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February 24, 2011updated 04 Apr 2017 1:08pm

Retail earnings help RBS cut losses

Royal Bank of Scotland (RBS) has slashed its net loss from £3.6bn ($5.8bn) in fiscal 2009 to £1.12bn for the 12 months to 31 December. RBS Retail & Commercial unit increased its income by 6% in fiscal 2010, driven by steady improvement in net interest margin over the course of the year. Net interest margin at RBS UK retail unit improved by 32 basis points to 3.91% while in the US, the margin increased by 48 basis points to 2.85%.

By Douglas Blakey

Royal Bank of Scotland (RBS) has slashed its net loss from £3.6bn ($5.8bn) in fiscal 2009 to £1.12bn for the 12 months to 31 December.

RBS’ Retail & Commercial unit increased its income by 6% in fiscal 2010, driven by steady improvement in net interest margin over the course of the year.

Net interest margin at RBS’ UK retail unit improved by 32 basis points to 3.91% while in the US, the margin increased by 48 basis points to 2.85%.

Operating profit at RBS’ UK division increased six-fold from £229m to £1.37bn while in the US, the retail unit returned to the black, posting a profit of £306m (2009:-£113m).

RBS’ Ireland-based business division, Ulster Bank, remained troubled with losses doubling from £368m to £761m.

Fiscal 2010 highlights included:

  • An improvement in RBS’ loan to deposit ratio to 117% from 135% at the end of 2009;
  • Group expenses fell by 4% to £16.7bn;
  • In the UK, RBS achieved a new mortgage lending market share of 11%, compared to its 8% share of stock;
  • UK retail savings balances grew by £8bn or 13% with 1.8 million accounts opened, outperforming the market total deposit growth of 3%;
  • Total UK retail deposits increased by 10% to £96.1bn;
  • Impairments were 33% lower in 2010 at £9.26bn;
  • UK retail impairments fell declined by 30% to £1.16bn;

Less positive was an 11% decline in UK non-interest income to £1.33bn; RBS pinned the fall on restructuring of current account overdraft fees in the final quarter of 2009.

At RBS’ Wealth division, operating profit fell by 27.6% to £304m while the bank’s insurance division slipped to a loss of £295m (2009: £59m profit).

RBS’ total group assets declined by 4.5% to £1.45trn.

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