RBS 2013 Annual Report Download - page 113
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Business review
111
Managed Statutory
2013 2012* 2011* 2013 2012* 2011*
£m £m £m £m £m £m
Basic loss per ordinary and equivalent B share
from continuing operations (81.3p) (54.5p) (22.7p) (81.3p) (54.5p) (22.7p)
Own credit adjustments 1.0p 32.5p (13.9p)
Payment Protection Insurance costs 6.2p 7.8p 5.8p
Interest Rate Hedging Products redress and related costs 3.8p 4.9p —
Regulatory and legal actions 15.1p 3.5p —
Sovereign debt impairment and related interest hedge adjustments —— 10.2p
Integration and restructuring costs 4.6p 10.1p 7.2p
Gain on redemption of own debt (1.7p) (3.2p) (2.3p)
Write-down of goodwill 9.4p 0.1p —
A
sset Protection Scheme —0.3p 6.2p
Interest rate hedge adjustments —— 1.6p
A
mortisation of purchased intangible assets 1.1p 1.2p 1.4p
Strategic disposals (1.4p) (1.0p) 0.8p
Bank levy 1.8p 1.6p 2.8p
Write-down of other intangible assets 3.1p 1.0p —
Bonus tax —— 0.2p
A
djusted (loss)/earnings per ordinary and equivalent B share from
continuing operations (1) (38.3p) 4.3p (2.7p)
*Restated - see page 102.
Note:
(1) Adjusted earnings per ordinary and equivalent B share excludes the participation rights of the dividend access share.
Results summary
2013 compared with 2012 - managed
Operating loss
Group operating loss was £2,303 million compared with an operating
profit of £2,952 million in 2012. The decline in performance primarily
related to increased impairment losses resulting from the establishment
of RBS Capital Resolution (RCR) and lower income in Markets.
Total income
Total income declined by 12% to £19,442 million, principally driven by
lower income in Markets reflecting the smaller balance sheet, reduced
risk levels and the uncertain market environment.
Net interest income
Group net interest income declined by 4% to £10,992 million largely
reflecting lower interest-earning asset balances partially offset by
repricing initiatives. Group net interest margin improved by 9 basis points
driven by moves to reprice deposits in a number of divisions, partially
offset by a roll-off in higher yielding securities.
Non-interest income
Non-interest income decreased by 21% to £8,450 million in 2013
principally driven by lower income from trading activities in Markets as the
division managed down the scale of the balance sheet and reduced risk.
This was partially offset by a £506 million improvement in Non-Core
trading losses. Operating lease and rental income fell by £392 million,
largely reflecting the disposal of RBS Aviation Capital in 2012.
Within other operating income, Non-Core recorded a loss of £334 million
excluding rental income, primarily related to fair value adjustments
associated with investment properties.
Operating expenses
Total operating expenses fell by 4% to £13,313 million, with staff costs
down 7% as headcount fell by 4,300 to 114,900, principally in UK Retail,
Markets and Non-Core. Markets operating expenses decreased by 11%
to £2,610 million and Non-Core by 36% to £605 million, driven by exiting
staff and lower central support requirements on run-down. Group cost:
income ratio was up at 68%.
Impairment losses
Impairment losses increased by 60% to £8,432 million from £5,279
million in 2012 primarily due to increased charges resulting from the
establishment of RCR. Excluding the impact of RCR (£4,490 million),
impairment losses fell by 25% to £3,942 million with significant
improvements in Non-Core, Ulster Bank and UK Retail partially offset by
increases in International Banking, US Retail & Commercial and Markets.
Loan impairments represented 2.0% of gross loans and advances to
customers excluding reverse repos compared with 1.2% in 2012.
Risk elements in lending at 31 December 2013 represented 9.5% of
loans and advances excluding reverse repos, compared with 9.1% a year
earlier. Provision coverage was 64% compared with 52% at 31
December 2012.