional amount of £1.45 billion. In the second quarter of 2011, the Group recorded an impairment loss of £733 million in respect of these bonds as a result of Greece’s continuing fiscal difficulties. This charge (c.50% of notional) wrote the bonds down to their market price as at 30 June 2011. In the third quarter of 2011, an additional impairment loss of £142 million was recorded to write the bonds down to their market price as at 30 September 2011 (c.37% of notional). In the fourth quarter of 2011, an additional impairment loss of £224 million was recorded to write the bonds down to their market price as at 31 December 2011 (c.21% of notional). 17
Analysis of results (continued) Key points 2011 compared with 2010 • One-off and other items amounted to a net charge of £2,658 million, including significant legacy costs for the Group: £850 million relating to PPI costs, £1,099 million in sovereign debt impairments, integration and restructuring costs of £1,064 million and a charge of £906 million for the APS. There was also a significant charge of £300 million for the bank levy. • A full year gain on FVOD of £1,846 million as a result of Group credit spreads widening partially offset the 2011 charges. This compares with a smaller gain of £174 million in 2010. • An impairment of £1,099 million was taken on the Group’s AFS bond portfolio in 2011 as a result of the decline in the value of Greek sovereign bonds. As of 31 December 2011, the bonds were marked at 21% of par value. • The APS fair value charge was £906 million in 2011. The cumulative charge for the APS was £2,456 million as at 31 December 2011. • Integration and restructuring costs remained broadly flat at £1,064 million, reflecting significant GBM restructuring in 2011. Q4 2011 compared with Q3 2011 • Q4 2011 integration and restructuring costs increased to £478 million, largely reflecting the GBM headcount reduction announced in 2011, as well as property exit costs. • An additional impairment of £224 million was taken in Q4 2011 as a result of the continuing decline in the value of Greek sovereign bonds. • The Group’s credit spreads narrowed in the fourth quarter resulting in a FVOD charge of £370 million. This compares with a widening of spreads in Q3 2011 and a significant gain of £2,357 million. • Q4 2011 included a charge of £300 million relating to the bank levy. For more details of this charge refer to page 19. Q4 2011 compared with Q4 2010 • In Q4 2011 the Group recorded a loss of £370 million on FVOD, as Group credit spreads tightened. Wider credit spreads in Q4 2010 resulted in a gain of £582 million. • The Q4 2011 APS fair value charge was £209 million compared with a charge of £725 million in Q4 2010, reflecting improved credit spreads in the quarter, as well as a further reduction in assets covered to £131.8 billion at 31 December 2011. • Integration and restructuring costs increased from £299 million in Q4 2010 to £478 million in Q4 2011 largely reflecting significant restructuring within GBM along with continued business and country exits. • A gain of £502 million on strategic disposals for Q4 2010 largely reflected the £837 million gain on the sale of Global Merchant Services, partially offset by losses on Non-Core project finance assets. RBS Group – Annual Results 2011 18
Page 3 and 4: Highlights RBS reports a 2011 Group
Page 5 and 6: Key financial data Year ended Quart
Page 7 and 8: Comment (continued) At present, we
Page 9 and 10: Comment (continued) 2011 Results (c
Page 11 and 12: Highlights 2011 results summary RBS
Page 13 and 14: Highlights 2011 results summary (co
Page 15 and 16: Highlights (continued) 2011 results
Page 17 and 18: Highlights (continued) 2011 results
Page 19: Contacts For analyst enquiries: Ric
Page 22 and 23: Contents RBS Group - Annual Results
Page 24 and 25: Forward-looking statements Certain
Page 26 and 27: Results summary RBS Group - Annual
Page 28 and 29: Results summary (continued) RBS Gro
Page 30 and 31: Summary consolidated income stateme
Page 32 and 33: Summary consolidated balance sheet
Page 34 and 35: Analysis of results (continued) Yea
Page 36 and 37: Analysis of results (continued) Yea
Page 40 and 41: Analysis of results (continued) Ban
Page 42 and 43: Analysis of results (continued) Bal
Page 44 and 45: Divisional performance (continued)
Page 46 and 47: UK Retail RBS Group - Annual Result
Page 48 and 49: UK Retail (continued) Key points (c
Page 50 and 51: UK Corporate RBS Group - Annual Res
Page 52 and 53: UK Corporate (continued) Key points
Page 54 and 55: Wealth RBS Group - Annual Results 2
Page 56 and 57: Wealth (continued) Key points (cont
Page 58 and 59: Global Transaction Services (contin
Page 60 and 61: Ulster Bank RBS Group - Annual Resu
Page 62 and 63: Ulster Bank (continued) Key points
Page 64 and 65: US Retail & Commercial (£ Sterling
Page 66 and 67: US Retail & Commercial (US Dollar)
Page 68 and 69: US Retail & Commercial (US Dollar)
Page 70 and 71: Global Banking & Markets RBS Group
Page 72 and 73: Global Banking & Markets (continued
Page 74 and 75: RBS Insurance RBS Group - Annual Re
Page 76 and 77: RBS Insurance (continued) Key metri
Page 78 and 79: RBS Insurance (continued) Key point
Page 80 and 81: Central items RBS Group - Annual Re
Page 82 and 83: Non-Core (continued) RBS Group - An
Page 84 and 85: Non-Core (continued) Third party as
Page 86 and 87: Non-Core (continued) Gross loans an
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Non-Core (continued) Key points (co
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Condensed consolidated statement of
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Commentary on condensed consolidate
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Average balance sheet RBS Group - A
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Average balance sheet (continued) R
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Condensed consolidated statement of
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Condensed consolidated cash flow st
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Notes (continued) 2. Accounting pol
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Notes (continued) 3. Analysis of in
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Notes (continued) 4. Loan impairmen
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Notes (continued) 6. Tax The actual
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Notes (continued) 9. Earnings per o
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Notes (continued) 10. Segmental ana
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Notes (continued) 10. Segmental ana
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Notes (continued) Total assets by d
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Notes (continued) 12. Financial ins
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Notes (continued) 14. Contingent li
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Notes (continued) 15. Litigation (c
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Notes (continued) 16. Investigation
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Notes (continued) 17. Other develop
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Risk and balance sheet management (
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Risk and balance sheet sheet manage
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Risk factors (continued) • The ac
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Additional information RBS Group -
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Appendix 1 Income statement reconci
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Appendix 1 Income statement reconci
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RBS Group - Annual Results 2011 App
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Appendix 2 Businesses outlined for
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Appendix 2 Businesses outlined for
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Appendix 3 Additional risk manageme
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Appendix 4 Asset Protection Scheme
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Glossary of terms Adjustable rate m
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Glossary of terms (continued) Comme
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Glossary of terms (continued) Debt
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Glossary of terms (continued) Forbe
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Glossary of terms (continued) Laten
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Glossary of terms (continued) Net i
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Glossary of terms (continued) Sale
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