RBS 2011 Annual Report Download - page 23

RBS Group 2011 21
Serving customers well
Our customers are at the heart of what we do.
We carried out over 5,000 hours of research,
listening to what customers want so we can
better deliver what they need.
In response to what they told us, we launched
‘Ahead for Business’. It is our promise to small
and medium-sized enterprises that “By doing
business with us, our customers can be
confident of realising their ambitions.”
We will honour this promise by providing
business expertise, sharing customers’
ambitions and making banking simple,
so they can focus on their business.
Our ‘Working with You’ initiative commits our
Business and Commercial relationship
managers, and their leaders, to spend at least
two days each year working in our customers’
businesses. That helps us to see customers’
challenges through their eyes and understand
their ambitions. We use that knowledge to tailor
the support and expertise we provide.
Between June and the end of the year,
we carried out over 4,600 of these visits.
In April, we spoke at the British Chambers of
Commerce conference. We promised them
that, “RBS will put proper, qualified bankers
back on the street.” One way we are doing
that is by investing in our people.
We launched our relationship manager
accreditation programme, endorsed by the
Chartered Banker Institute, to improve our
people’s knowledge and professionalism.
By the end of 2011, most of our relationship
managers had gained full accreditation under
the initial phase of the programme.
We helped more than 100,000 businesses
to start-up, by:
•providing two years’ free banking, business
planning software and an online start-up
course;
•answering more than 4,000 calls on our
Start-up Hotline, offering free advice and
a complementary business plan review
service; and
•partnering with Capital Enterprise and the
London Mayor’s office to sponsor business
boot camps, providing intensive support to
budding entrepreneurs.
For established businesses, we:
•made £100 million of new loans available
through our Franchise Fund;
•gave businesses access to £1 billion in the
fourth quarter through Lombard’s UK
Capital Expenditure Fund; and
•led the league tables in debt capital markets
and loan markets in deals done for larger
corporates.
In February 2010, we signed a lending
agreement with the UK Government. Under
Project Merlin, UK Corporate, GBM, Ulster
Bank and Wealth contributed to the total gross
new lending extended to UK businesses in
2011. We increased total gross new lending to
businesses by 22% in 2011 compared with
2010, with lending to SME customers up by
4%, exceeding our Merlin intentions. RBS
accounted for well over 40% of Merlin SME
lending, above our market share.
Building a sustainable risk profile
We redesigned our lending decision process,
which will reduce risks while improving
customer service and cutting costs. Expert
Lender simplifies credit underwriting while
Auto Decisions uses external risk data to
improve the quality and consistency of our
decisions for smaller value transactions.
We also reduced our real estate exposure.
Impairments grew by 3% to £785 million due
mainly to increased specific impairments.
Deposits increased by 1% to £100.9 billion,
helping our loan to deposit ratio to improve
from 110% to 106%.
Building sustainable value
Operating profit decreased by 3% to £1,414
million. Net interest income was broadly flat at
£2,585 million and the net interest margin
improved by seven basis points to 2.58%.
Non-interest income fell by 4% because of
lower GBM cross-sales and fee income,
although that was partly offset by increased
income from Invoice Finance and Lombard.
Our return on equity increased from 12.1% to
12.4%, due to slightly lower capital usage.
Chris Sullivan
Chief Executive,
UK Corporate
Performance highlights 2011 2010
Operating profit before impairment losses (£m) 2,199 2,224
Impairment losses (£m) (785) (761)
Operating profit (£m) 1,414 1,463
Return on equity (%) 12.4 12.1
Divisional review
UK Corporate