RBS 2003 Annual Report Download - page 91

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Annual Report and Accounts 2003
Operating and financial review
Overview of consolidated balance sheet
Total assets of £455.3 billion at 31 December 2003 were up
£43.3 billion, 11%, compared with 31 December 2002, reflecting
business growth.
Treasury bills and other eligible bills decreased by £6.6 billion,
58%, to £4.8 billion, reflecting liquidity management.
Loans and advances to banks rose £7.6 billion, 17%, to £51.9
billion. Growth in bank placings, up £1.7 billion, 7% to £25.4
billion, and reverse repurchase agreements and stock
borrowing (“reverse repos”), up £5.9 billion, 29%, to £26.5
billion, were due in part to a switch from treasury bills and
other eligible bills.
Loans and advances to customers were up £29.2 billion, 13%,
to £252.5 billion. Within this, reverse repos increased by 10%,
£2.1 billion to £24.1 billion. Excluding reverse repos, lending
increased by £27.1 billion, 13% to £228.4 billion with growth in
all divisions.
Debt securities increased by £12.9 billion, 19%, to £79.9
billion, principally due to increased holdings in Financial
Markets together with growth in Wealth Management’s
investment portfolio of investment grade asset-backed
securities, Citizens’ portfolio of US government and agency
securities and the acquisition of Churchill.
Equity shares rose £0.4 billion, 22% to £2.3 billion largely to
support an increase in Financial Markets equity derivatives
business.
Intangible fixed assets increased by £0.4 billion, 3% to £13.1
billion. Goodwill arising on the acquisitions made during the
year amounted to £1.5 billion, principally in respect of
Churchill, £0.8 billion and Citizens’ acquisitions, £0.4 billion.
This was partially offset by goodwill amortisation, £0.8 billion
and the adverse effect of exchange rate movements, £0.3 billion.
Tangible fixed assets were up £3.4 billion, 33% to £13.9 billion,
primarily due to growth in operating lease assets, up £1.1
billion, 20% to £6.4 billion, and the acquisition of various
investment properties.
Other assets rose by £1.5 billion, 9% to £18.4 billion, mainly
due to growth in the mark-to-market value of trading derivatives.
Long-term assurance assets and liabilities declined £5.6 billion,
61% to £3.6 billion, resulting from the transfer of the pension
managed fund business of NatWest Life to another third party
life company.
Deposits by banks increased by £12.6 billion, 23% to £67.3
billion to fund business growth, with repurchase agreements
and stock lending (“repos”) up £6.9 billion, 35%, to £27.0 billion
and inter-bank deposits up £5.7 billion, 16% to £40.3 billion.
Customer accounts were up £17.8 billion, 8% at £237.0 billion.
Within this, repos were up £2.0 billion, 8% to £27.0 billion.
Excluding repos, deposits rose by £15.8 billion, 8%, to £210.0
billion with growth mainly in CBFM, £6.4 billion, Retail Banking,
£4.6 billion, Citizens, £3.2 billion and Ulster Bank £0.9 billion. In
$ terms, Citizens grew US$11.7 billion, 23%, of which, US$3.2
billion related to acquisitions.
Debt securities in issue were up £7.1 billion, 21%, at £41.0
billion primarily to meet the Group’s funding requirements.
Subordinated liabilities were up £3.0 billion, 22% to £17.0 billion.
This reflected the issue of £1.6 billion (2,250 million) euro
denominated and £0.7 billion (US$1,100 million) US$ denominated
dated loan capital, and £1.1 billion sterling denominated and
£0.5 billion (US$850 million) US$ denominated, undated loan
capital. This was partially offset by the £0.4 billion (US$500
million and £40 million) redemption of dated loan capital and
the effect of exchange rate movements, £0.5 billion.
Minority interests increased by £0.9 billion, 48%, to £2.7 billion,
mainly reflecting the issues by subsidiaries of the Group of
US$850 million (£0.5 billion) Series I non-cumulative trust
preferred securities in May 2003 and US$650 million (£0.4
billion) Series II non-cumulative trust preferred securities in
December 2003.
Shareholders’ funds rose £1.0 billion, 4% to £28.1 billion
principally due to retentions of £0.8 billion and the issue of
£0.8 billion of equity shares in respect of scrip dividends and
the exercise of share options, partly offset by the redemption
of £0.4 billion non-equity preference shares in January 2003
and the adverse effect of exchange rate movements on share
premium account, £0.2 billion.