RBS 2011 Annual Report Download - page 26

24 RBS Group 2011
Serving customers well
Economic conditions remained extremely
challenging. In the Republic of Ireland, the
economy faltered again in the second half of
the year. Unemployment averaged more than
14%. Northern Ireland grew, although
unemployment was still above the pre-
recession rate and house prices fell.
I joined in April and I took time to talk to our
customers and our employees. I am clear
about two things. At all times, but especially in
difficult times, we must do what we can to
support customers and deliver on our
Customer Commitments. Secondly, I believe
that we have a strategy in place to ensure we
are well-placed to compete effectively in the
markets in which we operate. We’ve been
serving our personal and business customers,
now 1.9 million of them, for 176 years.
We developed our Customer Commitments to
deliver a more helpful banking service and we
measure how we perform against these.
•We supported 20,000 customers with
revised repayment arrangements through
Flex, our debt management service.
•We serve 90% of customers in branches
within five minutes.
•98% of customers are satisfied with the
helpfulness of branch staff.
We developed new ways to help customers
control their finances. Our enhanced iPhone
app gives customers access to all the
accounts they have on Anytime Banking,
transfer funds between their accounts and find
the nearest branch or ATM. 65,000 customers
have downloaded the iPhone app to date. Our
free text message alert service allows our
customers to keep track of their money,
avoiding charges. More than 43,000 customers
registered for the service and we sent over two
million texts in 2011.
Customers and colleagues told us how to
make it easier to open accounts. We made
application forms simpler. A specialist account
switching team makes it easier for people to
move to Ulster Bank. We use texts to update
customers on the progress of their switching
application. 94% of customers who opened an
account were satisfied with the process.
We continued to support businesses across
the island of Ireland.
•Our share of new lending increased in
Northern Ireland and the Republic of
Ireland.
•Since we launched our Start Up and Early
Stage proposition in September 2010, we
have supported more than 6,000 new
businesses.
Building a sustainable risk profile
Customer deposit balances fell by 4% in
constant currency terms largely driven by the
outflow of wholesale customer balances due
to rating downgrades. Our loan:deposit ratio
improved from 152% to 143%.
Impairment losses increased by 19%. This
largely reflects the deterioration in credit
metrics on the mortgage portfolio driven by a
combination of higher debt flow and further
falls in asset prices.
Risk-weighted assets increased by 15% with
the deterioration in credit risk metrics.
Building sustainable value
Disappointingly, operating profit before
impairment losses fell by £40 million. Income
fell by 7% driven by a contracting performing
loan book coupled with higher funding costs.
Lower income was partly offset by a 5% fall in
expenses, which reflected tight management
of the cost base across the business. Loans
and advances to customers decreased by 5%
in constant currency terms during 2011.
Jim Brown
Chief Executive,
Ulster Bank
Performance highlights 2011 2010
Operating profit before impairment losses (£m) 360 400
Impairment losses (£m) (1,384) (1,161)
Operating loss (£m) (1,024) (761)
Return on equity (%) (26.1) (21.0)
Divisional review
Ulster Bank