RBS 2009 Annual Report Download - page 6

RBS Group Annual Report and Accounts 20094
Group Chief Executive’s review
Stephen Hester, Group Chief Executive
dWatch or listen to
Stephen Hester at www.rbs.com/annualreport2009
MFor biographies
see pages 8-11
“RBS is being restructured and run to serve
customers well, to be safe and stable and to
restore sustainable shareholder value for all.”
Everyone at RBS is conscious of the
responsibilities that lie with us to ensure
recovery of the support the Bank has received.
In that context it is pleasing to be able to report
some big steps on our recovery path, which
I outline in this review.
Goals
Put simply, we have three overriding objectives:
•to serve our customers well;
•to restore the Bank to undoubted standalone strength; and
•to rebuild sustainable value for all shareholders and in so doing
to enable the UK Government to sell its shareholding profitably
over time.
The riskiest part of RBS’s journey is now behind us. There are four
years left of our recovery plan. Each year we expect to report strong,
measurable progress.
Strategy
Our strategy is simple and its concepts are well tested in this and other
industries. Its implementation, however, constitutes one of the largest
and most far-reaching company restructurings yet seen globally.
We aim to remake RBS as one of the world’s most admired, valuable
and stable universal banks. Driven by market-leading businesses in
large customer-driven markets, RBS targets 15%+ sustainable returns
on equity from a stable AA category risk profile and balance sheet.
We are concentrating RBS around the competitive strengths we enjoy in
each of our Core business Divisions. We are focusing on what we are
good at and making it better. At the same time we are reducing our
balance sheet, risk and funding exposures through massive
restructuring and are reducing both scale and scope in areas where we
are not naturally strong. We are re-engineering cost structures and have
embarked on overdue business investment. Cross-cutting management
and cultural change has also been comprehensive.
Results and progress
2009 saw pleasing progress toward our three main goals.
On every published measure the Group is ahead of our Strategic Plan
at this stage. However, the challenges of the starting point mean it
will take until the end of our Plan period for overall profitability to meet
our aspirations.
Customers
In 2009, our Core businesses sustained their market positions,
with customer numbers steady or growing across the Group’s major
retail and corporate business lines, thereby confirming the essential
health and value that underpins RBS’s businesses. This is also a
testimony to the efforts and endurance of our people. We can and
must do better still, however. The new RBS will be known for its
unswerving focus on customers.
Risk
We have also made substantial progress in restoring strength and
improved risk management to RBS – both under our own steam and
thanks to government support and improving markets. Our overall
balance sheet is already £696 billion below its peak and the funded
balance sheet is £351 billion lower, in constant currency terms; 70% of
our targeted reduction is behind us. Our funding and liquidity resilience
has dramatically improved. Our loan to deposit ratio is down from its 154%