RBS 2003 Annual Report Download - page 83

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Operating and financial review
Annual Report and Accounts 2003
Manufacturing
2003 2002* 2001*
£m £m £m
Staff costs 625 536 484
Other costs 1,250 1,226 1,162
Total manufacturing costs 1,875 1,762 1,646
Analysis:
Group Technology** 651 613 572
Group Purchasing and Property Operations** 636 585 535
Customer Support and other operations 588 564 539
Total manufacturing costs 1,875 1,762 1,646
* prior periods have been restated following the transfer of certain activities from Corporate Banking and Financial Markets and Wealth Management
** prior periods have also been restated to reflect the transfer of certain business units within Manufacturing
2003 compared with 2002
Manufacturing’s costs increased by 6% or £113 million, to
£1,875 million.
Group Technology costs have increased by 6% or £38 million
to £651 million. This reflects business as usual cost growth and
a specific improvement programme, the majority of the cost of
which will be borne by Group Technology. This is already
providing benefits across the Group and further investment
opportunities have been identified which will lead to further
efficiency benefits across the Group in 2004 and again in 2005.
The cost base of Group Purchasing and Property Operations
rose by 9% or £51 million to £636 million, largely as a result of
the continuing upgrade of the property portfolio in major UK
centres to support the Group’s core business.
Customer Support and other operations costs were £588 million,
4% or £24 million higher than the previous year. This reflects
further expansion of business operations with increased
expenditure in customer support areas of Lending, Telephony,
Payments and Security. In telephony, the Royal Bank of Scotland
customer service proposition has been introduced to NatWest
customers who can now choose between speaking to their local
branch, to a customer service officer or using the automated
telephone service.
2002 compared with 2001
Total manufacturing costs at £1,762 million were 7% or £116
million higher than 2001.
The increase in costs reflected growth in business volumes
arising from customer accounts, mortgage applications,
personal loans and ATM transactions, and initiatives to
enhance customer service, particularly in NatWest telephony.
Manufacturing successfully completed the integration of NatWest
on to the RBS technology platform in October 2002, ahead of
schedule.