TIDMRBS
RNS Number : 1397O
Royal Bank of Scotland Group PLC
04 February 2016
The Royal Bank of Scotland Group plc
Restatement
Document
February 2016
Contents
Page
=========================================================== ====
Introduction 1
Customer segments 4
Appendix 1 Financial statement reconciliations
Financial statement reconciliations 11
Appendix 2 Components of customer segments
Operating profit/(loss) by segment 17
UK PBB 18
Ulster Bank RoI 21
Commercial Banking 24
Private Banking 27
RBS International 30
Corporate & Institutional Banking 33
Capital Resolution 36
Williams & Glyn 39
Appendix 3 Allocation of previous segments to new customer
segments
Introduction 43
UK PBB 44
Ulster Bank 47
Commercial Banking 50
Private Banking 53
Corporate & Institutional Banking 56
RCR 59
Central items & other 62
=========================================================== ====
Forward-looking statements
Certain sections in this document contain 'forward-looking
statements' as that term is defined in the United States Private
Securities Litigation Reform Act of 1995, such as statements that
include the words 'expect', 'estimate', 'project', 'anticipate',
'believes', 'should', 'intend', 'plan', 'could', 'probability',
'risk', 'target', 'goal', 'objective', 'will', 'endeavour',
'outlook', 'optimistic', 'prospects' and similar expressions or
variations on such expressions. These statements concern or may
affect future matters, such as RBS's future economic results,
business plans and current strategies. Forward-looking statements
are subject to a number of risks and uncertainties that might cause
actual results and performance to differ materially from any
expected future results or performance expressed or implied by the
forward-looking statements. Factors that could cause or contribute
to differences in current expectations include, but are not limited
to, legislative, fiscal and regulatory developments, accounting
standards, competitive conditions, technological developments,
exchange rate fluctuations and general economic conditions. These
and other factors, risks and uncertainties that may impact any
forward-looking statement or RBS's actual results are discussed in
RBS's 2015 Annual Report and Accounts (ARA). The forward-looking
statements contained in this document speak only as at the date
hereof, and RBS does not assume or undertake any obligation or
responsibility to update any forward-looking statement to reflect
events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
The Royal Bank of Scotland Group plc (RBS)
Business reorganisation and reporting changes
This announcement sets out changes to RBS's financial reporting:
a change in accounting policy for pensions; revised operating
segments; and changes in results presentation. The announcement
contains restated financial results for the year ended 31 December
2014 and, to aid comparison of RBS's fourth quarter 2015 results
with prior periods, restated financial information for the quarters
ended 30 September 2015 and 31 December 2014.
Pension accounting policy
In light of developments during 2015, in particular publication
by the International Accounting Standards Board of its exposure
draft of amendments to IFRIC 14 'IAS 19 - The Limit on a Defined
Benefit Asset, Minimum Funding Requirements and their Interaction',
RBS has revised its accounting policy for determining whether or
not it has an unconditional right to a refund of surpluses in its
employee pension funds. Previously, where trustees have the power
to use a scheme surplus to enhance benefits for members, RBS did
not regard such power, in and of itself, as undermining the bank's
unconditional legal right to a refund of a surplus existing at that
point in time. Under the new policy, where RBS has a right to a
refund, this is no longer regarded as unconditional if pension fund
trustees can use a scheme surplus to enhance benefits for plan
members. As a result of this policy change, a minimum funding
requirement to cover an existing shortfall in a scheme may give
rise to an additional liability and surpluses may not be recognised
in full. The accounting policy change is being applied
retrospectively and comparatives restated.
Segmental reorganisation
RBS continues to deliver on its plan to build a stronger,
simpler and fairer bank for both customers and shareholders. To
support this and reflect the progress made, the previously reported
operating segments will now realign as follows:
Personal & Business Banking (PBB) comprises two reportable
segments:
-- UK PBB serves individuals and mass affluent customers in the
UK together with small businesses (generally up to GBP2 million
turnover). UK PBB includes Ulster Bank customers in Northern
Ireland.
-- Ulster Bank RoI serves individuals and businesses in the
Republic of Ireland (RoI).
Commercial & Private Banking (CPB) comprises three
reportable segments:
-- Commercial Banking serves commercial and mid-corporate
customers in the UK.
-- Private Banking serves high net worth individuals in the
UK.
-- RBS International (RBSI) serves retail, commercial, corporate
and financial institution customers in Jersey, Guernsey, Isle of
Man and Gibraltar.
Corporate & Institutional Banking (CIB) serves UK and
western European customers, both corporates and financial
institutions, supported by trading and distribution platforms in
the UK, US and Singapore.
Capital Resolution includes CIB Capital Resolution and the
remainder of RBS Capital Resolution (RCR).
Williams & Glyn (W&G) comprises RBS England and Wales
branch-based businesses, along with certain small and medium
enterprises and corporate activities across the UK.
Central items & other includes corporate functions, such as
treasury, finance, risk management, compliance, legal,
communications and human resources. Central functions manages RBS
capital resources and RBS-wide regulatory projects and provides
services to the reportable segments. Balances in relation to
Citizens and the international private banking business are
included in Central items in the relevant periods.
The Royal Bank of Scotland Group plc (RBS)
Reporting changes
In line with RBS's strategy to be a simpler bank the following
reporting changes have been implemented in relation to the
presentation of the results.
One-off and other items
The following items were previously reported separately after
operating profit; they are now reported within operating
profit:
-- Own credit adjustments;
-- Gain/(loss) on redemption of own debt;
-- Write-down of goodwill;
-- Strategic disposals; and
-- RFS Holdings minority interest (RFS MI) (restated for periods up to and
including Q4 2014 only; this has been reported within operating profit since
Q1 2015).
Own credit adjustments are included within segmental results in
CIB, Capital Resolution and Central items (Treasury) in line with
where the related liabilities are recorded. The non-statutory
results will continue to show these items and restructuring costs
and litigation and conduct costs as separate line items within the
relevant caption of the income statement where significant.
Allocation of central balance sheet items
RBS allocates all central costs relating to Services and
Functions to the business using appropriate drivers; these are
reported as indirect costs in the segmental income statements.
However, previously central balance sheet items have not been
allocated. The assets (and risk-weighted assets) held centrally,
mainly relating to Treasury, are now allocated to the business
using appropriate drivers.
Revised treasury allocations
Treasury allocations which are included within segmental net
interest income and segmental net interest margins, have been
revised to reflect the following:
-- In preparation for the separation of W&G, the element of treasury allocations
previously charged to UK PBB is now retained centrally.
-- To reflect the impact of changes to the notional equity allocation detailed
below.
Revised segmental return on equity
RBS's CET 1 target is 13% but for the purposes of computing
segmental return on equity (ROE), to better reflect the
differential drivers of capital usage, segmental operating profit
after tax and adjusted for preference dividends is divided by
notional equity allocated at different rates of 11% (Commercial
Banking and Ulster Bank RoI), 12% (RBS International) and 15% for
all other segments, of the monthly average of segmental
risk-weighted assets after capital deductions (RWAes). This
notional equity was previously 13% for all segments. In addition,
due to changes in UK tax rules enacted in the Finance Act 2015, RBS
has increased its longer-term effective 31 December tax rate. The
notional tax rate used in the segmental ROE has been revised from
25% to 28% (Ulster Bank RoI - 15%; RBS International - 10%). RBS's
forward planning tax rate is 26%.
The Royal Bank of Scotland Group plc (RBS)
Annual results 2015
February 04, 2016 11:00 ET (16:00 GMT)
Total income - adjusted (2) 45 - 45
Operating expenses - adjusted (3) (356) - (356)
Operating profit - adjusted (2,3) 995 - 995
========================================== ---------- =========== ==========
31 December 2014
===================================
Allocated
to
Previously Reporting Capital
reported changes (1) Resolution
Capital and balance sheet GBPbn GBPbn GBPbn
========================================== ========== =========== ==========
Loans and advances to customers (gross) 21.9 - 21.9
Loan impairment provisions (10.9) - (10.9)
========================================== ========== =========== ==========
Net loans and advances to customers 11.0 - 11.0
Funded assets 14.9 - 14.9
Risk elements in lending 15.4 - 15.4
Customer deposits (excluding repos) 1.2 - 1.2
Provision coverage (4) 71% - 71%
Risk-weighted assets 22.0 - 22.0
========================================== ========== =========== ==========
Notes:
(1) Refer to page 2 for further details.
(2) Excluding own credit adjustments.
(3) Excluding restructuring costs.
(4) Provision coverage represents loan impairment provisions as
a percentage of risk elements in lending.
Central items & other
Impact
Income statement of
Pension revised Re-presentation Allocated to
==================
of one-off
Previously accounting treasury and Capital
policy other items Centre
reported impact allocations (1) (2) Resolution
Quarter ended 30 September
2015 GBPm GBPm GBPm GBPm GBPm GBPm
============================ ========== ========== =========== =============== ====== ==========
Central items not allocated (285) (16) (10) 20 (317) 26
============================ ========== ========== =========== =============== ====== ==========
Quarter ended 31 December
2014
============================ ========== ========== =========== =============== ====== ==========
Central items not allocated (620) (6) (50) (703) 27
============================ ========== ========== =========== =============== ====== ==========
Year ended 31 December
2014
============================ ========== ========== =========== =============== ====== ==========
Central items not allocated (860) (33) 86 (904) 97
============================ ========== ========== =========== =============== ====== ==========
Balance sheet
Impact
of
Pension revised Allocated to
==================
Previously accounting treasury Capital
policy Centre
reported impact allocations (2) Resolution
As at 30 September 2015 GBPbn GBPbn GBPbn GBPbn GBPbn
============================== ========== ========== =========== ====== ==========
Central items not allocated -
risk-weighted assets 87.7 (8.7) 72.1 6.9
Central items not allocated -
funded assets 116.9 0.4 (89.5) 26.7 1.1
============================== ========== ========== =========== ====== ==========
As at 31 December 2014
============================== ========== ========== =========== ====== ==========
Central items not allocated -
risk-weighted assets 84.7 (9.8) 68.8 6.1
Central items not allocated -
funded assets 169.2 0.3 (83.1) 85.4 1.0
============================== ========== ========== =========== ====== ==========
Notes:
(1) Refer to page 2 for further details.
(2) Centre includes unallocated costs.
This information is provided by RNS
The company news service from the London Stock Exchange
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