RBS 2003 Annual Report Download - page 148

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Notes on the accounts
1 Dealing profits
2003 2002 2001
£m £m £m
Foreign exchange (1) 540 447 450
Securities
Equities (2) 24 18 10
Debt (3) 774 644 682
Interest rate derivatives (4) 455 353 284
1,793 1,462 1,426
Dealing profits include interest income and expense recognised on trading-related interest-earning assets and interest-bearing liabilities
and exclude direct costs and administrative expenses.
Notes:
(1) Includes spot and forward foreign exchange contracts and currency swaps, futures and options and related hedges and funding.
(2) Includes equities, equity derivatives, commodity contracts and related hedges and funding.
(3) Includes debt securities and related hedges and funding.
(4) Includes interest rate swaps, forward rate agreements, interest rate options, interest rate futures and credit derivatives and related hedges and funding.
2 Administrative expenses – staff costs
2003 2002 2001
£m £m £m
Wages, salaries and other staff costs 3,997 4,001 3,667
Social security costs 248 239 212
Pension costs (see Note 3) 273 232 180
4,518 4,472 4,059
The average number of persons employed by the Group during the year, excluding temporary staff, was 119,500 (2002 – 113,500;
2001 – 99,400).
3 Pension costs
The Group operates a number of pension schemes throughout the world. The main schemes are defined benefit schemes whose
assets are independent of the Group’s finances. The total pension cost for the Group was as follows:
2003 2002 2001
£m £m £m
Main UK scheme 200 187 150
Other Group schemes 73 45 30
273 232 180
At 31 December 2003, there was a pension cost prepayment
of £112 million and accrual of £18 million (2002 – prepayment
of £136 million and accrual of £17 million; 2001 – prepayment
of £115 million and accrual of £33 million).
On the acquisition of NatWest in March 2000, a surplus of
£1,070 million on its major schemes was recognised in the
consolidated balance sheet, and is being amortised over the
average future service life of members of the schemes. The
unamortised balance as at 31 December 2003 was £755
million (2002 – £838 million) before tax and £529 million (2002
– £587 million) after tax. The unamortised balance before tax is
included in ‘Other assets’.
The Group’s two main UK pension schemes, The Royal Bank of
Scotland Staff Pension Scheme and the National Westminster
Bank Pension Fund, merged on 1 April 2002 to form The Royal
Bank of Scotland Group Pension Fund. Scheme valuations are
carried out by independent professionally qualified actuaries to
determine pension costs, using the projected unit method; any
imbalance between assets and liabilities is adjusted over the
average future service life of members of the scheme. The
assumptions that have the most significant effect on the results
of the valuations are those relating to the valuation rate of
interest and the rates of increases in salaries and pensions.
Notes on the accounts