RBS 2006 Annual Report Download - page 67
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RBS Group • Annual Report and Accounts 2006
66
Operating and financial review continued
Operating and financial review
Retail has delivered a good performance in 2006, achieving
4% growth in total income to £7,703 million. Contribution
before impairment losses was up by 5% to £5,210 million,
contribution by 2% to £3,867 million, and operating profit by
2% to £2,299 million.
We have advanced in personal banking, with good growth in
savings and investment products combined with effective cost
control and improvements in the quality of our lending book.
Credit card recruitment and unsecured personal lending
continues to be focused on lower risk segments, with reduced
emphasis on acquisition through direct marketing.
We have continued to expand our customer franchise, growing
our personal current account base by 232,000 in 2006 as a
result of our sustained focus on quality and customer service.
We continue to have the highest share of customers switching
current accounts from other banks, and are now joint leader in
the personal current account market. RBS is first and NatWest
is joint second among major high street banks in Great Britain
for the percentage of main current account customers that are
"extremely satisfied" overall.
Net interest income increased by 4% to £4,211 million, with
faster growth in deposits helping to mitigate lower unsecured
lending volumes. Net interest margin improved slightly in the
second half.
Retail
2006 2005
£m £m
Net interest income 4,211 4,068
Non-interest income 3,492 3,374
Total income 7,703 7,442
Direct expenses
– staff costs 1,349 1,307
– other 656 696
2,005 2,003
Insurance net claims 488 486
Contribution before impairment losses 5,210 4,953
Impairment losses 1,343 1,172
Contribution 3,867 3,781
Allocation of Manufacturing costs 1,568 1,517
Operating profit 2,299 2,264
£bn £bn
Total banking assets 108.8 104.3
Loans and advances to customers – gross
– mortgages 65.6 61.1
– personal 17.7 17.7
– cards 9.0 9.5
– business 16.9 16.3
Customer deposits* 87.1 79.8
Risk-weighted assets 71.9 74.5
* customer deposits exclude bancassurance