RBS 2011 Annual Report Download - page 24

22 RBS Group 2011
Serving customers well
Our Wealth business is founded on good
advice and high levels of service. That is what
our clients want. We will be:
•Human – when our clients need advice or a
service they should be able to speak to us,
either in person or by telephone.
•Cosmopolitan – they will find us in many of
the world’s great cities, old and new.
•Connected – we operate across much of the
globe and our increasingly sophisticated
technology allows clients to reach us and us
to serve them.
It might seem odd that a business that relies
on personal service places so much emphasis
on the role technology plays in what we do.
However, our desire to provide exceptional
service was in danger of being let down by
systems that were past their best. That is why
we invested in the Avaloq platform.
With Avaloq, we will have a single source
of information about clients. That allows us
to work more effectively as a team. More
importantly, it should free resources so that
we can devote more time to the personal
service clients value.
In turbulent markets, many clients want to
make sure they preserve their wealth. Coutts’
managed portfolios are one of the most
consistent in the industry. Part of the
performance of our lower risk mandates
reflected decisions we took. These included:
•a reduction in euro exposure; and
•diversification into gold and longer duration
high quality bonds.
We know that many of tomorrow’s clients will
be entrepreneurs. That means we need to
understand what makes them tick. And they
need to know we are committed to them and
celebrate their achievements.
•We turned the windows of our head office in
The Strand into a giant billboard to mark
successful entrepreneurs.
•We sponsored the Entrepreneur of the Year
Award.
•Our report on the role of non-executive
directors was another stage in our thought
leadership activities.
Many of our clients are philanthropists. Coutts
runs forums for philanthropy where clients can
share ideas and experiences. These insights
can help clients to plan a giving strategy that
makes a real difference.
Building a sustainable risk profile
We remained an important source of funds
for the Group. Customer deposits grew
by 3% to £38.2 billion in a competitive
environment and our loan:deposit ratio
declined modestly to 44%.
Building sustainable value
We took a number of steps to prepare Wealth
for the future.
•We began to implement our strategic plan,
focusing on the Private Banking, Private
Wealth and Private Office markets in the UK,
Europe and the Middle East, and Asia.
•Coutts’ refreshed brand expresses our very
special way of working and thinking. It
communicates the history and heritage of
Coutts, as well as our modernity and
relevance.
•Our business relies on the quality of our
people and we made a number of senior
hires to strengthen our capabilities.
Operating profit increased by 6% on 2010 to
£321 million, driven by an 11% growth in
income, partially offset by increases in
expenses and impairments. Income increased
by £121 million with a 24 basis points
improvement in lending margins, strong
treasury income and increases in lending and
deposit volumes. Non-interest income rose 3%,
with investment income growing 2% despite
turbulent market conditions.
Expenses increased by £97 million, largely
driven by adverse foreign exchange
movements and headcount growth to service
the increased revenue base.
Assets under management declined 9%, with
fund outflows contributing 3% of the decrease
and market conditions making up the balance.
Rory Tapner
Chief Executive,
Wealth
Performance highlights 2011 2010
Operating profit before impairment losses (£m) 346 322
Impairment losses (£m) (25) (18)
Operating profit (£m) 321 304
Assets under management, excluding deposits (£bn) 30.9 33.9
Return on equity (%) 18.7 18.9
Divisional review
Wealth