RBS 2012 Annual Report Download - page 29

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RBS GROUP 2012
Making RBS safer
US Retail and Commercial continues to help
make RBS a safer bank. We have delivered
12 straight quarters of operating profit and
improving annual returns on equity. Our capital
position is among the strongest in our peer
group. For the first time since 2008, we were
able to return capital to RBS Group.
We strengthened our balance sheet. Our loan
to deposit ratio was 86% at year end and we
have improved our deposit mix, adding core
checking accounts while reducing more costly
term and time deposits. Wholesale funding
sources are greatly diminished.
Strong risk management remains a top
strategic priority. We have a clearly defined
credit risk appetite, driven by disciplined
underwriting, which has led to consistently
improving credit risk ratios. Asset quality has
improved in all portfolios as evidenced by loss
rates that are near or below pre-crisis levels.
Building a better bank that serves
customers well
In Consumer Banking, our commitment to
customers is clear in the investments we
have made.
We continued to upgrade our ATM network.
The new “Intelligent Deposit Machines”
provide customers with more convenience,
including enhanced deposit capabilities.
We enhanced our online and mobile
services. Our iPhone and Android
applications earned a combined 4.25 out of
5 rating from consumers. We tied for first in a
ratings analysis of 25 large banks
conducted by financial services consulting
firm Javelin Strategy & Research.
Our deposit and credit products help
customers achieve their goals. Through our
branches we opened 455,000 new checking
accounts in 2012.
We believe we can win and deepen customer
relationships by delivering high levels of
service. There is a dedicated team which
continues to improve the customer experience.
This team examines data from customer
surveys, feedback and complaints. This allows
us to identify trends and sources of issues. We
are able to understand what has not worked for
customers and fix it. In one example, customer
feedback led us to cut the wait time between
when we mail a customer’s debit card and the
associated PIN.
We jumped eight spots in 2012 to number 10 in
a survey of bank reputations conducted by
American Banker, an industry publication.
In Commercial Banking, our goal is to help
business customers grow and prosper.
We continue to improve client service and build
strong relationships. The strategy is paying off.
We were lead arranger in 109 deals, up from
83 in 2011. We are now within the top 10
arrangers of middle market syndicated debt
transactions. These deals earned us more than
$52 million in fees compared with $40 million in
2011. We are building our treasury management
capabilities as well. Now, four out of five of our
middle market credit clients also use our cash
management products.
Changing our culture
People lost confidence in banks during the
financial crisis. We have taken steps over the
past few years to strengthen our culture, which
we believe is the foundation of a good bank.
In 2009, we launched our ‘back to basics’
strategy. It keeps us focused on our customers
and what they want and need. Alongside it,
we created a vision, purpose and credo,
emphasizing customers, colleagues
and community.
In 2012, we built on these foundations,
adding five strategic priorities that make it
clearer where we should focus our efforts.
These priorities put ‘back to basics’ in words
that connect with our colleagues.
US Retail &
Commercial
Ellen Alemany
Chief Executive,
Citizens and Head of Americas
Watch or listen to Ellen Alemany
www.rbs.com/AnnualReview
Operating profit of £754 million was
£217 million (40 per cent) higher than in
2011. Total income increased by 2 per cent.
Higher net interest income was driven by
targeted commercial loan growth, deposit
pricing and lower funding costs. Non-
interest income was slightly higher
despite a decline in debit card fees as a
result of the Durbin Amendment legislation,
lower securities fees and lower deposit
fees. Expenses were 3 per cent higher,
largely as a result of one-off items.
Impairments fell sharply, by £235 million
to £91 million. Return on equity was
higher at 8.3 per cent. The loan to deposit
ratio was broadly stable at 86%.
Performance highlights 2012 2011
Operating profit before impairment losses (£m) 845 863
Impairment losses (£m) (91) (326)
Operating profit (£m) 754 537
Return on equity (%) 8.3 6.3