RBS 2004 Annual Report Download - page 72

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Operating and financial review
Operating and financial review continued
acquisition of NatWest. Total costs for the integration programme
were £2.3 billion. Since 6 March 2000 the integration initiatives
have contributed a cumulative £5.6 billion to the Group.
Earnings and dividends
Basic earnings per ordinary share increased by 9%, from
70.6p to 76.9p. Earnings per ordinary share, adjusted for
goodwill amortisation, integration costs and the dividend on
Additional Value Shares (“AVS”), increased by 7%, from 146.3p
to 157.2p.
The final dividend of 55p per share amounting to £1.5 billion
was paid on 1 December 2003 to the holders of the AVS
issued in connection with the acquisition of NatWest. A total of
£1 per AVS amounting to £2.7 billion in aggregate was paid
over three years to shareholders in accordance with the
original schedule.
The total ordinary dividend for the year was 50.3p per ordinary
share an increase of 15%. The total dividend was covered 3.1
times by earnings before goodwill amortisation, integration
costs and the AVS dividend.
Balance sheet
Total assets were £454 billion at 31 December 2003, 11%
higher than total assets of £411 billion at 31 December 2002.
Lending to customers, excluding repurchase agreements and
stock borrowing (“reverse repos”), increased by 13% or £27
billion to £228 billion. Customer deposits, excluding
repurchase agreements and stock lending (“repos”), grew by
8% or £16 billion to £210 billion.
Capital ratios at 31 December 2003 were 7.4% (tier 1) and
11.8% (total), against 7.3% (tier 1) and 11.7% (total) at 31
December 2002.
Profitability
The adjusted after-tax return on ordinary equity was 20.1%
compared with 18.3% for 2002. This is based on profit
attributable to ordinary shareholders before goodwill
amortisation, integration costs and the AVS dividend, and
average equity shareholders’ funds.
Acquisitions
In January 2003, Citizens completed the acquisition of
Pennsylvania-based commercial bank, Commonwealth
Bancorp, Inc. for a cash consideration of US$450 million.
In April 2003, Citizens announced the acquisition of Port
Financial Corp., the holding company of the Massachusetts
savings bank, CambridgePort Bank for a cash consideration of
US$285 million. This transaction was completed on 31 July 2003.
In May 2003, RBS announced the acquisition of Nordisk
Renting AB, a Swedish leasing company, for a cash
consideration of 104 million. This transaction was completed
on 2 June 2003.
In May 2003, RBS announced the acquisition of the credit card
and personal loans portfolios of Frankfurt-based Santander
Direkt Bank for a cash consideration of 486 million. This
transaction was completed on 31 July 2003.
In June 2003, RBS announced the acquisition of Churchill
Insurance Group PLC for a cash consideration of £1.1 billion.
This transaction was completed on 1 September 2003.
In July 2003, Citizens announced the acquisition of Community
Bancorp, Inc., the holding company for Community National
Bank, for a cash consideration of US$116 million. This transaction
was completed on 31 October 2003.
In September 2003, Citizens announced the acquisition of Thistle
Group Holdings, Co., the holding company for Roxborough
Manayunk Bank, for a cash consideration of US$136 million.
This transaction was completed on 5 January 2004.
In October 2003, Coutts Bank (Switzerland) Limited announced
the acquisition of a Swiss private bank, Bank von Ernst & Cie
AG, for a cash consideration of Swiss Francs 500 million. This
transaction was completed on 28 November 2003.
In October 2003, RBS announced that it had agreed terms for
a recommended acquisition of First Active plc, for a cash
consideration of 887 million. This transaction was completed
on 5 January 2004.
On 3 February 2004, RBS announced that it had agreed terms
with People’s Bank of Connecticut to purchase their credit card
portfolio. This transaction was completed on 5 March 2004.
Disposals
In May 2003, RBS announced the sale of the Miami-based
Latin American private banking operations of Coutts Group to
Santander Central Hispano. The cash consideration was
US$81 million. This transaction was completed on 31 July 2003.