RBS 2012 Annual Report Download - page 98

Non-Core continued
Non-Core third party assets fell to £57 billion, a reduction of £36 billion, or
39%, during the year and an overall reduction of £200 billion, or 78%,
since the division was set up. This was achieved through a mixture of
disposals, run-off and impairments. By the end of 2012, the Non-Core
funded balance sheet was under 7% of the Group’s funded balance sheet
compared with 21% when the division was created. Non-Core remains on
target to reach its third party asset target of c.£40 billion, a reduction of
approximately 85% of its original portfolio, by the end of 2013.
2012 compared with 2011
Third party assets declined by £36 billion, or 39%, largely reflecting
disposals of £18 billion and run-off of £16 billion. The disposal of RBS
Aviation Capital in Q2 2012 contributed c.£5 billion of this reduction.
Risk-weighted assets were £33 billion lower, principally driven by
disposals, run-off and restructuring of existing positions.
An operating loss of £2,879 million was £1,342 million lower than 2011,
principally due to lower impairments and expenses, partially offset by
lower net interest income following run-off and disposals.
Impairment losses fell by £1,696 million to £2,223 million, with £1,366
million of this reduction from the Ulster Bank portfolio and £269 million
from the real estate portfolio.
Income declined by £900 million as continued divestment and run-off
reduced net interest income. Rental income was lower following the
disposal of RBS Aviation Capital in Q2 2012.
Expenses were £351 million lower, driven by reduced headcount and
lower operating lease depreciation, principally following the disposal of
RBS Aviation Capital.
Headcount declined by 34% to 3,100 reflecting the divestment activity
and run-off across the business.
2011 compared with 2010
Operating loss of £4,221 million in 2011 was £1,494 million lower than
the loss recorded in 2010. The continued divestment of Non-Core
businesses and portfolios has reduced revenue streams as well as the
cost base.
Losses from trading activities increased by £690 million compared with
2010, principally as a result of the disposal of RBS Sempra Commodities
in 2010 and costs incurred as part of the division’s focus on reducing
capital intensive trading assets and mitigating future regulatory uplifts in
risk-weighted assets.
Impairment losses fell by £1,557 million despite ongoing challenges in the
real estate and Ulster Bank portfolios, reflecting improvements in other
asset classes.
Third party assets declined by £44 billion (32%) reflecting disposals of
£22 billion and run-off of £22 billion.
Risk-weighted assets were £60 billion lower than 2010, principally driven
by significant disposal activity on trading book assets combined with run-
off.
Headcount declined by 2,200 (32%) to 4,700 in 2011, largely reflecting
the divestment activity in relation to Asia, Non-Core Insurance and RBS
Sempra Commodities.
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Business review continued