RBS 2008 Annual Report Download - page 10

9RBS Group Annual Report and Accounts 2008
Global Transaction Services
Global Transaction Services (‘GTS’) ranked among
the top five global transaction services providers in
2008, offering global payments, cash and liquidity
management, as well as trade finance, United
Kingdom and international merchant acquiring and
commercial card products and services. It includes
the Group’s corporate money transmission activities
in the United Kingdom and the United States.
GTS enjoyed a strong year. Income grew by 12% to £2,472
million, the growth rate being maintained in the second half of
the year, despite difficult market conditions. Direct expenses
were 9% higher at £594 million, mainly as a result of investment
in the franchise to support growth. Operating profit increased
by 12% to £1,339 million. On an indicative basis, the ROE of
GTS was 60%.
Growth was driven by a strong performance in cash management,
which provides clients with liquidity management, and
international and domestic payment services. Income rose 9%
in the year to £1,514 million with good growth in international
cash management markets and steadier growth in UK and US
domestic markets. The Division was successful throughout the
year in winning new international cash management mandates
from existing RBS Group clients due to the strength of the
international payments platform and network.
Trade finance executes and advises on customers’ trade-related
finance and risk requirements. It made significant progress, with
income continuing to grow strongly throughout the year, up 57%
on 2007. GTS has substantially improved its penetration into
the Asia-Pacific market, increasing trade finance income in the
region by 74%, and has expanded its supply chain finance
activities with an enhanced product suite.
Merchant services and commercial cards offers customers a
wide range of card issuing and acquiring solutions, products
and services. It delivered a 6% increase in income to £694
million. Acquiring volumes were up 23% in the year driven by
good growth in online volumes, although weaker consumer
confidence in the latter part of the year meant that average
transaction values decreased, slowing income growth.
Commercial cards income grew by 16%.
GTS has maintained its market share and is ranked fifth worldwide
for transaction banking in terms of both revenue, at constant
exchange rates and network. In the UK, it is number one for
CHAPS, cheque processing and BACS transmissions. Streamline
merchant services retained its number one position in the UK
market, handling more than one in three of all card transactions.
The GTS business successfully exploits economies of scale
and scope. On scale:
•International Cash Management processes over one billion
payments and collections annually;
•Domestic Cash Management processes three billion BACS
transactions in the UK each year;
•Trade Finance processes 1.1 million collections and letters
of credit annually; and
•our cards businesses process six billion transactions per
annum worth £233 trillion, peaking at approximately 500
transactions per second.