RBS 2014 Annual Report Download - page 153

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RBS – Interim Results 2015
Appendix 1 Capital and risk management
Loans and related credit metrics (continued)
Key points
• Loans to banks decreased by £1.5 billion with a strategy-driven reduction of £3.2 billion in CIB, which
was partially offset by some increases in other segments. Liquidity management saw an increase in
Ulster Bank of £1.1 billion and £0.4 billion in UK PBB.
• Customer loans fell by £22.0 billion: CIB decreased by £15.0 billion and RCR by £10.9 billion;
Commercial Banking and UK PBB saw net growth of £5.0 billion and £0.8 billion respectively.
• Risk elements in lending (REIL) at £18.7 billion was 4.8% of gross customer loans, a significan
t
improvement on the £28.2 billion (or 6.8%) six months ago. This reflects the success of RCR’s
disposal strategy, particularly in relation to Irish assets. REIL is now covered 60% by impairment
provisions, lower than 64% as a result of the disposals.
• In UK PBB, gross customer loans increased by £0.8 billion to £130.7 billion. Mortgage lending was up
by £2.2 billion, £1.8 billion in Q2 2015, reflecting targeted growth partially offset by decreases in
unsecured lending. Impairments and credit metrics continued to improve. REIL as a percentage o
f
gross loans fell from 2.9% to 2.5% due to repayments of £494 million, reflecting improved asset quality
and write-offs of £439 million. Impairment release reflected recoveries on the back of improved
economic conditions.
• Ulster Bank: gross customers lending was £2.1 billion lower primarily driven by the weakening euro.
Significant growth in new lending volumes was more than offset by continued customer deleveraging
including a reduction in the tracker mortgage portfolio. Improved economic conditions and lowe
r
observable defaults have resulted in recoveries contributing to an impairment release of £52 million.
• In Commercial Banking, gross customer lending increased by £5.0 billion, of which £2.4 billion related
to transfers from Private Banking and £2.1 billion to transfers from CIB, partially offset by a £0.5 billion
decrease in legacy portfolios. REIL as a percentage of gross loans continued to decrease falling from
2.9% to 2.5%. The overall reduction in REIL reflects a low number of new individual cases.
• CIB: gross loans fell by £15.0 billion largely through asset disposals throughout the regions,
repayments and exit of non-strategic clients in GTS and included sectors such as oil and gas and
shipping. There were also transfers to Commercial Banking (£2.1 billion). REIL increases were seen in
shipping, electric and gas sectors.
• CFG gross loans to customers increased by £1.8 billion or 3.0% to £62.0 billion, reflecting growth in
the retail and wholesale portfolio. Impairments and REIL were broadly unchanged.
• RCR saw a significant reduction in gross customer loans - £6.5 billion in commercial real estate, £3.3
billion in other corporate and £1.1 billion in asset finance - as the execution of its disposal and run-
down strategy continued. REIL fell by £8.0 billion to £7.4 billion and provisions decreased by £5.8
billion to £5.1 billion as a consequence. This contributed to the significant improvements in credit
metrics in both RCR and RBS overall.