Royal Bank of Scotland
(RBS) has posted a larger than expected loss for fiscal 2011 of
£1.99bn ($3.12bn), up 77% year-on-year following writedowns of its
Eurozone debt holdings and provisions against PPI
mis-selling.

On a pre-tax basis, RBS
lost £766m for the 12 months to 31 December 2011, against £399m in
fiscal 2010.

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RBS, 82% owned by the UK
government as a result of the £45bn state bail-out in 2008,
continues to be hammered by losses at its Northern Ireland-based
retail focused Ulster Bank.

Ulster Bank losses
widened to £1.02bn as Irish credit conditions remained problematic.
Ulster Bank impairments alone totaled almost £3.8bn.

RBS highlights in fiscal
2011 included:

  • RBS Insurance turned loss into profit, a
    £749m improvement on 2010;
  • the group loan:deposit ratio improved by
    10 percentage points to 108% from 118% in 2010;
  • UK retail operating profit rose 45% to
    £1.99bn, with income flat but expenses 6% lower and impairments
    down 32%.

During 2011, RBS reduced
headcount across its UK retail division by 1.8% or a net 500FTE to
27,700 FTE’s.

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Across the group, RBS
cut only 1.1% of its workforce by a net 1,700 FTE to 146,800;
further job losses can be expected to be announced during
2012.

RBS said that its
investment in customer service was starting to pay off with the UK
Retail division achieving its goal of serving 80% of its customers
in less than 5 minutes in its busiest branches and answering 90% of
all incoming calls in less than a minute.

Digital channels
investments also showed signs of paying off: the iPhone app for RBS
and NatWest customers was updated and has now been downloaded by
one millioncustomers.

Less positive metrics
included a 2 percentage point increase year-on-year in the group
cost-income ratio to 62%.

RBS group net interest
margin also moved in the wrong direction, falling by 9 basis points
to 1.92%.

Total group assets
actually rose in fiscal 2011, by 3.6% to £1.51trn although RBS’
funded balance sheet – total assets less derivatives – declined by
5% to £977m.

RBS said that the deal
to dispose of 318 UK branches to Santander is making good progress,
with an expected date for execution of the branches sale on target
for the fourth quarter of 2012.