RBS 2013 Annual Report Download - page 7

05
2013 Financial Results
2013. Out of a cumulative PPI provision of
£3.1 billion, £2.2 billion had been utilised by
31 December 2013. The remaining £0.9 billion
provision covers approximately 12 months at
current levels of redress and administrative
expenses.
A further £500 million provision was made in
Q4 2013 for interest rate hedging products
redress and administration costs, reflecting
higher volumes, higher anticipated redress
payments and recalibration of our methodology
based on more recent trends. The total charge
for the full year was £550 million making a total
of £1.25 billion of which £0.2 billion had been
utilised by 31 December 2013.
Serving our customers
Investment of £700 million has been committed
over the next 3-5 years to build the best retail
and commercial bank in the UK. Investment in
digital channels continued, with 50% of eligible
customers now banking online or on mobile.
Mortgage balance growth was affected in
H1 2013 by advisor training, but application
volumes recovered during the second half,
helped by RBS’s lead in launching the second
phase of the Help to Buy scheme. Gross
new lending in 2013 was £14.3 billion, up 3%
from 2012. This represented an 8% market
share, slightly in excess of RBS’s share of
mortgage stock.
UK Corporate will implement all the
recommendations of the independent review
of its lending standards and practices led by
Sir Andrew Large.
Support for SME customers during 2013
included pro-active ‘Statements of Appetite’
sent to over 12,000 customers, resulting in
more than £5.9 billion of new loan offers.
SME demand for credit has picked up over the
course of the year, with new and increased
lending sanctioned in 2013, up 6% from the
prior year to £9.9 billion. SMEs drew down
£6.4 billion of new loans in 2013, up 2% from
2012. However, businesses’ cash generation
remained strong, with SME current account
balances up 13% from the end of 2012. Many
customers increased their loan repayments
and reduced overdraft utilisation, which
dropped to 37% at the end of 2013 compared
with 42% a year earlier.
Among larger businesses, £12.9 billion
of new facilities were made available to
new and existing clients. RBS also helped
UK companies, universities and housing
associations to raise £24.7 billion through
bond issues in 2013.
RBS repaid all its borrowings from the Bank of
England Funding for Lending Scheme (FLS)
in 2013 but continues to participate fully in
the scheme. In the period since launch to 31
December 2013, RBS allocated more than
£4.7 billion of new FLS-related lending to
business customers, with discounts targeted
at SMEs and mid-sized manufacturers. We
intend to remain in the scheme throughout
2014 (subject to no further changes in the
scheme rules).
Total net lending flows reported within
the scope of the FLS scheme were minus
£2,295 million in Q4 2013, with net lending of
plus £349 million to households and minus
£2,645 million to private sector non-financial
corporations, of which minus £671 million was
to SMEs.
Over time, with steady focus and
disciplined delivery, the new RBS will
emerge. The businesses we operate will
be highly effective and relentless in their
pursuit of delivering service that makes
us number one for customers.