Reports

Profit Improves At Wealth Arm Of RBS

Tom Burroughes Group Editor London 28 February 2013

Profit Improves At Wealth Arm Of RBS

The wealth management arm of UK-listed Royal Bank of Scotland, which includes its flagship Coutts brand, reported an operating profit, before impairments, of £299 million ($453 million) last year, up from £273 million a year before.

The wealth management arm of UK-listed Royal Bank of Scotland, which includes its flagship Coutts brand, reported an operating profit, before impairments, of £299 million ($453 million) last year, up from £273 million a year before.

This part of RBS also reported impairment losses of £46 million, up from £25 million; total income over 2012 was £1.17 billion, up from £1.104 billion. The net interest margin was 3.73 per cent, up from 3.23 per cent, the banking group, whose parent is part-owned by the UK government in the wake of the 2008 financial crisis, said.

As far as the parent banking group was concerned, meanwhile, it reported a loss attributable to ordinary and B shareholders of £5.971 billion, widening from a loss of £1.997 billion in 2011.

Wealth details

At the wealth business, total assets under management at the end of 2012 – excluding deposits – were £28.9 billion, down from £29.5 billion at the end of September. Customer deposits were £38.9 billion, versus £38.7 at the end of September.

The cost/income ratio of the wealth business was 74 per cent at the end of last year, compared with 75 per cent a year earlier, it said.

A total of 5,300 staff worked in the wealth business at the end of 2012, a fall of 400 people from a year before.

RBS’s wealth business refocused on its new divisional strategy, with examples such as the sale of Coutts’ Latin American businesses and the completion of the rollout of Coutts global technology platform in the UK.

“By the end of the year the division had exited over 100 countries since the strategy was introduced and was serving clients in the remaining countries through one central operating platform, a clear demonstration of the division's commitment to its strategy,” the bank said.

In the fourth quarter of last year, Coutts launched its new Retail Distribution Review (RDR)-compliant advice proposition and products, the firm  continued.

“Significant investment was made during 2012 to ensure clients would continue to receive the best service, advice and products based on their specific needs. One example of this was the introduction of seven new UK and global RDR-compliant multi-asset funds, allowing clients to continue to invest in a broad range of asset classes matched to their needs and risk appetites,” it said.

Parental issues

RBS said it reported a 2012 operating profit of £3.462 billion, increasing from £1.824 billion in 2011; the pre-tax-loss of £5.165 billion was reported after an £4.649 billion accounting charge for improved own credit. The bank reported a Core Tier 1 ratio – a key barometer of financial strength – of 10.3 per cent and a loan-deposit ratio of 100 per cent.

Expenses fell by 4 per cent, with the bank saying it benefitted from the cost reduction programme started in 2009 and a 6,600 cut in core staffing levels.

As previously reported last December, RBS paid a total of £381 million in penalties after agreeing with authorities in the US and UK to settle charges of manipulating LIBOR and other key market trading rates.

The bank said that a further £450 million charge was taken in the fourth quarter relating to Payment Protection Insurance mis-selling claims.

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