RBS 2014 Annual Report Download - page 173
Download and view the complete annual report
Please find page 173 of the 2014 RBS annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.-
1 -
2
-
3
-
4
-
5
-
6
-
7
-
8
-
9
-
10
-
11
-
12
-
13
-
14
-
15
-
16
-
17
-
18
-
19
-
20
-
21
-
22
-
23
-
24
-
25
-
26
-
27
-
28
-
29
-
30
-
31
-
32
-
33
-
34
-
35
-
36
-
37
-
38
-
39
-
40
-
41
-
42
-
43
-
44
-
45
-
46
-
47
-
48
-
49
-
50
-
51
-
52
-
53
-
54
-
55
-
56
-
57
-
58
-
59
-
60
-
61
-
62
-
63
-
64
-
65
-
66
-
67
-
68
-
69
-
70
-
71
-
72
-
73
-
74
-
75
-
76
-
77
-
78
-
79
-
80
-
81
-
82
-
83
-
84
-
85
-
86
-
87
-
88
-
89
-
90
-
91
-
92
-
93
-
94
-
95
-
96
-
97
-
98
-
99
-
100
-
101
-
102
-
103
-
104
-
105
-
106
-
107
-
108
-
109
-
110
-
111
-
112
-
113
-
114
-
115
-
116
-
117
-
118
-
119
-
120
-
121
-
122
-
123
-
124
-
125
-
126
-
127
-
128
-
129
-
130
-
131
-
132
-
133
-
134
-
135
-
136
-
137
-
138
-
139
-
140
-
141
-
142
-
143
-
144
-
145
-
146
-
147
-
148
-
149
-
150
-
151
-
152
-
153
-
154
-
155
-
156
-
157
-
158
-
159
-
160
-
161
-
162
-
163 -
164 -
165 -
166 -
167 -
168 -
169 -
170 -
171 -
172 -
173 -
174 -
175 -
176 -
177 -
178 -
179 -
180 -
181 -
182 -
183 -
184
-
185
-
186
-
187
-
188
-
189
-
190
-
191
-
192
-
193
-
194
-
195
-
196
-
197
-
198
-
199
 |
 |
38
RBS – Interim Results 2015
Appendix 1 Capital and risk management
Non-trading portfolios (continued)
Product hedging*
Product structural hedges are used to reduce the volatility on earnings related to specific products, primarily
customer deposits. The balances are primarily hedged with medium-term interest rate swaps, so that
reported income is less sensitive to movements in short-term interest rates.
The table below shows the impact on net interest income associated with product hedges managed by
Treasury. These relate to the main UK banking businesses except Private Banking. The figures shown
represent the incremental contribution of the hedge relative to short-term wholesale cash rates.
Six months ended
30 June 30 June 31 Decembe
r
2015 2014 2014
Net interest income £m £m £m
Product hedges
UK Personal & Business Banking 210 184 209
Commercial Banking 101 81 99
Corporate & Institutional Banking 39 37 38
Total product hedges 350 302 346
Key points
• As short-term interest rates remained close to historically low levels in H1 2015, the incremental
impact of product hedges relative to wholesale cash rates remained positive.
• In H1 2015, the all-in yield was 1.5%, slightly lower than in H2 2014 (1.6%), due to low levels o
f
interest rates, and similar to H1 2014 (1.5%).
Equity hedging*
Equity structural hedges are also used to reduce the volatility on earnings arising from returns on equity. The
hedges managed by Treasury relate mainly to the UK banking businesses and contributed £0.4 billion to
these businesses in H1 2015 (H1 2014 and H2 2014 - £0.4 billion), which is an incremental benefit relative to
short-term wholesale cash rates. In H1 2015, the all-in yield was 2.4%, slightly lower than in H1 2014 (2.6%)
and H2 2014 (2.5%) due to the low levels of interest rates.
*Not within the scope of Deloitte LLP’s review report