RBS 2008 Annual Report Download - page 17

RBS Group Annual Report and Accounts 200816
Divisional review continued
Direct expenses increased by 30% to £483 million. This
reflected higher collection costs and continued investment in
the Group’s infrastructure in the region, including the
recruitment of additional experienced private bankers in RBS
Coutts Asia. Impairment losses increased by 44% to £171
million, largely as a result of pressures on the Indian consumer
finance book. The indicative ROE of Asia Retail & Commercial
Banking was -16%.
Volatile market conditions reduced demand among clients for
structured and equity fund products and led to a slowing in
affluent banking income. Despite this, Royal Preferred Banking,
which was launched in a number of countries during the year,
saw client numbers increase by 13% and assets under
management in the affluent segment grew by 3%. Royal Wealth
Management was launched in India, emphasising our
commitment to that market.
Credit cards and consumer finance metrics have continually
been reviewed over the period resulting in further tightening of
consumer lending policies. This has led to lower levels of card
and loan acquisition. There has also been a slowdown in the
number of card transactions. Despite this, the cards and
consumer finance business reported income growth of 20%.
Business banking saw strong growth across most regions with
revenue increasing by 28%, having performed particularly well
in India, Pakistan and China.
RBS Coutts, our wealth management business, continued to
deliver good income growth of 19% and strong levels of client
acquisition, up 5% in the year. Despite adverse financial
markets and significant levels of client de-leveraging, assets
under management in the international wealth business grew by
8%. We continued to rebrand Coutts’ businesses outside the UK
to RBS Coutts.
Total assets under management for the Division at 31 December
2008 were 7% higher than a year earlier at £21.2 billion, while
customer deposits were 40% higher, partly reflecting exchange
rate movements.
Strategic review
Asia Retail & Commercial Banking has established operations
in a number of fast growing and attractive markets. However,
the franchise is thinly spread and in general has not yet
achieved significant scale. The Group intends to exit its retail
and commercial activities in these areas. RBS Coutts will
remain a core business.
RBS Insurance
RBS Insurance is the UK’s second largest general
insurer and the largest personal lines insurer by
gross written premiums. It sells and underwrites
personal lines and SME insurance over the
telephone and internet, as well as through brokers,
RBS Group bank branches and partnerships.
Its brands include Direct Line, which sells general insurance
products direct to the customer, while the Churchill and
Privilege brands sell both directly to the customer and via
selected price comparison websites. In addition, NIG sells
general insurance products through independent brokers and
Green Flag is RBS Insurance’s provider of the rescue product.
Internationally, RBS Insurance sells general insurance, mainly
motor, in Spain, Germany and Italy under the Direct Line brand.