RBS 2013 Annual Report Download - page 147
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Business review
145
Simplifying Banking
Ulster Bank delivered a number of improvements for personal and
business customers in 2013:
• The launch of initiatives such as “Get Cash”, “Pay Your Contacts”
and “Emergency Cash” provided a new range of simple and
convenient services for customers to access their cash and make
payments online and via mobile.
• Further development of online and mobile banking for business
customers focused on providing an efficient and effective day-to-day
banking service. Enhancements during 2013 included a speedy and
simplified account application process; registration for Anytime
Banking via telephone; ability to manage personal and business
accounts together and access to extended transaction history.
• The efficiency and effectiveness of Ulster Bank’s digital offering was
evidenced by a 55% increase in mobile app registrations and more
than 100 million transactions were carried out via digital channels
during 2013. Over 315,000 customers regularly use mobile app
banking services and 640,000 customers make regular use of online
Anytime banking services.
Supporting Enterprise and the Community:
• Supporting entrepreneurship and the growth of small businesses in
the local community is a long term commitment of Ulster Bank.
Highlights in 2013 included:
• The Community Impact Fund and Business Woman Can initiative
which facilitated women in local communities to set up their own
business. The bank also supported a number of projects in schools
across the island of Ireland through its MoneySense programme.
• Ulster Bank’s dedicated SME teams offer professional support and a
range of products to help customers meet their banking challenges
and grow their business. The agri–specialist team has introduced a
number of initiatives during 2013 to support the farming sector.
• The ‘One Week in June’ initiative raised £430,000 for a number of
Irish charities through a series of fundraising events involving both
customers and staff.
• In partnership with Concern Worldwide and Disasters Emergency
Committee, Ulster Bank ATMs, branches and online banking
facilitated donations to the Philippines Typhoon emergency appeals.
Helping Customers out of Financial Difficulty:
• Ulster Bank is committed to working with all customers in financial
difficulty to find a solution. The Bank continued to invest in its
Problem Debt Management Unit and further developed a range of
solutions to make it easier for customers to enter into arrangements.
As a consequence, the number of mortgage customers in arrears of
90 days or more has decreased every month since March 2013.
2013 compared with 2012
Excluding the impact of the creation of RCR, operating result improved by
£494 million or 48% primarily due to a higher income and lower
impairment losses on the mortgage portfolio.
Total income increased by £26 million or 3% to £871 million primarily
reflecting hedging gains on the mortgage portfolio. Net interest margin for
2013 increased by 3 basis points to 1.91% although net interest income
was £18 million lower at £631 million, largely driven by lower interest-
earning assets and a higher cost of funding.
Total expenses increased by £33 million or 6% to £554 million driven by
the costs of mandatory change programmes such as the Single Euro
Payment Area, £18 million, an investment of £10 million in programmes
to support customers in financial difficulty and an accelerated
depreciation charge of £12 million.
Impairment losses, excluding the impact of RCR, were £482 million, 35%
lower. This was predominantly due to a sharp reduction in losses on the
mortgage portfolio which reduced by £411 million or 64% due to a decline
in arrears levels driven by an improved collections performance and the
development of programmes to assist customers in financial difficulty,
coupled with stabilising residential property prices.
The loan:deposit ratio reduced from 130% to 120% during 2013 reflecting
continued customer deleveraging and low levels of demand for new
lending. Retail and SME deposit balances increased by 2% during 2013,
offset by a reduction in wholesale customer balances, resulting in a 2%
decline in total deposit balances.
Risk-weighted assets decreased by 15% reflecting a smaller performing
loan book and stabilising credit metrics.
2012 compared with 2011
Operating loss increased by £56 million primarily reflecting a reduction in
income driven by lower interest earning asset volumes.
Total expenses fell by £26 million, reflecting the benefits of cost saving
initiatives.
Impairment losses remained elevated, as weak underlying credit metrics
prevailed. Falling asset values throughout most of 2012 and high levels of
unemployment coupled with weak domestic demand continued to
depress the property market. The impairment charge for 2012 was driven
by a combination of new defaulting customers and deteriorating security
values. Risk elements in lending increased by £2 billion during the year
reflecting continued difficult conditions in both the commercial and
residential property sectors.
The loan to deposit ratio improved from 143% to 130%, driven by a
combination of deposit growth and a decrease in the loan book. At
constant currency, the loan book decreased by 2% as a result of natural
amortisation and limited new lending due to low levels of market demand.
Retail and SME deposits increased by 8%; however, this was partly offset
by outflows of wholesale balances driven by market volatility and the
impact of a rating downgrade in the second half of 2011.