RBS 2007 Annual Report Download - page 58

RBS Group • Annual Report and Accounts 2007
56
Business review continued
Business review
Wealth Management
2007 2006 2005
£m £m £m
Net interest income 569 496 439
Non-interest income 459 393 345
Total income 1,028 889 784
Direct expenses
– staff costs 338 299 258
– other 128 127 125
466 426 383
Contribution before impairment losses 562 463 401
Impairment losses 4 113
Contribution 558 462 388
Allocation of Manufacturing costs 145 144 139
Operating profit 413 318 249
£bn £bn £bn
Loans and advances to customers – gross 10.5 8.8 7.8
Investment management assets – excluding deposits 35.1 28.2 25.4
Customer deposits 33.9 28.4 25.4
Risk-weighted assets 7.5 6.4 6.0
2007 compared with 2006
Wealth Management’s offering of private banking and investment
services continued to deliver very strong growth in income, up
16% in 2007 to £1,028 million. Contribution grew by 21% to
£558 million and operating profit by 30% to £413 million.
We have continued Coutts & Co’s UK regional expansion
programme, and this has helped us to grow customer numbers
by 7% and income by 22%. Outside the UK, Coutts
International has been re-branded as RBS Coutts to leverage
the global brand strength of the Group in the continental
European and Asia-Pacific markets and RBS Coutts has
maintained its momentum in the Asia-Pacific region,
succeeding in growing customer numbers by 27% and income
by 51% in US dollar terms.
Growth in banking volumes contributed to a 15% rise in net
interest income to £569 million. Average loans and advances to
customers rose by 13% and average deposits by 17%.
Non-interest income grew by 17% to £459 million, reflecting
higher investment management fees and new product sales,
including new investment vehicles specialising in private equity
and natural resources, as well as continued growth in
underlying new business volumes, particularly in the UK and
Asia. Assets under management rose to £35.1 billion at 31
December 2007, up 24% from a year earlier.
Total expenses rose by 7% to £611 million, with direct expense
up 9% at £466 million, reflecting continued investment in the
UK and continental Europe along with a further significant
expansion of our team of private bankers in Asia. Total
headcount increased by 12%.
2006 compared with 2005
Wealth Management delivered strong growth, with total income
rising by 13% to £889 million. Contribution grew by 19% to
£462 million and operating profit by 28% to £318 million.
Wealth Management’s offering of private banking and
investment services delivered robust organic income growth in
2006. Our continuing investment in Coutts UK, Adam &
Company and our offshore businesses helped us to achieve an
overall increase in client numbers of 5%. Coutts UK customers
rose by 9%. Outside the UK, Coutts International was
successful in the Asia-Pacific region in recruiting additional
experienced private bankers. We grew customer numbers in
the region by 13% and income by 24%.
Growth in banking volumes contributed to a 13% rise in net
interest income to £496 million. Average loans and advances to
customers rose by 14% and average deposits by 10%, with net
interest margin maintained at close to 2005 levels.
Non-interest income grew by 14% to £393 million, reflecting
higher investment management fees and performance fees, as
well as strong growth in new business volumes, particularly in
the UK. Assets under management rose by 11%, to £28.2
billion at the year-end.
Total expenses rose by 9% to £570 million. In a highly
competitive recruitment market, headcount was successfully
increased by 7%, reflecting our continued investment in the UK
and further expansion in Asia.
Impairment losses returned to historic levels, following a
number of specific items in prior years.