RBS continues to deliver on its plan to build a strong, simple and fair bank for both customers and
shareholders, and remains committed to delivering its 2016 targets. RBS reported a profit before tax of £421 million for Q1 2016. An attributable loss of £968 million included payment of the final Dividend Access Share (DAS) dividend of £1,193 million to the UK Government.
Income was broadly stable compared with Q1 2015 across our core Personal & Business Banking
(PBB) and Commercial & Private Banking (CPB) franchises. In Q1 2016, core PBB and CPB net loans and advances grew by 15% on an annualised basis with strong growth in both the mortgage and commercial businesses. RBS has made good progress on customer Net Promoter Score (NPS) in the last year, although there still remains much to do. Common Equity Tier 1 ratio (CET1) of 14.6% remains in excess of target. Adjusted return on equity(1) across our core PBB, CPB and CIB franchises was 10.9% in Q1 2016.
As a result of further extensive analysis on the separation and divestment of Williams & Glyn
throughout Q1 2016, we have recently concluded that there is a significant risk that this will not be
achieved by 31 December 2017 and alternative means to achieve this are being explored.
- An attributable loss(2) of £968 million in Q1 2016 compared with £459 million in Q1 2015. Excluding the
final DAS dividend of £1,193 million, the Bank made an attributable profit(2) of £225 million
notwithstanding IFRS volatility(3) losses of £356 million, restructuring costs of £238 million and an
impairment charge of £223 million largely related to its shipping portfolio. An own credit adjustment
gain of £256 million was recorded in Q1 2016.
- Operating profit was £421 million in Q1 2016 compared with £37 million in Q1 2015. Adjusted
operating profit(4) of £440 million in Q1 2016 was down from £1,355 million in Q1 2015 primarily due to
Capital Resolution and the IFRS volatility charge.
- Net interest margin (NIM) was stable compared with Q1 2015 at 2.15% as the benefit from reductions
in the low yielding non-core assets has been largely offset by modest asset margin pressure and mix
impacts across the core franchises.
- Adjusted operating expenses(5) were down by £157 million compared with Q1 2015. Excluding
expenses associated with Williams & Glyn and write down of intangible assets, adjusted operating
expenses were down £189 million.
- Restructuring costs were £238 million in the quarter, down £209 million, or 47%, compared with Q1
2015. Litigation and conduct costs of £31 million compared with £856 million in Q1 2015 and £2,124
million in Q4 2015, which included additional provisions for mortgage-backed securities and foreign
exchange litigation in the US, additional PPI provisions and other customer redress.
- Further to the announcement on 27 January 2016, RBS made a payment of £4.2 billion during March
to The Royal Bank of Scotland Group Pension Fund, being an accelerated payment of existing
committed future contributions. The impact of the £4.2 billion accelerated payment was largely
reflected in the year end financial statements; the incremental impact of the accelerated payment
being made during March was to reduce the CET1 ratio by around 30 basis points.
- Tangible net asset value (TNAV) was 351p per ordinary share at 31 March 2016, broadly stable in the
quarter. A 14p reduction due to the payment of the final Dividend Access Share dividend and the
accelerated pension payment was offset by gains recognised in foreign exchange reserves (5p)
reflecting the strengthening of the US dollar and the euro, and cash flow hedging reserves (8p) as
swap rates decreased.
(1) Excluding restructuring costs, litigation and conduct costs, write down of goodwill, own credit adjustments, loss on redemption of own debt and strategic disposals.
(2) Attributable to ordinary shareholders.
(3) IFRS volatility relates to loans which are economically hedged but for which hedge accounting is not permitted under IFRS.
(4) Operating profit/(loss) before tax, own credit adjustments, loss on redemption of own debt, strategic disposals and excluding restructuring costs, litigation and conduct costs and write down of goodwill.
(5) For unadjusted operating profit and expenses see segment performance on pages 19 to 21.