RBS 2007 Annual Report Download - page 10

Chairman’s statement
Chairman’s statement
RBS Group • Annual Report and Accounts 2007
08
RBS enjoyed another successful year in 2007
despite some of the most challenging market
conditions in the financial and credit markets
for some time. The hard work of our employees
allowed us to deliver a strong financial and
operational performance as well as successfully
completing the acquisition of ABN AMRO, the
largest banking acquisition ever undertaken.
In 2007 the Group’s total income grew by 11%
to £31,115 million (2006 – £28,002 million) and
operating profit increased by 9% to £10,282 million
(2006 – £9,414 million), with adjusted earnings per
ordinary share rising 18% to 78.7p. The Board is
recommending a total dividend of 33.2p, 10%
higher than in 2006.
Acquisition of ABN AMRO
The Group entered 2007 focused on continued organic growth,
for which we had created a range of attractive options. When it
emerged that ABN AMRO was seeking alternative options for
that company’s growth, it was incumbent on us to consider
the implications and opportunities raised by that decision.
Following very thorough analysis and debate by the Board, and
consultation with shareholders, the Group decided to bid for
ABN AMRO as part of a consortium involving our partners
Banco Santander and Fortis.
It was, and remains the Board’s view that the acquisition of
ABN AMRO will deliver good, long-term value enhancement to
shareholders. The businesses which the Group has secured
will enable us to accelerate the implementation of our growth
strategy and also provide the Group with a significant
presence and options for expansion in the world’s most rapidly
growing economies.
Financial market and economic developments
Rising mortgage delinquencies and declining house prices
in the US combined to trigger a significant disruption to credit
markets in the second half of the year. One consequence has
been a decline in the value of a range of assets and resultant,
often substantial write-downs for banks around the world.
Another was to hasten a slowdown in the pace of activity in
some economies, especially in the US.
We have witnessed the benefits of the Group’s long-standing
focus on credit quality and the diversification of our income
streams which have allowed us to deliver record profits despite
the challenging environment.
Board of directors
There were no changes to the composition of the Board
during the year. This stability and continuity served the Group
well and is particularly important in the current environment.
I would like to thank my colleagues for their support and
commitment in 2007.
The environment
I was pleased that others have recognised the seriousness of
the Group’s approach to the environment. RBS was included in
the Carbon Disclosure Project’s Climate Disclosure Leadership
Index, while Innovest, a ratings agency, upgraded us to AAA
for our management of social and environmental risks and
opportunities, culminating in RBS being named as one of the
100 most sustainable companies globally at the Davos World
Economic Forum in 2008. Our commitment to the environment
is also good for our business and in 2007 we remained one of
the world’s leading financiers of renewable energy projects.
2008
We have a great deal to do in 2008. Markets will continue to
be demanding and we have a major integration to deliver.
But we also have an unparalleled set of opportunities and their
realisation will allow us to continue on the impressive growth
trajectory that has characterised RBS over the past decade.
Sir Tom McKillop
Chairman