RBS 2010 Annual Report Download - page 109

Commentary on consolidated balance sheet - pro forma
2010 compared with 2009
Total assets of £1,452.6 billion at 31 December 2010 were down £69.8
billion, 5%, compared with 31 December 2009. This principally reflects
the continuing planned disposal of Non-Core assets, together with a
reduction in the level of debt securities and mark-to-market value of
derivatives in Global Banking & Markets.
Cash and balances at central banks were up £5.5 billion, 11%, to £57.0
billion due to an improvement in the Group's structural liquidity position
during 2010.
Loans and advances to banks increased by £16.6 billion, 20%, to £100.5
billion. Reverse repurchase agreements and stock borrowing (‘reverse
repos’) were up £7.5 billion, 21%, to £42.6 billion and bank placings rose
£9.1 billion, 19%, to £57.9 billion, primarily as a result of the investment of
surplus liquidity in short-term assets.
Loans and advances to customers were down £40.4 billion, 7%, at
£555.3 billion. Within this, reverse repurchase agreements were up £11.5
billion, 28%, to £52.5 billion. Customer lending decreased by £51.9 billion
to £502.7 billion or £48.9 billion before impairment provisions. This
reflected planned reductions in Non-Core of £39.7 billion along with
declines in Global Banking & Markets £16.7 billion, US Retail &
Commercial, £2.6 billion and Ulster Bank, £2.0 billion. These were
partially offset by growth in UK Retail, £5.4 billion, Wealth, £2.4 billion
and Global Transaction Services, £1.7 billion, together with the effect of
exchange rate and other movements, £2.6 billion.
Debt securities were down £31.6 billion, 13%, to £217.5 billion driven
mainly by reductions in Global Banking & Markets.
The value of derivative assets were down £11.1 billion, 3%, to £427.1
billion, primarily reflecting a decrease in interest contracts, movements in
five to ten year interest yields, and the combined effect of currency
movements, with Sterling weakening against the dollar but strengthening
against the Euro.
The reduction in assets and liabilities of disposal groups resulted from
completion of disposals of certain of the Group’s Asian and Latin
American businesses, and substantially all of the RBS Sempra
Commodities JV business.
Deposits by banks declined £55.0 billion, 36%, to £98.7 billion, with
reduced inter-bank deposits, down £49.7 billion, 43%, to £65.9 billion and
lower repurchase agreements and stock lending (‘repos’), down £5.3
billion, 14%, to £32.7 billion.
Customer accounts rose £28.1 billion, 6%, to £510.7 billion. Within this,
repos increased £13.7 billion, 20%, to £82.1 billion. Excluding repos,
customer deposits were up £14.3 billion, 3%, to £428.6 billion, reflecting
growth in UK Corporate, £12.2 billion, Global Transaction Services £7.8
billion, UK Retail, £7.0 billion, Ulster Bank, £1.7 billion and Wealth, £0.8
billion, together with exchange rate and other movements of £3.0 billion.
This was partially offset by decreases in Global Banking & Markets, £8.3
billion, US Retail & Commercial, £4.0 billion and Non-Core, £5.9 billion.
Debt securities in issue were down £28.0 billion, 11% to £218.4 billion.
Reductions in the level of certificates of deposit and commercial paper in
Global Banking & Markets were partially offset by a programme of new
term issuances totalling £38.4 billion.
Subordinated liabilities decreased by £4.5 billion, 14% to £27.1 billion.
This reflected the redemption of £2.6 billion undated loan capital, debt
preference shares and trust preferred securities under the liability
management exercise completed in May, together with the conversion of
£0.8 billion US dollar and Sterling preference shares and the redemption
of £1.6 billion of other dated and undated loan capital, which were
partially offset by the effect of exchange rate movements and other
adjustments of £0.5 billion.
The Group’s non-controlling interests decreased by £0.8 billion, 36%, to
£1.4 billion, primarily reflecting the disposal of the majority of the RBS
Sempra Commodities JV business, £0.6 billion, and the life assurance
business, £0.2 billion.
Owner’s equity decreased by £2.6 billion, 3%, to £75.1 billion. This was
driven by the partial redemption of preference shares and paid-in equity,
£3.1 billion less related gains of £0.6 billion, the attributable loss for the
period, £1.1 billion, together with an increase in own shares held of £0.7
billion and higher losses in available-for-sale reserves, £0.3 billion.
Offsetting these reductions were the issue of £0.8 billion ordinary shares
on conversion of US dollar and Sterling denominated non-cumulative
preference shares classified as debt and exchange rate and other
movements, £1.2 billion.
107RBS Group 2010
Business review