RBS 2007 Annual Report Download - page 59

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RBS Group • Annual Report and Accounts 2007
Business review
Ulster Bank
2007 2006 2005
£m £m £m
Net interest income 979 873 759
Non-interest income 318 252 244
Total income 1,297 1,125 1,003
Direct expenses
– staff costs 302 254 217
– other 159 131 122
461 385 339
Contribution before impairment losses 836 740 664
Impairment losses 104 104 95
Contribution 732 636 569
Allocation of Manufacturing costs 219 215 208
Operating profit 513 421 361
£bn £bn £bn
Total assets 54.8 44.5 37.2
Loans and advances to customers – gross
– mortgages 18.3 15.0 13.2
– corporate 24.8 19.6 13.7
– other 4.0 3.6 2.6
Customer deposits 21.8 18.1 15.9
Risk-weighted assets 36.0 29.7 23.8
Average exchange rate – /£ 1.461 1.467 1.463
Spot exchange rate – /£ 1.361 1.490 1.457
2007 compared with 2006
Ulster Bank maintained its success in building its personal and
corporate banking business in the island of Ireland, with total
income rising by 15% to £1,297 million, contribution by 15% to
£732 million and operating profit by 22% to £513 million. These
results reflect solid sales growth across all activities, driven by
an enhanced range of innovative products and an expanded
distribution network.
Net interest income increased by 12% to £979 million,
reflecting good growth in both loans and deposits. Average
loans and advances to customers increased by 24%, with
particular strength in business lending, with a 29% increase
spread across a variety of industrial sectors. Our mortgage
book also saw very good growth in 2007, in spite of the
slowdown in the housing market, with average balances up
17%. We achieved particular success in attracting
remortgagers with our Switcher package. We were also
successful in the current account switching market, winning
100,000 new current account customers during the year. This,
together with new product launches such as the eSavings
Account and Reward Reserve savings accounts, contributed to
a 17% increase in average customer deposits. Net interest
margin tightened, reflecting more competitive market
conditions and increased funding costs.
Non-interest income rose by 26% to £318 million, driven by
strong performances in Corporate Markets and credit cards.
We successfully launched our new wealth business in the
course of the year.
Total expenses increased by 13% to £680 million, as we
continued our investment programme to support the future
growth of the business. We continued to expand our branch
and business centre footprint and recruited additional
customer-facing staff, particularly in Corporate Markets.
Despite tighter housing market conditions, arrears trends saw
no deterioration in 2007 and impairment losses remained
stable at £104 million.