RBS 2012 Annual Report Download - page 12

10
OUR BUSINESS AND OUR STRATEGY
Chairman’s
statement
The plan to rebuild RBS from 2009 has been based on two primary
elements. The first was to stabilise the company, making it safe so
that it could stand on its own feet. The second was to focus our
energies on serving customers well. We were clear that the plan
would take time and that it would take five years and more for key
aspects to be delivered.
Four years on, I am pleased to report that we made more progress
in 2012, passing a number of important milestones. Perhaps the
most significant was when, with our regulator’s agreement, we
exited the Asset Protection Scheme in October, the earliest date at
which that was possible. We were able to do so because we have
made RBS safer. Our Core Tier 1 capital ratio was 10.3% at the
end of 2012, above our target, despite some large unplanned
charges. The balance sheet is smaller, falling by a further £195
billion to £1,312 billion, as the run-down of Non-Core assets
continued faster than we first planned. Our funding is more stable
too, with the Group loan to deposit ratio at 100% or 90% in our
Core business and our liquidity portfolio is 3.5x times short-term
wholesale funding.
We have achieved all of this in the most testing economic
environment for many decades. The UK economy is still smaller
than before the crisis struck and the US economy is only slightly
bigger. This weakness in the main economies where we operate
was a headwind to our plans, and regulatory changes have further
reduced our return on equity in some areas. In particular, lower
returns from investment banking activities necessitated further
restructuring.
Watch or listen to Philip Hampton
www.rbs.com/AnnualReview
OUR BUSINESS AND OUR STRATEGY