RBS 2004 Annual Report Download - page 77

section
01
Operating and
financial review
75
Annual Report and Accounts 2004
Operating and financial review
2004 compared with 2003
Non-interest income increased by £2,566 million, 23% to
£13,546 million and represents 60% of total income (2003 –
57%). Excluding acquisitions and at constant exchange rates,
non-interest income was up 13%.
Within non-interest income, fees and commissions receivable
increased by 17% or £941 million, to £6,634 million. This
reflected strong growth in lending, transmission and card
related fees together with increased insurance brokerage
and ATM income.
Fees and commissions payable increased by £617 million to
£1,954 million reflecting higher brokerage costs in CBFM due
to greater volumes of trading and structuring business and
fees paid in Retail Direct in support of higher volumes.
Commissions payable to brokers and intermediaries in the
general insurance business were up reflecting the acquisition
of Churchill in September 2003.
Dealing profits at £1,988 million were up £195 million, 11% on
2003. Growth was achieved across all customer segments and
product classes with further diversification of dealing revenues
in the US to compensate for lower residential refinancing
volume than the previous year.
Other operating income increased by 12% to £1,855 million.
This was principally due to higher gross income from rental
assets reflecting strong growth in operating lease assets.
General insurance premium income, after reinsurance, rose by
58%, or £1,821 million to £4,944 million reflecting organic
growth and the acquisition of Churchill. Excluding Churchill, the
growth was 17% reflecting volume growth in motor and home
insurance products.
2003 compared with 2002
Non-interest income increased by 20%, or £1,813 million, to
£10,980 million. Non-interest income represented 57% of total
income. Excluding general insurance premium income, non-
interest income rose by 9% or £643 million to £7,857 million
reflecting strong performances in CBFM, up 18% or £670
million and Retail Direct, up 17%, or £145 million.
Within non-interest income, fees and commissions receivable
increased by 8% or £444 million, to £5,693 million. This
reflected an increase in lending and transmission fees, and
good growth in insurance brokerage, cards related fees and
ATM income.
Fees and commissions payable increased by £372 million to
£1,337 million reflecting higher brokerage costs in CBFM, fees
paid in Retail Direct in support of higher volumes and
commissions payable to brokers and intermediaries following
the acquisition of Churchill.
Dealing profits at £1,793 million were up £331 million, 23% on
2002. This reflected strong growth in volumes in all product
areas. The performance in the first half of the year benefited
from the unusually high levels of demand for mortgage backed
securities in the US.
Other operating income increased by 17% to £1,650 million.
This was due to growth in income from rental assets
(comprising operating lease assets and investment properties)
and higher investment securities gains.
General insurance premium income, after reinsurance, rose by
60%, or £1,170 million to £3,123 million. Excluding the acquisition
of Churchill Insurance the growth was 25% or £490 million
reflecting volume growth in motor and home insurance products.
Non-interest income
2004 2003* 2002*
£m £m £m
Dividend income 79 58 58
Fees and commissions receivable 6,634 5,693 5,249
Fees and commissions payable (1,954) (1,337) (965)
Dealing profits 1,988 1,793 1,462
Other operating income 1,855 1,650 1,410
8,602 7,857 7,214
General insurance premium income
Earned premiums 5,357 3,627 2,442
Reinsurance (413) (504) (489)
4,944 3,123 1,953
13,546 10,980 9,167
* restated (see page 139)