RBS 2008 Annual Report Download - page 11

RBS Group Annual Report and Accounts 200810
Divisional review continued
On scope, GTS is an integral part of the offering of GBM, and
our regional commercial and corporate businesses, which, in
turn, introduce customers to GTS.
Strategic review
GTS remains a strategically attractive business for RBS,
providing important working capital and payment solutions to
the Group’s customers and substantial scope remains to cross-
sell global transaction services to our corporate and financial
institutions clients, particularly those in the UK. GTS plans to
right-size its global network consistent with developing Europe
as its core base, it will retain the capability to continue to serve
both locally and globally all multi-national customers who are at
the heart of the core GBM proposition, whilst at all times
maintaining service levels during the change. The business also
plans to increase efficiency through development of a lower
cost front and back-office operating model and explore joint
ventures for growth and selective disposals.
Although the year ahead will present challenges as slowing
global growth affects trade flows and transaction volumes,
GTS remains an attractive component of the Group’s portfolio
for the future.
UK Retail & Commercial Banking
UK Retail & Commercial Banking (‘RBS UK’)
comprises retail, corporate and commercial banking
and wealth management services. It operates
through a range of channels including on-line and
fixed and mobile telephony, and through two of the
largest networks of branches and ATMs in the UK.
In the retail market, RBS UK serves over 15 million personal
customers through the RBS and NatWest brands. It offers a full
range of banking products and related financial services
including mortgages, bancassurance products, deposit
accounts, and credit and charge cards.
RBS UK holds a leading market share across all of the business
& commercial and corporate sectors. Through its network of
relationship managers it distributes a full range of banking,
finance and risk management services, including market-leading
invoice finance and asset finance offerings.
The UK wealth management arm offers high quality private
banking and investment services through the Coutts, Adam &
Company, RBS International and NatWest Offshore brands.
The results for the year reflect a weaker second half with rapidly
deteriorating economic conditions in the UK. Total income grew
modestly, up 2% on 2007 to £10,814 million. A consistent theme
across the businesses was the weakness of non-interest
income, which was down 5%, reflecting generally lower demand
for a range of products. Direct expenses increased by 6% to
£3,171 million and impairment losses by 44% to £1,964 million,
with a marked deterioration in the second half of the year.
Operating profit declined by 18% to £3,283 million. The
indicative ROE of UK Retail & Commercial Banking was 18%.
UK Retail Banking
Total income was unchanged on the year at £6,794 million.
Direct costs rose modestly, by 1% to £1,832 million.
Impairments increased by 8% to £1,281 million. Operating profit
declined by 12% to £1,764 million.
In a testing environment, Retail Banking supported customers
by maintaining the availability of lending, while managing risk.
•Business Banking continued to grow, maintaining market
leadership with a share of 26%. Loans and advances to small
business customers were up 7% despite a significant
contraction in demand.