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%.

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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