RBS 2004 Annual Report Download - page 87

section
01
Operating and
financial review
85
Annual Report and Accounts 2004
Operating and financial review
Manufacturing
2004 2003* 2002*
£m £m £m
Staff costs 794 671 571
Other costs 1,645 1,443 1,381
Total manufacturing costs 2,439 2,114 1,952
Analysis:
Group Technology 807 686 665
Group Purchasing and Property Operations 854 718 649
Customer Support and other operations 778 710 638
Total manufacturing costs 2,439 2,114 1,952
* prior periods have been restated to reflect the transfer in 2004 of certain activities, principally from RBS Insurance and Ulster Bank.
2004 compared with 2003
Manufacturing’s costs increased by £325 million, 15% to
£2,439 million.
Manufacturing is now supporting RBS Insurance and Ulster
Bank and of the £325 million increase, £82 million reflects
technology and property operations of Churchill (2004 – £96
million; 2003 – £33 million) and First Active (2004 – £19 million;
2003 – £nil) which were acquired in September 2003 and
January 2004 respectively.
The balance of the increase was required to support higher
business volumes, to upgrade the Group's regional property
portfolio and to invest in the Group Efficiency Programme
initiatives that are improving the Group's overall efficiency.
A number of initiatives aimed at improving efficiency and
customer service were introduced in the year, including a sales
prompt system on screens in NatWest branches and in RBS
and NatWest telephony: enhanced fraud prevention;
conversion of paper based branch reports to screen; image
and workflow capability in service centres; the introduction of
a new image enabled mortgage platform which has improved
the efficiency and quality of our service and the introduction of
an on-line customer query management system.
2003 compared with 2002
Manufacturing’s costs increased by 8% or £162 million, to
£2,114 million.
Group Technology costs increased by £21 million to £686
million. This reflected 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 providing
benefits across the Group and further investment opportunities
were identified which will lead to further efficiency benefits
across the Group.
The cost base of Group Purchasing and Property Operations
rose by 11% or £69 million to £718 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 £710 million,
11% or £72 million higher than the previous year. This reflected
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 was 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.