RBS 2014 Annual Report Download - page 54

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RBS – Interim Results 2015
Corporate & Institutional Banking
Key points (continued)
H1 2015 compared with H1 2014 (continued)
● Operating expenses increased from £2,158 million to £3,430 million in H1 2015 due to a higher level
of litigation and conduct costs and restructuring costs The increased restructuring costs of £1,025
million reflect February’s strategic announcement and were driven by the write-down of intangible
assets totalling £521 million and provision for staff redundancies, as the business strives to become a
smaller, simpler bank. Adjusted expenses fell by 20% to £1,532 million as headcount continued to be
reduced and discretionary expenditure tightly controlled.
● RWAs fell substantially, from £128 billion at 30 June 2014 to £88 billion at 30 June 2015 reflecting the
ongoing drive to reduce both the scale and risk of the business. This was reinforced by the creation o
f
CIB Capital Resolution where an acceleration of disposals means RWAs have fallen by £19 billion
since 31 December 2014 and are ahead of plan. CIB is on track to deliver the previously announced
target of a £25 billion reduction in 2015.
Q2 2015 compared with Q1 2015
● Operating loss increased by £593 million to £1,334 million, reflecting lower income and highe
r
restructuring costs, partially offset by lower litigation and conduct costs. Adjusted operating loss was
£227 million compared with a profit of £50 million in Q1 2015 as the reduction in adjusted expenses
was more than offset by lower income.
● Total income fell by £284 million to £520 million. This was driven by the wind down of CIB Capital
Resolution where: Markets income fell from £94 million in Q1 2015 to £21 million in Q2 2015; Portfolio
income increased from £80 million in Q1 2015 to £85 million in Q2 2015; Transaction Services income
fell from £126 million in Q1 2015 to £104 million in Q2 2015; disposal losses increased from £28
million in Q1 2015 to £113 million in Q2 2015. CIB Go-forward income declined by 28% from £430
million to £310 million, driven by uncertainty in European markets, impacting both rates trading and
debt capital market issuance.
● Operating expenses increased by £252 million to £1,841 million as a lower level of litigation and
conduct expenses was more than offset by higher restructuring costs. Adjusted expenses fell by £64
million to £734 million due to ongoing reductions in both headcount and discretionary expenditure.
● RWAs fell by £15 billion to £88 billion, £13 billion of which was in CIB Capital Resolution driven by
reductions in both the loan portfolio and the trading book.
Q2 2015 compared with Q2 2014
● Operating loss totalled £1,334 million, compared with £25 million in Q2 2014. This reflected lowe
r
income, an increase in restructuring costs to £734 million following the recent strategic announcemen
t
and higher litigation and conduct costs of £373 million, partially offset by lower adjusted expenses
falling by 22% to £734 million. Adjusted operating loss was £227 million, compared with a profit o
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£177 million in Q2 2014.
Note:
(1) The business transfer from CIB to CPB was effective from 1 May 2015. Comparatives were not restated and for the whole period the financials of the UK large corporate
business were: total income of £32 million in H1 2015 (H1 2014 - £31 million; Q2 2015 - £19 million; Q1 2015 - £15 million; Q2 2014 - £16 million); operating expenses o
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£2 million in H1 2015 (H1 2014 - £4 million; Q2 2015 - £1 million; Q1 2015 - £1 million; Q2 2014 - £2 million); net loans and advances to customers of £2.1 billion (31
March 2015 - £2.0 billion; 31 December 2014 - £1.8 billion); and RWAs of £2.3 billion (31 March 2015 - £2.1 billion; 31 December 2014 - £2.1 billion).