rbs201011056k9.htm
 
FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549

 
 
Report of Foreign Private Issuer
 
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
 
For November 5, 2010
 
Commission File Number: 001-10306

 
The Royal Bank of Scotland Group plc

 
RBS, Gogarburn, PO Box 1000
Edinburgh EH12 1HQ

 
(Address of principal executive offices)
 
 
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
 
Form 20-F X
  
Form 40-F ___
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):_________

 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):_________


Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.


Yes
   ___
No X
 
 
If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- ________

 
 
The following information was issued as a Company announcement in London, England and is furnished pursuant to General Instruction B to the General Instructions to Form 6-K:

 
 
 
 
 
 
 


Statutory results
 
The condensed consolidated financial statements and related notes presented on pages 133 to 142 inclusive are on a statutory basis and include the results and financial position of RFS Holdings (RFS), the entity that acquired ABN AMRO. The interests of the State of the Netherlands and Santander in RFS are included in minority interests.

Legal separation of ABN AMRO Bank NV took place on 1 April 2010 from which date the results of ABN AMRO attributable to the Consortium members (RBSG, the Dutch State following its acquisition of Fortis, and Santander) are classified as discontinued operations.  The income statements for 2009 have been represented accordingly.
 
RBS Group – Q3 2010 Results
 
 
 

Condensed consolidated income statement
for the period ended 30 September 2010
 
 
Quarter ended
  
Nine months ended
 
30 September
 2010 
30 June 
2010 
30 September* 
2009  
  
30 September 
2010 
30 September* 
2009  
 
£m 
£m 
£m  
  
£m 
£m  
             
Interest receivable
5,584 
5,888 
5,693 
  
17,164 
20,334 
Interest payable
(2,173)
(2,212)
(2,573)
  
(6,535)
(10,365)
             
Net interest income
3,411 
3,676
3,120 
  
10,629 
9,969 
             
Fees and commissions receivable
2,037 
2,053 
1,919 
  
6,141 
6,385 
Fees and commissions payable
(611)
(579)
(545)
  
(1,762)
(1,896)
Income from trading activities
277 
2,110 
1,088 
  
4,153 
3,052 
Gain on redemption of own debt
- 
553 
- 
  
553 
3,790 
Other operating income (excluding insurance
  premium income)
(317)
346 
(77)
  
476 
569 
Insurance net premium income
1,289 
1,278 
1,301 
  
3,856 
3,958 
             
Non-interest income
2,675 
5,761 
3,686 
  
13,417 
15,858 
             
Total income
6,086 
9,437 
6,806 
  
24,046 
25,827 
             
Staff costs
(2,423)
(2,365)
(2,363)
  
(7,477)
(7,499)
Premises and equipment
(611)
(547)
(631)
  
(1,693)
(1,909)
Other administrative expenses
(914)
(1,022)
(1,062)
  
(2,947)
(3,265)
Depreciation and amortisation
(603)
(519)
(534)
  
(1,604)
(1,566)
Write-down of goodwill and other intangible
  assets
- 
- 
- 
  
- 
(311)
             
Operating expenses
(4,551)
(4,453)
(4,590)
  
(13,721)
(14,550)
             
Profit before other operating charges and
  impairment losses
1,535 
4,984 
2,216 
  
10,325 
11,277 
Insurance net claims
(1,142)
(1,323)
(1,145)
  
(3,601)
(3,036)
Impairment losses
(1,953)
(2,487)
(3,279)
  
(7,115)
(10,800)
             
Operating (loss)/profit before tax
(1,560)
1,174 
(2,208)
  
(391)
(2,559)
Tax credit/(charge)
295 
(825)
617 
  
(637)
1,073 
             
(Loss)/profit from continuing operations
(1,265)
349 
(1,591)
  
(1,028)
(1,486)
             
Loss on distribution of ABN AMRO Bank NV to the State of the Netherlands and Santander
- 
(1,019)
- 
  
(1,019)
- 
Other profits from discontinued
  operations, net of tax
18 
- 
- 
  
331 
30 
             
Profit/(loss) from discontinued operations,
  net of tax
18 
(1,019)
- 
  
(688)
30 
             
Loss for the period
(1,247)
(670)
(1,591)
  
(1,716)
(1,456)
Minority interests
101 
946 
36 
  
703 
(595)
Preference share and other dividends
- 
(19)
(245)
  
(124)
(791)
             
(Loss)/profit attributable to ordinary and B
  shareholders
(1,146)
257 
(1,800)
  
(1,137)
(2,842)
             
Basic (loss)/earnings per ordinary and B share
  from continuing operations
(1.1p)
0.8p 
(3.2p)
  
(0.5p)
(5.2p)
             
Basic loss per ordinary and B share from
  discontinued operations
- 
- 
- 
  
- 
(0.1p)

* restated for the reclassification of the results attributable to other Consortium Members as discontinued operations.
 
RBS Group – Q3 2010 Results
 
 
 

Condensed consolidated statement of comprehensive income
for the period ended 30 September 2010
 
 
Quarter ended
  
Nine months ended
 
30 September 
2010 
30 June 
2010 
30 September 
2009 
  
30 September 
2010
30 September 
2009 
 
£m 
 £m 
£m 
  
£m 
 £m 
             
Loss for the period
(1,247)
(670)
(1,591)
  
(1,716)
(1,456)
             
Other comprehensive income
            
Available-for-sale financial assets
235 
93 
3,079 
  
743 
1,419 
Cash flow hedges
553 
1,449 
(90)
  
1,807 
274 
Currency translation
(647)
(91)
1,777 
  
47 
(2,504)
Tax on other comprehensive income
(256)
(331)
(857)
  
(702)
(379)
             
Other comprehensive (loss)/income for
  the period, net of tax
(115)
1,120 
3,909 
  
1,895 
(1,190)
             
Total comprehensive (loss)/income for
  the period
(1,362)
450 
2,318 
  
179 
(2,646)
             
Attributable to
            
Minority interests
(117)
(457)
1,075 
  
(249)
(743)
Preference shareholders
- 
- 
242 
  
105 
752 
Paid-in equity holders
- 
19 
3 
  
19 
39 
Ordinary and B shareholders
(1,245)
888 
998 
  
304 
(2,694)
             
 
(1,362)
450 
2,318 
  
179 
(2,646)


 
RBS Group – Q3 2010 Results
 
 
 


Financial review
 
Operating loss
Operating loss before tax for the quarter was £1,560 million compared with a profit of £1,174 million in the second quarter of 2010.

Total income
Total income decreased 36% to £6,086 million in the quarter.

Net interest income fell by 7% to £3,411 million.

Non-interest income decreased to £2,675 million from £5,761 million in the second quarter of 2010.

Operating expenses
Operating expenses increased to £4,551 million of which integration and restructuring costs were £311 million compared with £254 million in the second quarter of 2010.

Net insurance claims
Bancassurance and general insurance claims, after reinsurance, decreased by 14% to £1,142 million.

Impairment losses
Impairment losses were £1,953 million, compared with £2,487 million in the second quarter of 2010.

Taxation
The tax credit for the third quarter of 2010 was £295 million compared with a tax charge of £825 million in the second quarter of 2010.

Earnings
Basic earnings per ordinary share including discontinued operations was a loss of 1.1p per share compared with earnings of 0.8p for the second quarter of 2010.

Capital
Capital ratios at 30 September 2010 were Core Tier 1 of 10.2%, Tier 1 of 12.5% and Total of 13.5%.
 
RBS Group – Q3 2010 Results
 
 
 

Condensed consolidated balance sheet
at 30 September 2010
 
 
30 September 
2010 
30 June 
2010 
31 December 
2009 
(audited)
 
£m 
£m 
£m 
       
Assets
      
Cash and balances at central banks
61,416 
29,591 
52,261 
Net loans and advances to banks
60,334 
54,489 
56,656 
Reverse repurchase agreements and stock borrowing
48,407 
47,663 
35,097 
Loans and advances to banks
108,741 
102,152 
91,753 
Net loans and advances to customers
528,049 
539,375 
687,353 
Reverse repurchase agreements and stock borrowing
44,503 
39,396 
41,040 
Loans and advances to customers
572,552 
578,771 
728,393 
Debt securities
226,410 
236,260 
267,254 
Equity shares
21,755 
17,326 
19,528 
Settlement balances
22,874 
20,718 
12,033 
Derivatives
548,805 
522,871 
441,454 
Intangible assets
14,369 
14,482 
17,847 
Property, plant and equipment
17,398 
17,608 
19,397 
Deferred taxation
5,909 
5,839 
7,039 
Prepayments, accrued income and other assets
11,908 
14,095 
20,985 
Assets of disposal groups
17,450 
22,340 
18,542 
       
Total assets
1,629,587 
1,582,053 
1,696,486 
       
Liabilities
      
Bank deposits
80,304 
96,710 
104,138 
Repurchase agreements and stock lending
41,465 
44,165 
38,006 
Deposits by banks
121,769 
140,875 
142,144 
Customer deposits
420,639 
420,890 
545,849 
Repurchase agreements and stock lending
87,287 
70,655 
68,353 
Customer accounts
507,926 
491,545 
614,202 
Debt securities in issue
235,083 
217,317 
267,568 
Settlement balances
20,628 
19,730 
10,413 
Short positions
44,004 
42,994 
40,463 
Derivatives
543,397 
508,966 
424,141 
Accruals, deferred income and other liabilities
23,667 
24,867 
30,327 
Retirement benefit liabilities
2,637 
2,611 
2,963 
Deferred taxation
2,270 
2,195 
2,811 
Insurance liabilities
6,782 
6,521 
10,281 
Subordinated liabilities
27,890 
27,523 
37,652 
Liabilities of disposal groups
16,154 
17,615 
18,890 
       
Total liabilities
1,552,207 
1,502,759 
1,601,855 
       
Equity
      
Minority interests
1,780 
2,492 
16,895 
Owners’ equity*
      
  Called up share capital
15,029 
15,029 
14,630 
  Reserves
60,571 
61,773 
63,106 
       
Total equity
77,380 
79,294 
94,631 
       
Total liabilities and equity
1,629,587 
1,582,053 
1,696,486 
       
* Owners’ equity attributable to:
      
Ordinary and B shareholders
70,856 
72,058 
69,890 
Other equity owners
4,744 
4,744 
7,846 
       
 
75,600 
76,802 
77,736 


 
RBS Group – Q3 2010 Results
 
 
 


Commentary on condensed consolidated balance sheet
 
Total assets of £1,629.6 billion at 30 September 2010 were up £47.5 billion, 3%, compared with 30 June 2010.

Cash and balances at central banks were up £31.8 billion, 108% to £61.4 billion.

Loans and advances to banks increased by £6.6 billion, 6%, to £108.7 billion. Reverse repurchase agreements and stock borrowing (‘reverse repos’) were up £0.7 billion, 2% to £48.4 billion and bank placings rose £5.8 billion, 11%, to £60.3 billion as a result of increased placings on the inter-bank markets.

Loans and advances to customers decreased £6.2 billion, 1%, to £572.6 billion. Within this reverse repos were up £5.1 billion, 13% to £44.5 billion. Excluding reverse repos, customer lending decreased by £11.3 billion, 2%, to £528.0 billion or by £9.8 billion before impairment provisions. This reflected reductions, in constant currency terms, in Non-Core of £6.8 billion, together with declines in UK Corporate £1.7 billion, Global Transaction Services, £1.2 billion, Global Banking & Markets, £1.2 billion and US Retail & Commercial, £1.1 billion together with the effect of exchange rate movements, £0.2 billion. These were offset by growth in UK Retail, £1.9 billion, and Wealth, £0.6 billion.

Equity shares increased £4.4 billion, 26%, to £21.8 billion driven by increased holdings within Global Banking & Markets.

Settlement balances rose £2.2 billion, 10%, to £22.9 billion as a result of customer activity principally within Global Banking & Markets.

Movements in the value of derivative assets, up £25.9 billion, 5%, to £548.8 billion, and liabilities, up £34.4 billion, 7%, to £543.4 billion, primarily reflect changes in interest rates, currency movements, with Sterling strengthening against the US dollar offset in part by weakening against the Euro, and growth in trading volumes.

Assets of disposal groups reduced by £4.9 billion, 22%, to £17.5 billion resulting primarily from the completion of disposals of RBS Sempra’s Oil, Metals and European Gas & Power business, the Eurosales Finance businesses in France and Germany and certain of the Group’s Asian and Latin American businesses.

Deposits by banks declined £19.1 billion, 14%, to £121.8 billion, reflecting reduced inter-bank deposits, down £16.4 billion, 17%, to £80.3 billion and decreased repurchase agreements and stock lending (‘repos’), down £2.7 billion, 6%, to £41.5 billion.

Customer accounts rose £16.4 billion, 3%, to £507.9 billion. Within this, repos increased £16.6 billion, 24%, to £87.3 billion.  Excluding repos, customer deposits were down £0.3 billion, to £420.6 billion, with reductions, in constant currency terms, in Global Banking & Markets, £4.8 billion, Wealth, £1.4 billion and Ulster Bank, £0.2 billion, together with the effect of exchange rate movements of £1.5 billion. This was partially offset by growth in UK Corporate, £2.6 billion, Global Transaction Services, £2.3 billion, UK Retail, £1.4 billion and US Retail & Commercial, £1.1 billion.
 
RBS Group – Q3 2010 Results
 
 
 


Commentary on condensed consolidated balance sheet
 
Debt securities in issue were up £17.8 billion, 8%, to £235.1 billion, principally as a result of the Group’s capital raising programme in the third quarter, coupled with movements in Global Banking & Markets.

Liabilities of disposal groups declined £1.5 billion, 8%, to £16.2 billion primarily reflecting the completion of several disposals in the quarter.

Owners' equity reduced by £1.2 billion, 2%, to £75.6 billion. The attributable loss for the period, £1.1 billion, and exchange rate movements, £0.7 billion, were offset in part by an increase in cash flow hedging reserves, £0.4 billion, and reduced losses in available-for-sale reserves £0.2 billion.
 
RBS Group – Q3 2010 Results
 
 
 

Condensed consolidated statement of changes in equity
for the period ended 30 September 2010
 

 
 
Nine months 
 ended 
30 September 
2010 
Six months 
 ended 
30 June 
2010 
Year ended 
31 December 
 2009 
(audited)
 
£m 
£m 
£m 
       
Called-up share capital
      
At beginning of period
14,630 
14,630 
9,898 
Ordinary shares issued in respect of placing and open offers
- 
- 
4,227 
B shares issued
- 
- 
510 
Other shares issued during the period
402 
401 
- 
Preference shares redeemed during the period
(2)
(2)
(5)
       
At end of period
15,030 
15,029 
14,630 
       
Paid-in equity
      
At beginning of period
565 
565 
1,073 
Securities redeemed during the period
(132)
(132)
(308)
Transfer to retained earnings
(2)
(2)
(200)
       
At end of period
431 
431 
565 
       
Share premium account
      
At beginning of period
23,523 
23,523 
27,471 
Ordinary shares issued in respect of placing and open offer, net of £95 million expenses
- 
- 
1,047 
Other shares issued during the period
217 
217 
- 
Preference shares redeemed during the period
- 
- 
(4,995)
Redemption of preference shares classified as debt
118 
118 
- 
       
At end of period
23,858 
23,858 
23,523 
       
Merger reserve
      
At beginning of period
25,522 
25,522 
10,881 
Issue of B shares, net of £399 million expenses
- 
- 
24,591 
Transfer to retained earnings
(12,250)
(12,250)
(9,950)
       
At end of period
13,272 
13,272 
25,522 
       
Available-for-sale reserves
      
At beginning of period
(1,755)
(1,755)
(3,561)
Unrealised gains in the period
1,327 
647 
1,202 
Realised (gains)/losses in the period
(535)
(127)
981 
Taxation
(263)
(208)
(377)
Recycled to profit or loss on disposal of businesses, net of £6 million tax
(16)
(16)
- 
       
At end of period
(1,242)
(1,459)
(1,755)
       
Cash flow hedging reserve
      
At beginning of period
(252)
(252)
(876)
Amount recognised in equity during the period
329 
(58)
380 
Amount transferred from equity to earnings in the period
138 
17 
513 
Taxation
(154)
- 
(269)
Recycled to profit or loss on disposal of businesses, net of £20 million tax
58 
58 
- 
       
At end of period
119 
(235)
(252)

 
RBS Group – Q3 2010 Results
 
 
 

Condensed consolidated statement of changes in equity
for the period ended 30 September 2010 (continued)
 
 
Nine months 
 ended 
30 September 
2010 
Six months 
 ended 
30 June 
2010 
Year ended 
 31 December 
 2009 
(audited)
 
£m 
£m 
£m 
       
Foreign exchange reserve
      
At beginning of period
4,528 
4,528 
6,385 
Retranslation of net assets
997 
1,775 
(2,322)
Foreign currency (losses)/gains on hedges of net assets
(452)
(609)
456 
Taxation
29 
72 
9 
Recycled to profit or loss on disposal of businesses
(17)
(11)
- 
       
At end of period
5,085 
5,755 
4,528 
       
Capital redemption reserve
      
At beginning of period
170 
170 
170 
Preference shares redeemed during the period
2 
2 
- 
       
At end of period
172 
172 
170 
       
Contingent capital reserve
      
At beginning of period
(1,208)
(1,208)
- 
Contingent capital agreement – consideration payable
- 
- 
(1,208)
       
At end of period
(1,208)
(1,208)
(1,208)
       
Retained earnings
      
At beginning of period
12,134 
12,134 
7,542 
(Loss)/profit attributable to ordinary shareholders and other equity owners
      
- continuing operations
(985)
163 
(2,600)
- discontinued operations
(28)
(30)
(72)
Equity preference dividends paid
(105)
(105)
(878)
Paid-in equity dividends paid, net of tax
(19)
(19)
(57)
Transfer from paid-in equity
      
- gross
2 
2 
200 
- taxation
(1)
(1)
- 
Equity owners gain on withdrawal of minority interest
      
- gross
40 
40 
629 
- taxation
(11)
(11)
(176)
Redemption of equity preference shares
(2,968)
(2,968)
- 
Gain on redemption of equity preference shares
609 
609 
- 
Redemption of preference shares classified as debt
(118)
(118)
- 
Transfer from merger reserve
12,250 
12,250 
9,950 
Actuarial losses recognised in retirement benefit schemes
      
- gross
- 
- 
(3,756)
- taxation
- 
- 
1,043 
Net cost of shares bought and used to satisfy share-based payments
(11)
(9)
(16)
Share-based payments
      
- gross
103 
61 
325 
- taxation
12 
5 
- 
       
At end of period
20,904 
22,003 
12,134 
       
Own shares held
      
At beginning of period
(121)
(121)
(104)
Shares purchased during the period
(711)
(704)
(33)
Shares issued under employee share schemes
11 
9 
16 
       
At end of period
(821)
(816)
(121)
       
Owners’ equity at end of period
75,600 
76,802 
77,736 


 
RBS Group – Q3 2010 Results
 
 
 

Condensed consolidated statement of changes in equity
for the period ended 30 September 2010 (continued)
 
 
Nine months 
 ended 
30 September 
2010 
Six months 
 ended 
30 June 
2010 
Year ended 
31 December 
2009 
(audited)
 
£m 
£m 
£m 
       
Minority interests
      
At beginning of period
16,895 
16,895 
21,619 
Currency translation adjustments and other movements
(481)
(461)
(1,434)
(Loss)/profit attributable to minority interests
      
- continuing operations
(43)
74 
382 
- discontinued operations
(660)
(676)
(33)
Dividends paid
(4,217)
(4,171)
(313)
Movements in available-for-sale securities
      
- unrealised (losses)/gains in the period
(54)
22 
299 
- realised losses/(gains) in the period
36 
(3)
(466)
- taxation
5 
1 
(36)
- recycled to profit or loss on disposal of discontinued operations, net of
  £2 million tax
(7)
(7)
- 
Movements in cash flow hedging reserves
      
- amount recognised in equity during the period
(99)
(165)
(209)
- taxation
33 
47 
59 
- recycled to profit or loss on disposal of discontinued operations, net of £340
  million tax
1,021 
1,036 
- 
Actuarial gains recognised in retirement benefit schemes
      
- gross
- 
- 
91 
- taxation
- 
- 
1 
Equity raised
501 
501 
9 
Equity withdrawn and disposals
(11,110)
(10,561)
(2,445)
Transfer to retained earnings
(40)
(40)
(629)
       
At end of period
1,780 
2,492 
16,895 
       
Total equity at end of period
77,380 
79,294 
94,631 
       
Total comprehensive income/(loss) recognised in the statement of
  changes in equity is attributable as follows:
      
Minority interests
(249)
(132)
(1,346)
Preference shareholders
105 
105 
878 
Paid-in equity holders
19 
19 
57 
Ordinary and B shareholders
304 
1,549 
(5,747)
       
 
179 
1,541 
(6,158)


 
RBS Group – Q3 2010 Results
 
 
 


Notes on statutory results
 
1. Basis of preparation
Having reviewed the Group’s forecasts, projections and other relevant evidence, the directors have a reasonable expectation that the Group will continue in operational existence for the foreseeable future.  Accordingly, the IMS for the nine months ended 30 September 2010 has been prepared on a going concern basis.
 
 
2. Litigation and investigations developments
Except for the developments noted below, there have been no material changes to the litigation or investigations as disclosed in the Interim Results for the six months ended 30 June 2010.

Payment Protection Insurance ("PPI")
The FSA published its final policy statement on 10 August 2010 and instructed firms to implement the measures contained in it by 1 December 2010. The new rules impose significant changes with respect to the handling of mis-selling PPI complaints. On 8 October 2010, the British Bankers’ Association filed an application for judicial review of the FSA’s policy statement and of related guidance issued by the Financial Ombudsman Service.
 
RBS Group – Q3 2010 Results
 
 
 


Additional information
 
Statutory results
Financial information contained in this document does not constitute statutory accounts within the meaning of section 435 of the Companies Act 2006 (‘the Act’). The statutory accounts for the year ended 31 December 2009 have been filed with the Registrar of Companies. The report of the auditors on those statutory accounts was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Act.
 
RBS Group – Q3 2010 Results
 
 
 


 
 
Signatures


 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.







 
 
Date: 5 November 2010
 
 
THE ROYAL BANK OF SCOTLAND GROUP plc (Registrant)
 
 
 
By:
/s/ Jan Cargill
 
 
Name:
Title:
 Jan Cargill
 Deputy Secretary