Annual Report 2016

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“2016 was another difficult year for RBS shareholders, even though there is good progress to report on our strategy to rebuild a strong bank focused primarily on retail and commercial customers in the UK and Ireland.”

Howard Davies, Chairman

Our priorities and long term targets

  • Strength and sustainability CET1 ratio 13% RoTE ≥ 12%
  • Customer experience No.1 for service, trust and advocacy.
  • Simplifying the bank Cost:income ratio < 50%.
  • Supporting growth Leading market positions in every franchise.
  • Employee engagement Improve employee engagement.

Our 2016 performance at a glance

  • 6,955m)
    Loss attributable to ordinary shareholders
  • 4,082m)
    Operating loss before tax1
  • £4,249m
    PBB, CPB & NatWest Markets adjusted operating profit1
  • 66%
    Cost:income ratio - adjusted2
  • 13.4%
    Common Equity Tier 1 ratio3
  • 11.1%
    PBB, CPB & NatWest Markets Adjusted return on equity1,4

“In 2016 RBS made an attributable loss of £7.0 billion, mostly reflecting charges for outstanding litigation and conduct, and costs associated with restructuring of the bank. The financial impact of these issues is a difficult but necessary step in working through the bank’s legacy issues.”

Ross McEwan, Chief Executive

Delivery against our 2016 targets

Strategy goal 2016 target 2016
Strength and sustainability Maintain Bank CET1 ratio of 13% CET1 ratio of 13.4%
£2 billion AT1 issuance £2 billion equivalent AT1 issued in Q3 2016
Capital Resolution RWAs around £30-35 billion RWAs down £14.5 billion to £34.5 billion
Customer experience Narrow the gap to No.1 in NPS in every primary UK brand Year on year Commercial Banking have narrowed the gap. NatWest Personal, Ulster Business & Commercial in Northern Ireland and Ulster Business Direct in Republic of Ireland, have seen improvements in NPS.
Simplifying the bank Reduce operating expenses by £800 million Operating expenses down £985 million(1)
Supporting sustainable growth Net 4% growth in PBB and CPB customer loans Net lending in PBB and CPB up 10%
Employee engagement Raise employee engagement to within two points of the Global Finance Services (GFS) norm Down 3 points to be 6 points adverse to GFS norm


  1. Cost saving target and progress 2016 calculated using operating expenses excluding restructuring costs £2,106 million (2015 – £2,931 million), litigation and conduct costs £5,868 (2015 – £3,568 million), write down of goodwill nil (2015 – £498 million), write down of other intangible assets of £117 million (2015 – £75 million), the operating costs of Williams and Glyn £393 million (2015 – £359 million) and the VAT recovery £227 million.

How we create value for customers and society

Our activities generate outcomes across all parts of the economy:

Keeping money safe and accessible for our depositors, including preventing 498,000 cases of attempted fraud amounting to £303 million in the UK.(1)

Offering lending, advice and services to individuals. Supporting customers with financial life events, including £33.7 billion of gross new mortgage lending(2) to help our customers buy homes.

Enabling individuals and businesses to make payments effectively and efficiently, including more than doubling the number of products sold through our mobile channel compared with 2015.

Providing working capital and lending to help businesses meet their goals, including £30.5 billion(3) in lending to small and medium-sized enterprises across England, Scotland and Wales, and c. £1.0 billion in lending to infrastructure projects.

Supporting local communities, including £2.5 million(4) of grants made by our Skills & Opportunities Fund to 125 organisations, who support people from disadvantaged communities start-up in business or get into employment.

Supporting entrepreneurs to start up in business, including 1,736 businesses(5) helped through Entrepreneurial Spark powered by NatWest.

Investing in our people and partners to develop a skilled workforce, including the delivery of leadership training to almost 16,000 leaders through a comprehensive ‘Determined to Lead’ programme.

Payment of £1.32 billion(6) in tax to the UK Government, which supports central government and local authority spending.

Notes for how we create value for customers and society:

  1. Data relates to reported attempted fraud cases and prevented third party losses in the UK (not including policy declines for debit cards).
  2. Gross new mortgage lending across UK PBB, Ulster Bank RoI and RBSI.
  3. SME lending balances in over 9960 postcode sectors across England, Scotland & Wales.
  4. Data is compiled by Project North East (PNE) on and is based on the total spend allocated by each Regional Board.
  5. Data is compiled by Entrepreneurial Spark. The data includes all businesses which have been part of the programme since launch in 2012.
  6. Comprises £174 million corporate tax, £660 million irrecoverable VAT, £208 million bank levies and £279 million employer payroll taxes.

Our brands

Our brands are our main connection with customers. Each takes a clear and differentiated position that will help us strengthen our relationships with our customers, stand out in the market, and build the value of our brands.

NatWest serves over 14 million customers in England and Wales, supporting them with their banking needs, at all stages in their lives.

Royal Bank of Scotland is committed to serving Scottish communities and putting the interests of customers first.

Ulster Bank operates both in the Republic of Ireland and Northern Ireland. Understanding and delivering what matters for its customers is what Ulster Bank seeks to do every day.

Exceptional service sits at the heart of Coutts, a business that has been built on understanding the needs of their private and commercial clients.

Lombard is the UK’s largest provider of asset finance, helping to take businesses to the next level with a forward-looking entrepreneurial approach.

Adam & Company provides progressive private banking, tailoring its services and solutions to match each client and their unique needs.

Child & Co is one of the oldest private banks in the UK, providing bespoke banking services from the legal heart of London.

Drummonds has served private banking customers for over 300 years, providing a discreet and professional service.

As the bank of the British Armed Forces, Holt’s prides itself on understanding the complexities of serving in the military and providing a personalised service.

Isle of Man Bank is the ‘community bank’ and the island’s oldest native bank, offering retail, private and business banking services to local customers.

RBS International is one of the world’s leading offshore banks, operating under three distinct brands – RBS International, NatWest and Isle of Man Bank.

NatWest Markets provides financing and risk management to our core corporate and global financial institutional customers and trades with financial institutions, investors and counterparties for distribution and market making.

Our Structure

Notes for our 2016 performance at a glance:

  1. Operating profit before tax excluding own credit adjustments, (loss)/gain on redemption of own debt, strategic disposals, restructuring costs, litigation and conduct costs and write down of goodwill.
  2. Excluding own credit adjustments, (loss)/gain on redemption of own debt and strategic disposals, restructuring costs, litigation and conduct costs and write down of goodwill.
  3. Based on end-point Capital Requirements Regulation (CRR) Tier 1 capital and leverage exposure under the CRR Delegated Act.
  4. Tangible equity is equity attributable to ordinary shareholders less intangible assets.
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