RBS 2003 Annual Report Download - page 7

Annual Report and Accounts 2003
05
Group Chief Executive’s review
In 2003 we continued our focus on
delivering strong growth organically and
through acquisitions. Customer numbers
rose across all our divisions. Our
cost:income ratio, a key measure of our
efficiency, improved to 42%. Our profit
before tax, goodwill amortisation and
integration costs increased by 11%,
and our adjusted earnings per share
increased by 11%.
These are pleasing figures, the more so since they demonstrate
a consistently strong performance over the last decade. The
strength and diversity of the Group we are building gives us
continued scope for growth and creates many strategic options.
Good organic growth last year is indicative of the focus and
commitment to building our existing businesses. All our divisions,
with the exception of Wealth Management, increased their
contribution to the Group, with particularly strong performances
from RBS Insurance and Retail Direct which achieved growth of
32% and 25% respectively.
We announced eight acquisitions during 2003. Some of these
were concentrated on product areas where we saw considerable
scope for both growth and efficiency improvement. The
acquisition of Churchill Insurance Group, completed in September
2003, positions RBS Insurance as the UK’s second largest
general insurer. The purchase of First Active plc by Ulster Bank,
completed in January 2004, has greatly strengthened our
presence in financial services in Ireland.
Other acquisitions reinforced the geographic reach of the Group
in Europe and the US. Citizens made three more bank
acquisitions and is now the 13th largest commercial banking
organisation in the US by deposits. The purchase of the credit
card and personal loans portfolios of Santander Direkt in
Germany expanded our European consumer finance operation.
Coutts enhanced its position in international wealth management
with the acquisition of Bank von Ernst in Switzerland.
We have kept in place many of the successful cross-business
teams established during the NatWest integration. With the skills
built up during that process, they have now turned their attention
to further improving our service to customers and our efficiency.
Our customers
It has been particularly pleasing to see again good growth in
customer numbers across all our businesses. We are proud of
the large numbers of awards our businesses have won this year
for products and services.
We are the only bank in the UK to give our customers the option
to call their local branch. We believe that what matters is that
customers have choice; some prefer to use telephone or internet
banking while others prefer to speak to one of our customer
service advisers who are all based in the UK, Europe or the US,
close to the customers they serve.
Our people
Our people have delivered everything that has been asked of
them and more, particularly during the integration of NatWest.
We are committed to retaining their trust and loyalty, meeting
their development needs and are complementing our extensive
range of training with new and enhanced leadership
programmes. We believe our staff are the key to our growth
and that they should share in the success they have helped to
create. We have again set the staff profit share at 10% of basic
salaries. As a result of growing volumes across our businesses,
we have increased our staff numbers again this year.
Our shareholders
We made the final Additional Value Share payment of £1.5 billion,
meaning that a total of £2.7 billion has been returned to share-
holders by this means, following the acquisition of NatWest.
Our underlying capital generation continues to be good. We
have the capital strength to grow our existing businesses and
take advantage of acquisition opportunities when they arise
and when we see value for our shareholders.
By maintaining our focus on the fundamentals of growing income,
improving efficiency and maintaining credit quality, we are
confident that we can continue to deliver superior sustainable
value to our shareholders.
Fred Goodwin, Group Chief Executive