RBS 2008 Annual Report Download - page 47

RBS Group Annual Report and Accounts 200846
Business review continued
2008 compared with 2007 – pro forma
Operating expenses, excluding purchased intangibles amortisation and
integration costs, fell by 4%, £702 million to £15,916 million, with cost
growth in the Group’s core retail and commercial banking franchises
offset by efficiency programmes and a significant reduction in Global
Banking & Markets staff costs.
The Group’s ratio of operating expenses (excluding one-off items, write-
down of goodwill and other intangible assets, purchased intangibles
amortisation, integration costs restructuring costs and share of shared
assets) to total income was 59.2% compared with 49.5% in 2007,
largely reflecting the impact on income of the year’s difficult market
conditions.
2008 compared with 2007 – statutory
Operating expenses increased by £40,091 million to £54,033 million,
primarily reflecting the write-down of goodwill and other intangible
assets of £32,581 million following a review of the carrying value of
goodwill and other purchased intangible assets. Cost growth in the
Group’s core retail and commercial banking franchises was offset by
efficiency programmes and a significant reduction in Global Banking &
Markets staff costs. The 2008 costs reflect a full year of the retained
ABN AMRO businesses in comparison with 76 days in 2007.
The Group’s ratio of operating expenses to total income was 208.9%
compared with 45.9% in 2007, largely reflecting the impact on income
of the year’s difficult market conditions and the write-down of goodwill
and other intangible assets.
Operating expenses
Pro forma (1) Statutory
2008 2007 2008 2007
£m £m £m £m
Administrative expenses:
Staff costs 7,726 9,345 10,241 7,338
Premises and equipment 2,084 1,809 2,593 1,703
Other administrative expenses 4,315 3,767 5,464 2,969
Total administrative expenses 14,125 14,921 18,298 12,010
Depreciation and amortisation 1,791 1,697 3,154 1,932
Write-down of goodwill and other intangible assets — —32,581 —
15,916 16,618 54,033 13,942
Note:
(1) Pro forma excludes one-off items, write-down of goodwill and other intangible assets, purchased intangibles amortisation, integration costs, restructuring costs and share of shared assets.