RBS 2014 Annual Report Download - page 37

35
RBS – Interim Results 2015
UK Personal & Business Banking
Key points (continued)
Q2 2015 compared with Q1 2015
• Operating profit was £667 million, up £319 million or 92%. This reflected higher income, up 1% to
£1,469 million and lower expenses, down 30% to £793 million. Impairments remained low at £9
million, compared to a £26 million net release in the prior quarter.
• Net interest income was broadly stable, with a small reduction in net interest margin of 3bps due to
contraction in mortgage margins partially offset by balance growth.
• Non-interest income increased by 4% to £322 million, due to a largely seasonal increase in card
transaction levels, partly offset by reduced interchange income following implementation of new EU
regulations on interchange rates.
• Operating expenses decreased 30% to £793 million, largely reflecting lower restructuring, litigation
and conduct costs. Adjusted expenses increased by £17 million due to increased technology spend
and the increase in Williams & Glyn functional staff costs as the business prepares for divestment.
• The impairment losses increased by £35 million to £9 million as provision releases in Q2 were lowe
r
than Q1. Underlying default levels continue to be low.
• Mortgage balances increased £1.8 billion in the quarter, achieving approximately 10% of the gross
new lending market share, driven by increased adviser capacity and competitive pricing.
• Business loan balances decreased £0.8 billion, largely reflecting the transfer of £0.4 billion to
Commercial Banking in Q2, a decrease in Williams & Glyn (Commercial/Corporate) and asset write
offs; underlying balances were broadly stable in the quarter. Business deposit balances decreased
£0.1 billion, driven by the transfer of £0.6 billion of balances to Commercial & Private Banking in Q2.
Underlying deposit balances increased 2% in the quarter.
• RWAs declined 4% to £41.0 billion with improved credit quality, lower unsecured balances and
Business Banking data and model improvements.
Q2 2015 compared with Q2 2014
• Operating profit of £667 million, increased £183 million or 38%, while adjusted operating profit totalled
£697 million compared with £663 million in the second quarter of 2014.
• Net interest income is broadly stable at £1,147 million with lower asset income primarily from lowe
r
asset margins partly offset by increased deposit income.
• Non-interest income decreased by 7% to £322 million largely due to lower insurance profit share and
lower cards interchange income.
• Operating expenses decreased £162 million or 17%, largely reflecting lower restructuring costs and
litigation and conduct costs. Adjusted expenses decreased by £13 million supported by an underlying
4% decrease in headcount, lower FSCS levy charges and lower complaints and compensation costs
partly offset by increased investment in technology.
• Net impairment losses of £9 million were significantly lower, driven by lower defaults across all
portfolios and higher levels of portfolio provision releases, particularly in business banking.
• RWAs declined 13% to £41.0 billion with improved credit quality and lower unsecured balances.