Royal Bank of Scotland : Segmental reporting restatement

Segmental Reporting Restatement

Document

April 2019

The Royal Bank of Scotland Group plc

Overview of business re-segmentation

This announcement sets out changes to RBS's operating segments and consequent changes in results presentation. The announcement contains re-presented financial results for the year ended 31 December 2018 and, is presented to aid comparison of RBS's quarter ended 31 March 2019 results with prior periods. Re-presented financial information for the quarters ended 31 December 2018 and 31 March 2018 are included.

Segmental reorganisation

RBS continues to deliver on its plan to build a strong, simple and fair bank for both customers and shareholders. To support this, the following previously reported operating segments are now realigned, with comparatives re-presented:

•Effective from 1 January 2019, Business Banking has been transferred from UK Personal and Business Banking (UK PBB) to Commercial Banking as the nature of the business, including distribution channels, products and customers, are more closely aligned to the Commercial Banking (CB) business. Concurrent with the transfer, UK PBB has been renamed to UK Personal Banking (UK PB) and the previous franchise combining UK PBB (now UK PB) and Ulster Bank RoI has been renamed Personal & Ulster. The Commercial & Private Banking franchise has also been renamed to Commercial & Private.

Quarter ended 31 March 2019 results

RBS's results for the quarter ended 31 March 2019 will be announced on Friday 26 April 2019. These results will be reported on the new structure and reporting basis as described above.

In conjunction with this Segmental Reporting Restatement Document, a financial supplement showing re-presented financial information for the last nine quarters is available at www.rbs.com/results.

Forward-looking statements

This document contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, such as statements that include, without limitation, the words 'expect', 'estimate', 'project', 'anticipate', 'commit', 'believe', 'should', 'intend', 'plan', 'could', 'probability', 'risk', 'Value-at-Risk (VaR)', 'target', 'goal', 'objective', 'may', 'endeavour', 'outlook', 'optimistic', 'prospects' and similar expressions or variations on these expressions. These statements concern or may affect future matters, such as RBSG's future economic results, business plans and current strategies. In particular, this document includes forward-looking statements relating to RBSG in respect of, but not limited to: its regulatory capital position and related requirements, its financial position, profitability and financial performance (including financial, capital and operational targets), its access to adequate sources of liquidity and funding, increasing competition from new incumbents and disruptive technologies, its impairment losses and credit exposures under certain specified scenarios, substantial regulation and oversight, ongoing legal, regulatory and governmental actions and investigations, LIBOR, EURIBOR and other benchmark reform and RBSG's exposure to economic and political risks (including with respect to Brexit and climate change), operational risk, conduct risk, cyber and IT risk and credit rating risk. Forward-looking statements are subject to a number of risks and uncertainties that might cause actual results and performance to differ materially from any expected future results or performance expressed or implied by the forward-looking statements. Factors that could cause or contribute to differences in current expectations include, but are not limited to, legislative, political, fiscal and regulatory developments, accounting standards, competitive conditions, technological developments, interest and exchange rate fluctuations and general economic conditions. These and other factors, risks and uncertainties that may impact any forward-looking statement or RBSG's actual results are discussed in RBSG's UK 2018 Annual Report and Accounts (ARA) and materials filed with, or furnished to, the US Securities and Exchange Commission, including, but not limited to, RBSG's most recent Annual Report on Form 20-F and Reports on Form 6-K. The forward-looking statements contained in this document speak only as of the date of this document and RBSG does not assume or undertake any obligation or responsibility to update any of the forward-looking statements contained in this document, whether as a result of new information, future events or otherwise, except to the extent legally required.

Document roadmap

Pages 2 to 5 of this document show the income statement, selected balance sheet line items and key metrics for the new reportable segments for the year and quarter ended 31 December 2018 and for the quarter ended 31 March 2018. The Re- segmentation reconciliation Appendix - summarises how Business Banking area is allocated to the reportable operating segment Commercial Banking.

For further information contact:

Alexander Holcroft Investor Relations [phone]

Group Media Centre [phone]

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RBS - Segmental Reporting Restatement Document April 2019

Re-presented customer segments

						Year ended 31 December 2018
		Personal & Ulster				Commercial & Private
		UK Personal	Ulster Bank			Commercial	Private		RBS	NatWest	Central items	Total
		Banking (1)	RoI			Banking	Banking		International	Markets	& other (2)	RBS
Income statement		£m	£m			£m	£m		£m	£m	£m	£m
Net interest income	4,283		444			2,855	518		466	112	(22)	8,656
Non-interest income	771		166			1,747	257		128	1,238	347	4,654
Own credit adjustments		-	-			-	-		-	92	-	92
Total income	5,054		610			4,602	775		594	1,442	325	13,402
Direct expenses
- staff	(698)		(202)			(739)	(161)		(102)	(557)	(1,190)	(3,649)
- other	(266)		(103)			(255)	(66)		(67)	(241)	(2,712)	(3,710)
Indirect expenses	(1,464)		(185)			(1,294)	(229)		(91)	(415)	3,678	-
Strategic costs
- direct	(41)		(2)			(33)	-		(3)	(195)	(730)	(1,004)
- indirect	(185)		(20)			(122)	(21)		(6)	(43)	397	-
Litigation and conduct costs	(213)		(71)			(44)	(1)		9	(153)	(809)	(1,282)
Operating expenses	(2,867)		(583)			(2,487)	(478)		(260)	(1,604)	(1,366)	(9,645)
Operating profit/(loss) before impairment (losses)/releases	2,187		27			2,115	297		334	(162)	(1,041)	3,757
Impairment (losses)/releases	(339)		(15)			(147)	6		2	92	3	(398)
Operating profit/(loss)	1,848		12			1,968	303		336	(70)	(1,038)	3,359
Key metrics
Return on equity (3)	24.7%		0.5%			12.1%	15.4%		24.4%	(2.0%)	nm	4.8%
Net interest margin	2.67%		1.79%			1.96%	2.52%		1.71%	0.40%	nm	1.98%
Cost:income ratio (4)	56.7%		95.6%			52.8%	61.7%		43.8%	111.2%	nm	71.7%
Loan impairment rate	0.23%		0.08%			0.14%	nm		nm	nm	nm	0.13%
							As at 31 December 2018
Capital and balance sheet		£bn	£bn			£bn	£bn		£bn	£bn	£bn	£bn
Total assets	171.0		25.2			166.4	22.0		28.4	244.5	36.7	694.2
Funded assets (5)	171.0		25.2			166.4	22.0		28.4	111.4	36.5	560.9
Net loans to customers - amortised cost	148.9		18.8			101.4	14.3		13.3	8.4	-	305.1
Impairment provisions	(1.1)		(0.8)			(1.3)	-		-	(0.1)	-	(3.3)
Customer deposits	145.3		18.0			134.4	28.4		27.5	2.6	4.7	360.9
Risk-weighted assets (RWAs)	34.3		14.7			78.4	9.4		6.9	44.9	0.1	188.7
RWA equivalent (RWAes)	35.5		14.7			79.7	9.5		6.9	50.0	0.2	196.5
Employee numbers (FTEs - thousands) (6)	21.7		3.1			10.3	1.9		1.7	4.8	23.6	67.1

For notes to this table refer to page 5.

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RBS - Segmental Reporting Restatement Document April 2019

Re-presented customer segments

				Quarter ended 31 December 2018
	Personal & Ulster			Commercial & Private
	UK Personal	Ulster Bank		Commercial	Private	RBS	NatWest	Central items	Total
	Banking (1)	RoI		Banking	Banking	International	Markets	& other (2)	RBS
Income statement	£m	£m		£m	£m	£m	£m	£m	£m
Net interest income	1,061	110		724	133	123	30	(5)	2,176
Non-interest income	185	37		392	65	32	89	49	849
Own credit adjustments	-	-		-	-	-	33	-	33
Total income	1,246	147		1,116	198	155	152	44	3,058
Direct expenses
- staff	(166)	(53)		(185)	(39)	(25)	(128)	(263)	(859)
- other	(80)	(27)		(77)	(22)	(22)	(65)	(870)	(1,163)
Indirect expenses	(414)	(52)		(403)	(72)	(35)	(123)	1,099	-
Strategic costs
- direct	(27)	(3)		(5)	-	(1)	(89)	(230)	(355)
- indirect	(63)	(12)		(57)	(10)	(2)	(22)	166	-
Litigation and conduct costs	(7)	(17)		(37)	-	(1)	(28)	(2)	(92)
Operating expenses	(757)	(164)		(764)	(143)	(86)	(455)	(100)	(2,469)
Operating profit/(loss) before impairment (losses)/releases	489	(17)		352	55	69	(303)	(56)	589
Impairment (losses)/releases	(142)	19		(5)	8	2	100	1	(17)
Operating profit/(loss)	347	2		347	63	71	(203)	(55)	572
Key metrics
Return on equity (3)	17.2%	0.4%		8.3%	12.3%	20.0%	(9.2%)	nm	3.5%
Net interest margin	2.60%	1.73%		1.96%	2.49%	1.81%	0.39%	nm	1.95%
Cost:income ratio (4)	60.8%	111.6%		67.5%	72.2%	55.5%	299.3%	nm	80.5%
Loan impairment rate	0.38%	(0.39%)		0.02%	nm	nm	nm	nm	0.02%
For the notes to this table refer to page 5.

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RBS - Segmental Reporting Restatement Document April 2019

Re-presented customer segments

				Quarter ended 31 March 2018
	Personal & Ulster			Commercial & Private
	UK Personal	Ulster Bank		Commercial	Private	RBS	NatWest	Central items	Total
	Banking (1)	RoI		Banking	Banking	International	Markets	& other (2)	RBS
	£m	£m		£m	£m	£m	£m	£m	£m
Net interest income	1,068	106		683	123	104	36	26	2,146
Non-interest income	230	40		475	61	33	380	(84)	1,135
Own credit adjustments	-	-		-	-	-	21	-	21
Total income	1,298	146		1,158	184	137	437	(58)	3,302
Direct expenses
- staff	(178)	(49)		(188)	(43)	(24)	(165)	(317)	(964)
- other	(65)	(19)		(47)	(14)	(15)	(53)	(606)	(819)
Indirect expenses	(374)	(47)		(311)	(55)	(20)	(102)	909	-
Strategic costs
- direct	(7)	(1)		(6)	(1)	-	(17)	(177)	(209)
- indirect	(61)	(3)		(42)	(8)	(1)	(6)	121	-
Litigation and conduct costs	(1)	(9)		(1)	-	1	(6)	(3)	(19)
Operating expenses	(686)	(128)		(595)	(121)	(59)	(349)	(73)	(2,011)
Operating profit/(loss) before impairment (losses)/releases	612	18		563	63	78	88	(131)	1,291
Impairment (losses)/releases	(68)	(8)		(12)	(1)	-	9	2	(78)
Operating profit/(loss)	544	10		551	62	78	97	(129)	1,213
For the notes to this table refer to page 5.

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RBS - Segmental Reporting Restatement Document April 2019