RBS 2012 Annual Report Download - page 14

12
OUR BUSINESS AND OUR STRATEGY
Group Chief
Executive’s review
RBS is four years into its recovery plan and good progress has been
made. We are a much smaller, more focused and stronger bank. Our
target is for 2013 to be the last big year of restructuring. There will be
important work still to do, but an increasingly sound base from which
to work. As the spotlight shifts to the ‘new RBS’ post restructuring,
we are determined that it will show a leading UK bank striving to be a
really good bank. By serving customers well RBS can become one of
the most respected, valued and stable of banks. That is our goal.
2012 saw landmark achievements for RBS. It was also a chastening year. Along with
the rest of the banking industry we faced significant reputational challenges as we
worked with regulators to put right past mistakes. We are determined to overcome the
cultural and reputational baggage of pre-crisis times with the same focus we have
applied to the financial clean-up from that era.
Priorities
The Bank’s purpose is to serve customers well. The better we do this the better
the results will be for all our stakeholders over time.
We need to complete and sustain our return to a safe and conservative risk profile.
And these priorities need in turn to produce a sustainable result for shareholders,
and to create the opportunity for taxpayer share sales.
If we make continued progress across these priorities, and do it in the right way,
we can become a really good bank and serve our stakeholders and society well.
2009-2012 Report Card
RBS has:
Sustained its 33 million customer franchise in the face of substantial restructuring
and other pressures. Lending balances to Core UK businesses and homeowners
(excluding commercial real estate) were grown by over 3%, ahead of growth in the
wider economy.
Rebuilt financial resilience. RBS’s huge restructuring process is moving successfully
to its later stages. From their worst point, total assets are down £906 billion, short-
term wholesale borrowing is £255 billion down. Risk concentrations are well down.
Balance sheet leverage is reduced from 21x to 15x. In each case we are well
ahead of original targets. And a Core Tier 1 capital ratio of 10.3% provides us
some 3.5 times more capital per unit of equivalent risk than pre-crisis levels.
Reached a loan to deposit ratio - perhaps the clearest indicator of a bank’s funding
prudence – of 1:1 from a worst point of 154%. Achieving this ‘golden rule’ of
banking is a powerful symbol of our recovery.
Produced £43 billion in pre-impairment profits from Core businesses. These have
been used to self fund the majority of £52 billion of legacy losses, loan
impairments, restructuring charges, regulatory costs and other clean-up items.
Watch or listen to Stephen Hester
www.rbs.com/AnnualReview
OUR BUSINESS AND OUR STRATEGY