RBS 2012 Annual Report Download - page 70

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Business review continued
UK Retail continued
2012
£bn
2011
£bn
2010
£bn
Capital and balance sheet
Loans and advances to customers (gross) (2)
- mortgages 99.1 95.0 90.6
- personal 8.8 10.1 11.7
- cards 5.7 5.7 6.1
113.6 110.8 108.4
Loan impairment provisions (2.6) (2.7) (2.7)
Net loans and advances to customers 111.0 108.1 105.7
Risk elements in lending (2) 4.6 4.6 4.6
Provision coverage (3) 58% 58% 59%
Customer deposits (2) 107.6 101.9 96.1
Assets under management (excluding deposits) 6.0 5.5 5.7
Loan:deposit ratio (excluding repos) 103% 106% 110%
Risk-weighted assets 45.7 48.4 48.8
Notes:
(1) Divisional return on equity is based on divisional operating profit after tax divided by average notional equity (based on 10% of the monthly average of divisional RWAs, adjusted for capital
deductions).
(2) Includes businesses outlined for disposal: gross loans and advances to customers £7.6 billion (2011 - £7.3 billion; 2010 - £6.8 billion), risk elements in lending £0.5 billion (2011 and 2010 - £0.5
billion) and customer deposits £8.5 billion (2011 - £8.8 billion; 2010 - £9.0 billion).
(3) Provision coverage percentage represents loan impairment provisions as a percentage of risk elements in lending.
Over the last four years UK Retail has undertaken stretching initiatives
and undergone significant change in order to meet its goal to consistently
improve the service it offers to its customers. Highlights in 2012 include:
x Continued progress on the RBS and NatWest Customer Charter
commitments supporting our goal of becoming Britain’s most helpful
retail bank;
x Providing more than £500 million of cheaper mortgages through the
Government’s Funding for Lending Scheme (FLS), launched at the
end of June 2012 and opened for drawings in August 2012, which
represents 14% of all completions in the last quarter of 2012;
x Seeking and responding to customer feedback to enhance the retail
mobile banking app which is used by more than two million
customers to manage their money and complete over one million
transactions every week;
x Increasing online banking webchat functionality to allow customers
real-time access to an advisor, direct from their computer, who can
answer queries and action basic account services 24 hours a day;
and
x Continued to invest in simplifying processes to make it easier for
customers to bank with us, including introducing more than 200 cash
deposit machines and ATMs to further reduce queuing times in
branches.
However, the business has also had setbacks in the year. Customers
suffered from disruptions to payment systems in June. Throughout this
time UK Retail staff worked tirelessly to deal quickly with the issues and
provide full redress and compensation to customers affected. In addition,
the provision relating to historic Payment Protection Insurance (PPI) mis-
selling was increased by £1.1 billion in 2012, bringing total PPI expense
to date to £2.2 billion. This expense is not included in operating profit.
With the new UK conduct regulator examining many products and
services along with associated disclosures and sales practices, there are
likely to be further impacts to business practices and potential additional
costs of redress. The business is actively working to ensure its products
set and sales practices are appropriate.
Ross McEwan joined UK Retail as its new Chief Executive in September
2012 and spent considerable time engaging with customers and
employees around the country and reviewing business processes and
performance. With his management team, he has developed a range of
initiatives, building upon existing efforts, which focus on simplifying
processes and providing a better experience for all customers. Ultimately,
with a lot of hard work, the goal is to be the best retail bank in the UK.