RBS 2012 Annual Report Download - page 16

14
What is the trend in your margins?
Group net interest margin was broadly stable
over the year meaning the profitability of taking
in savings and lending to our customers stayed
broadly constant. This is a struggle with
interest rates so low but an important sign
of financial resilience.
When will I receive a dividend?
Over the last two years RBS has been
subject to dividend restrictions imposed by the
European Commission. This prevented us from
paying dividends on ordinary shares, B shares
and hybrid securities, unless we had a legal
obligation to do so.
With the exception of certain securities issued
by the RBS N.V. legal entity, this restriction has
expired and the Group has resumed payment
to date on hybrid securities.
With the resumption of payments on hybrid
securities, the Board is in the legal position
to consider the payment of dividends on
ordinary shares.
Considerations around timing of any
such decision will primarily be driven by,
the Group’s operating environment
and profitability;
uncertainty around regulatory capital
adequacy requirements, most notably
the impact of Basel III; and
the Dividend Access Share held by
the UK Government
The Dividend Access Share entitles the
Government to a dividend on issued B Shares
at the higher of 7%, or 2.5x the ordinary
dividend. This could be a barrier to resuming
ordinary dividends in the near term.
Resolution of this issue could be achieved
via engagement with the Government at some
time in the future, when the Group feels it is
closer to announcing the resumption of
ordinary dividends.
When will the UK Government
sell its shares?
The UK Government created UK Financial
Investments (UKFI) to manage its
shareholdings in financial institutions.
UKFIs overarching objective is to manage
these shareholdings commercially and to
devise and execute a strategy for realising
value in an orderly and active way over time.
For further details please see:
http://www.ukfi.co.uk/about-us/what-we-do
As a consequence, the decision of when
to sell, and to whom, is at the full discretion
of UKFI and the Government.
To best facilitate this process, the Group remain
focussed on delivering a sustainable, attractive
and profitable business with a strong
investment proposition.
When will you return to profitability?
RBS has been profitable on an operating basis
for the past three years. However the Group
has continued to incur significant costs in
resolving the ‘sins of the past’, such as:
restructuring costs, conduct related fines,
and impairments on legacy portfolios.
With the culmination of the restructuring
phase of our strategic plan in 2013, these
associated ‘exceptional costs’ should start
to significantly reduce from next year.
We retain the conviction that the underlying
businesses of RBS can deliver sustainable
profitability using a more conservative
business model.
How are you controlling expenses?
Disciplined cost management has been a
foundation of our strategic plan. The Group's
cost reduction programme realised over
£3.6 billion of sustainable savings to date,
versus its original £2.5 billion target. This has
seen Group operating costs reduce by 18%,
or £3.2 billion, since 2008. We have embedded
cost discipline across our Core businesses,
where operating expenses are down 9%
since 2009. Non-Core's costs have significantly
reduced, and should continue to fall as
we approach the end of the active
run-down process.
Q
QQ
Q
Q
When we speak to our investors, some questions
are asked more often than others. Below we provide
a selection of those frequently asked questions
and answers
Q&As
OUR BUSINESS AND OUR STRATEGY