RBS 2011 Annual Report Download - page 27

RBS Group 2011 25
Serving customers well
In 2011, we continued to position our company
to help our customers, colleagues and
communities prosper. We view that as our
purpose for being in business, and our team
has taken significant steps to help us achieve
this goal.
We are intent on providing customers with a
superior experience. That’s why we introduced
our Customer Commitments, built around
feedback from our customers. Our four core
commitments are:
•we listen and get to know you;
•we value your time and business;
•we put you in control; and
•we will earn your trust.
Our colleagues are bringing these
commitments to life. YourPlace Banking brings
the bank right to our customers and helps
them manage their money. It provides financial
education, financial reviews and planning
tools. This smart, no-cost feature gives
customers convenient access to banking
where and how they want it.
We also took steps to become more effective
and efficient. We formed a Consumer Banking
division by combining our retail and consumer
lending businesses. This new structure
supports ongoing efforts to become our
customers’ primary bank.
These and other efforts have led to positive
results in Consumer Banking.
•Citizens Financial Group grew demand
deposits in 2011 while reducing higher-cost
term deposits.
•We have increased the number of deposit
customers who hold loan products for ten
consecutive quarters.
•We increased the number of customers who
bank with us online, a key driver of customer
retention.
•Our retail customer satisfaction scores remain
higher than the average of our peer group.
We have also built Citizens into a leading
commercial bank. We want to meet the growing
needs of our clients, and we want people to
know us for our innovative thinking and global
capabilities. Commercial Banking invested in
and developed a number of specialty
channels, including healthcare, technology,
not-for-profits, franchise finance and sponsor
finance, to help achieve these goals.
Building a sustainable risk profile
The economic environment has been
particularly challenging for the US banking
industry and new regulations have had a
negative impact on revenue. Through diligent
execution of our strategic plan, we have
worked to address these challenges and
strengthen our financial position.
•As at 31 December 2011, Citizens Financial
Group’s Tier 1 Common Capital ratio of
13.85% ranked at the top of its peer group.
•Asset quality improved throughout the year,
which resulted in a lower provision for loan
losses.
Our progress was recognized by Standard
and Poors, which upgraded our credit rating
from A- to A in late November.
Building sustainable value
Operating profit increased by 57% to £479
million. Net interest income fell by 1%. Net
interest margin improved by 21 basis points
to 3.06% reflecting changes in deposit mix,
continued discipline around deposit pricing
and the positive impact from the balance
sheet restructuring programme combined with
strong commercial loan growth.
Non-interest income fell 2%. Higher gains on
the sale of securities and higher account and
transaction fees partially offset the impact of
legislative changes on debit card and deposit
fees. Total expenses were down 1%.
Our return on equity increased from 3.6%
to 6.3%.
We plan to build on the progress we have
made by focusing our efforts on five priorities.
•Employ a high performing and engaged
workforce.
•Deliver a differentiated customer experience.
•Serve customers as their primary banking
partner.
•Ensure a balanced and effective control
environment.
•Deliver financial results consistent with a
top-performing regional bank.
We believe this will position us to create even
more value for our customers, colleagues and
communities and live our brand, which
emphasises that “good banking is good
citizenship.”
Ellen Alemany
Chief Executive,
Citizens and
Head of Americas
Performance highlights 2011 2010
Operating profit before impairment losses (£m) 804 823
Impairment losses (£m) (325) (517)
Operating profit (£m) 479 306
Return on equity (%) 6.3 3.6
Divisional review
US Retail & Commercial