RBS 2010 Annual Report Download - page 6

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Group Chief Executive’s review
Stephen Hester, Group Chief Executive
dWatch or listen to
Stephen Hester at www.rbs.com/AnnualReport
MFor biographies
see pages 226-229
Two years on from the global financial crisis,
our recovery is ahead of schedule. In 2010 we
made big strides in risk reduction and an early
return to operating profits. We have much work
still to do and there are significant obstacles
still to overcome. We aim for continued
progress this year.
Our goals
Our overriding focus is on achieving three things:
•to serve 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 holding profitably over time.
Strategy
RBS’s strategy, announced in 2009, remains our best route to achieving
these goals. It is serving us well in meeting the twin challenges of
continuing change in our external environment and the need for radical
internal restructuring at RBS.
The new RBS is built upon customer franchises with substantial
competitive strengths in their respective markets, our “Core”
businesses. Each is being reshaped to provide improved and enduring
performance. The Core businesses all generate strong value in their
own right, and a still stronger, balanced and more valuable mix together.
The business shape and new management disciplines we are
establishing can drive RBS to success as a leading bank in its markets
for many years to come.
The weaknesses uncovered by the financial crisis – of leverage, risk
concentration and business stretch – are being fixed. The successful
and continuing run-down and sale of assets which weakened us, or
businesses where we have no competitive advantage, illustrates this.
These assets were placed in our Non-Core Division and give a focus to
our risk reduction objectives. We are changing a balance sheet which
could not withstand the crisis and, importantly, the culture that created it.
2010 Results against goals
2010 was a year of good progress and the Group is on or ahead of its
published goals for this stage of our Plan. There have been and still are
challenges to face into, whether economic, regulatory or political. Our
resilience to such events is increasing steadily.
Customers: We are completely clear – success in serving customers
is the key to our business future. Overdue investment in service,
technology and a changing cultural approach is starting to roll out
across RBS. Most of our Core franchises showed gains on a variety of
customer measures during the year though we are conscious that much
remains to be done. It will take time for our actions to have full effect,
in particular where business restructuring has been most marked.
In each of our retail businesses we have re-energised and invested
in our customer offering around the organising thought of ‘helpful
banking’. The proposition in each market is tailored to suit local
customers: NatWest has ‘Helpful Banking’; RBS has ‘Here for You’;
Citizens has ‘Good Banking is Good Citizenship’, and; Ulster Bank
has ‘Help For What Matters’. This is supporting improved customer
attraction and retention and has resonated positively with staff,
customers, and the broader communities we serve.
Risk: Excellent progress has been made on the journey towards bringing
RBS’s risk profile in line with the highest standards of our industry.
Our funding and liquidity profile is much improved and no longer an
outlier for our industry. Non-Core assets are down a further £63 billion,
the loan-to-deposit ratio is 117%, down from 154% at peak and our
Core businesses now take in over £1 of deposits for every £1 of loans
RBS Group 2010