Financial Results

Profits Squeezed At Royal Bank of Scotland's Wealth Division, Assets Up

Tom Burroughes Group Editor London 5 November 2010

Profits Squeezed At Royal Bank of Scotland's Wealth Division, Assets Up

Operating profits before impairments at the wealth arm of Royal Bank of Scotland fell to £75 million ($121.6 million) in the quarter ending on 30 September, down from £120 million in the same period last year and £88 million in the previous three months.

Higher business investment costs and weaker investment fee income bit into profits during the quarter, the UK-listed bank said today in a statement.

RBS, which is partly owned by the UK government, has three private banking businesses: RBS Coutts, Coutts & Co, and the Scotland-based Adam & Co. The latter bank has seen a number of senior management defections in recent weeks and months.

Among the details of the results, RBS said its wealth division’s net interest margin was 3.44 per cent in the latest quarter, compared with 4.34 per cent a year ago. Its risk-weighted assets were £12.1 billion at 30 September, a 1.0 per cent increase year-on-year, the bank said.

The number of employees in the wealth division has risen, now standing at 5,100 from 5,000 at the end of June.

Assets under management – including client deposits – stood at £31.3 billion, up by 3 per cent from 30 June.

Total expenses increased by 6 per cent, primarily driven by investment in strategic initiatives, combined with continued front office staff investment and temporary resource to support the implementation of the new banking platform.

For RBS as a whole, the group made a loss attributable to shareholders of £1.146 billion in the third quarter, versus a loss a year ago of £1.8 billion; the bank made an operating profit before fair value of debt of £1.73 billion, compared with a profit on a comparable basis of £1.622 billion a year ago.

At the end of September, the bank had a Core Tier 1 capital ratio of 10.2 per cent.

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