RBS 2004 Annual Report Download - page 9

Group review
07
Annual Review and Summary Financial Statement 2004
In 2004 we continued to achieve strong
growth across our activities, both
organically and through acquisitions.
We increased our total income by 18%
and improved our cost:income ratio to
40.8%. Our profit before tax, goodwill
amortisation and integration costs
increased by 15% to £8,101 million.
All our divisions increased their income
and their contribution to Group profit.
It is pleasing that we continued to deliver strong organic growth
across our businesses, on top of the strong performance in
previous years.
In addition to delivering strong organic growth, we completed
several acquisitions during 2004. The largest of these was the
US bank Charter One, which enabled Citizens to expand into
several adjacent Midwestern states around the important cities
of Cleveland, Chicago and Detroit. As a result of organic growth
and acquisitions, Citizens is now the 8th largest commercial
banking organisation in the United States, by deposits.
Through smaller acquisitions, we have established a presence
in credit card issuing and merchant acquisition in the United
States, and a strengthened position in Continental Europe.
These extensions to our capabilities enhance the options for
the Group to expand its activities outside the United Kingdom.
During 2004 we reached agreement to distribute credit cards
to the customers of The Kroger Co., the second largest
supermarket group in the United States, and to distribute
consumer loan products to the customers of Tchibo, a leading
German retailer.
All integrations of recently acquired businesses are on track.
Several major stages in the IT conversion of Churchill have
been completed successfully. Implementation of the plan to
integrate First Active is well under way and the initial stages in
the conversion of Charter One have already been implemented.
In each case, we are confident that we shall be able to deliver
the expected transaction benefits.
Our customers
We aim to deliver value for our customers. Our success in
achieving this in 2004 is shown by increased customer numbers
in each of our divisions, as well as by positive surveys of
customer satisfaction. In Retail Banking for NatWest, the option
to call branches direct and the appointment of over 1,000
additional branch staff have led to significant improvements in
customer satisfaction. During 2004 we again won many awards
for our products and services.
Our people
Our people are the key to our success. The continuing
commitment of our employees, even after their very hard work
in previous years completing the integration of NatWest, is
evident from the results of our 2004 Employee Opinion Survey.
In this survey, the response rate was 84%, our highest ever,
and the Group improved its score in 14 of the 15 categories
surveyed. We continue to invest in our employees through an
extensive range of development and leadership programmes.
As a result of organic growth and acquisitions, staff numbers
increased by 15,700 in 2004.
Our shareholders
Our principal goal is to create value for our shareholders.
A key measure of our success towards this goal is the rate of
increase in our dividend per share. This is the 12th consecutive
year in which we have increased our dividend per share by
15% or more. Our 2004 dividend per share was covered nearly
three times by adjusted earnings.
Business outlook
We continue to see strong growth in lending to commercial and
mid-corporate customers, and some recovery in demand from
large corporates, with consumers continuing to behave rationally
given the prevailing climate and stimuli in their particular
economies. Whilst in the UK context we would expect the
transition away from consumer credit-led activity to continue, the
outlook for employment and hence the economy remains positive.
In a number of respects, 2004 represented a continuation of
established themes within our results: strong income growth,
improving efficiency, good credit quality. Importantly however,
the continued development, both organic and through
acquisition, of our businesses has introduced further strength
and diversity in key areas.
As a consequence, we remain confident that we can deliver
superior value for our shareholders, our customers and our
people in 2005.
Sir Fred Goodwin, Group Chief Executive