Private Banking Arm Of RBS Logs Strong Rise In Profit For 2016, AuM Gained

Tom Burroughes Group Editor London 24 February 2017

Private Banking Arm Of RBS Logs Strong Rise In Profit For 2016, AuM Gained

The private banking arm of RBS logged a strong rise in profits for 2016, with the firm hailing an encouraging rise in assets under management.

Royal Bank of Scotland today said its private banking division, which incorporates Coutts and Adam & Company, logged an adjusted operating profit for 2016 of £149 million ($198 million), a 32 per cent rise from 2015.

Total income at this part of RBS increased by £13 million from the year before to £657 million last year, it said in a statement.

Adjusted operating expenses of £511 million fell by £7 million over the year, which RBS said was caused by a simpler business model. The adjusted cost/income ratio of the division narrowed to 78 per cent in 2016, down from 80 per cent the previous year.

RBS, which is part-owned by the UK government, has simplified its private banking operations, with international businesses under the Coutts brand being sold to Geneva-headquartered Union Bancaire Privee in 2015.

RBS as a whole logged an attributable loss of £6.955 billion in 2016, widening from a loss of £1.979 billion in 2015. The loss for the year included litigation and conduct costs of £5.868 billion and restructuring costs of £2.106 billion.

On a like-for-like basis, overall balances (banking, lending and investments) for RBS as a whole grew by more than £6 billion. Assets under management of £17.0 billion grew by £2 billion on a like-for-like basis, up 13 per cent compared to 2015, reflecting underlying growth and equity index inflation. On a reported basis, assets under management rose £3.1 billion from the level in 2015 as investment cash balances were included in assets under management for the first time in Q3 2016, the bank said.

Customer deposits grew by £3.5 billion from 2015, to reach £26.6 billion.

“Our latest full year results are a further encouraging sign that our strategy is working, with profits, income, return on equity, deposits, lending and AuMs all showing pleasing growth. We continue to travel in the right direction on costs. There is still further room for improvements across the board," said Peter Flavel, chief executive of Coutts.

“I am particularly encouraged by the £2 billion of growth in assets under management, a clear sign our clients increasingly see us as more than a bank and are turning to us for long term, reliable and strong returns on their investments," he continued.

“2016 saw us achieve a number of important milestones. We welcomed over 1,700 new clients, around 20 per cent of whom came from NatWest or Royal Bank of Scotland referrals, demonstrating the importance of this connectivity. We purchased our home of more than 100 years at 440 Strand and introduced several UK banking firsts including multi-currency bank cards and easy-to-use push notifications for online banking, CouttsID. We also successfully established our new Jersey booking centre," he said.

"We are determined to build on this success throughout 2017 and beyond. To that end, we are committed to investing in excess of £20 million per year for the next four years in the business, with a focus on our digital and wealth management propositions," he added.

Flavel told this publication that investment will include moves to further automate certain processes, such as the development of straight-through processing, and improve efficiencies.


Register for WealthBriefing today

Gain access to regular and exclusive research on the global wealth management sector along with the opportunity to attend industry events such as exclusive invites to Breakfast Briefings and Summits in the major wealth management centres and industry leading awards programmes