RBS 2011 Annual Report Download - page 15

RBS Group 2011 13
Key performance indicator Why? How are we doing? Original 2013 target Revised medium-term target
Return on
equity (ROE)(1)
We need to cover our
cost of capital in the
long-run and justify our
shareholders’ support.
Core >15% Core >12%
Cost:income ratio(2)
We cannot achieve our ROE
target without cost control
and margin re-pricing to
ensure income is generated
efficiently.
Core <50% Core <55%
Core Tier 1 ratio
We need a strong capital
ratio to meet society’s
expectations of a safer
banking system.
>8% >10%
Loan:deposit ratio
We want to put our balance
sheet on a more secure
footing by lending only as
much as we have in deposits.
c.100% c.100%
Short-term
wholesale funding (3)
We want to reduce our reliance
on short-term money market
funding to make our balance
sheet less volatile.
<£125bn <10% TPAs(6)
Liquidity portfolio(4)
We want to hold strong
liquidity buffers, to guard
against unexpected funding
difficulties.
c.£150bn <15% TPAs(6)
Leverage ratio(5)
We target a much lower
leverage ratio than before.
A <18x ratio means that our
assets are less than 18 times
as large as our equity capital.
<20x <18x
£155bn£155bn
16.9x
16.8x
£102bn
£130bn
108%
118%
10.6%
10.7%
60%
56%
10.5%
13.3%
(1) Based on indicative Core attributable profit taxed at standard rates and Core
average tangible equity per the average balance sheet (c.75% of Group tangible
equity based on risk-weighted assets at 31 December 2011).
(2) Cost:income ratio net of insurance claims.
(3) Excluding derivatives collateral.
(4) Eligible assets held for contingent liquidity purposes including cash,
Government issued securities and other eligible securities with central banks.
(5) Funded tangible assets divided by total Tier 1 capital.
(6) Third Party Assets.
Our business and our strategy
Our key targets
2010 2011
2010 2011
2010 2011
2010 2011
2010 2011
2010 2011
2010 2011