RBS 2012 Annual Report Download - page 66

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Business review continued
Divisional performance
The results of each division on a managed basis are set out below. The
results are stated before movements in own credit adjustments, Asset
Protection Scheme, Payment Protection Insurance costs, Interest Rate
Hedging Products redress and related costs, regulatory fines, sovereign
debt impairment, interest rate hedge adjustments on impaired available-
for-sale sovereign debt, amortisation of purchased intangible assets,
integration and restructuring costs, gain on redemption of own debt,
strategic disposals, bank levy, bonus tax, write-down of goodwill and
other intangible assets, RFS MI and includes the results of Direct Line
Group on a managed basis which are included in discontinued operations
in the statutory results.
Business Services directly attributable costs have been allocated to the
operating divisions, based on their service usage. Where services span
more than one division an appropriate measure is used to allocate the
costs on a basis which management considers reasonable. Business
Services costs are fully allocated and there are no residual unallocated
costs.
Group Centre directly attributable costs have been allocated to the
operating divisions, based on their service usage. Where services span
more than one division, the costs are allocated on a basis management
considers reasonable. The residual unallocated costs remaining in the
Group Centre relate to volatile corporate items that do not naturally reside
within a division.
Treasury costs are allocated to operating divisions as follows: term
funding costs are allocated or rewarded based on long term funding gap
or surplus; liquidity buffer funding costs are allocated based on share of
overall liquidity buffer derived from divisional stresses; and capital cost or
benefit is allocated based on share of divisional risk-adjusted risk-
weighted assets (RWAs).
2012 2011 2010
Operating profit/(loss) by division £m £m £m
UK Retail 1,891 2,021 1,348
UK Corporate 1,796 1,924 1,893
Wealth 253 248 283
International Banking 594 755 1,311
Ulster Bank (1,040) (984) (683)
US Retail & Commercial 754 537 349
Retail & Commercial 4,248 4,501 4,501
Markets 1,509 899 2,724
Direct Line Group 441 454 (295)
Central items 143 191 630
Core 6,341 6,045 7,560
Non-Core (2,879) (4,221) (5,715)
Operating profit 3,462 1,824 1,845
Own credit adjustments (4,649) 1,914 242
Asset Protection Scheme (44) (906) (1,550)
Payment Protection Insurance costs (1,110) (850) —
Interest Rate Hedging Products redress and related costs (700) — —
Regulatory fines (381) — —
Sovereign debt impairment — (1,099) —
Interest rate hedge adjustments on impaired available-for-sale sovereign debt — (169) —
Amortisation of purchased intangible assets (178) (222) (369)
Integration and restructuring costs (1,550) (1,064) (1,032)
Gain on redemption of own debt 454 255 553
Strategic disposals 113 (104) 171
Bank levy (175) (300) —
Bonus tax — (27) (99)
Write-down of goodwill and other intangible assets (518) (11) (10)
RFS Holdings minority interest (20) (7) (150)
Operating loss including the results of Direct Line Group discontinued operations (5,296) (766) (399)
Direct Line Group discontinued operations* 131 (424) 245
Operating loss before tax (5,165) (1,190) (154)
* Included within Direct Line Group discontinued operations are the managed bases divisional results of Direct Line Group (DLG), certain DLG related
activities in Central items and Non-Core, and related one-off and other items including write-down of goodwill, integration and restructuring costs and
strategic disposals.