RBS has reported a loss of net £8.2bn ($13.6bn), falling £3bn further into the red from a loss of £5.2bn in 2012.
Fiscal 2013 was the worst year for RBS since its £45bn loss and subsequent bailout from the UK government in 2008 following the global financial crisis.
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This expected loss includes regulatory and redress provisions of £3.8bn, and impairments and other losses of £4.8bn due to the creation of the so-called ‘bad-bank’ unit, RBS Capital Resolution (RCR).
A further blow to investors was a fall in operating profit of 15% from 2012, to £2.5bn.
Additional low points for the year at the bank include:
- The retail and commercial division is down 4% to £4bn, with lower income in UK corporate and international banking offsetting improved impairments in Ulster Bank and UK retail;
- Group revenue, excluding the RCR impact, is down 10% to £19.7bn, principally reflecting a £1.1bn reduction in markets income, with expenses down 4% to £13.3bn;
- Payment Protection Insurance (PPI) provisions reached a total of £900m for the full year 2013;
- Customer deposits for 2013 fell to £414bn from £434bn in 2012;
- Operating expenses decreased by £541m, 4%, to £13.3bn, and
- Loan to deposit ratio for the group remained unchanged at 94%.
Some more positive highlights for the group include:
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By GlobalData- Group net interest margin increased by 9 basis points to 2.01%;
- In line with the group’s strategy the bank’s assets fell to £1trn from £1.1trn in 2012, and
- Operating profit within the groups UK retail division increased by 3% to £1.9bn driven by a 39% decline in impairment losses.
Throughout 2013 RBS has been working hard to restructure and slim down its operations. In early November the bank announced it would be speeding up the spin off of US based Citizens which is expected to be completed at the end of 2016. Later in the month RBS sold its stake in World Pay for a gain on sale of £159m.
RBS will dispose of 314 branches to the Corsair Group in a £600m deal to be completed in 2015 or possibly early 2016; the branches will then adopt the Williams & Glyn name, a brand not witnessed on UK high streets since the 1980s.
Ross McEwan, who took over as RBS chief executive in October, said the bank’s performance in 2013 was "certainly sobering".
"This is a huge loss. It’s driven by pre-crisis issues but let’s not pretend it’s anything but huge," he said.
RBS has come under criticism following the announcement of £576m being set aside for staff bonuses, a drop of 15% on 2012. Of that sum, RBS revealed that £237m went to investment bankers.
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