25th Apr 2007 14:17
Royal Bank of Scotland Group PLC25 April 2007 The Royal Bank of Scotland Group plc AGM Statement 25 April 2007 The Meeting will deal with the proposed Resolutions as outlined in the Notice ofMeeting issued to Shareholders dated 16 March 2007 and will provide a summary ofthe business and financial performance of the Group in 2006. The following is an extract from the speech to be made by Sir Tom McKillop,Chairman, at the Meeting. "I am pleased to say that in 2006, the Group once again demonstrated itsinherent strength and breadth, achieving impressive growth and capitalgeneration, enabling us to increase the dividend by 25 per cent and raise ourpayout ratio to 45 per cent." "During the year, I have travelled widely across the Group, meeting with manyemployees, customers and shareholders in Europe, the US and in Asia-Pacific. Ihave been deeply impressed with the RBS colleagues I have met and have found ourbusinesses to be in good health, growing strongly, and making significant impactin the markets in which they operate." "Income rose from just over £25.5 billion to just over £28 billion, an increaseof 10 per cent over the course of the year." "Group operating profit rose by £1.16 billion to £9.4 billion and after tax andother deductions resulted in £6.2 billion of profit attributable to ourshareholders." "Earnings per share grew 14 per cent, in line with our operating profit to around £2 per share. The Tier 1 ratio was maintained in the middle of the 7-8per cent range that we had previously set as our target. And our return onequity rose from 18.2 per cent to 19 per cent, reflecting strong profitgeneration and capital efficiency." "The Board have recommended an increase of 25 per cent in the dividend, and thisfollows the 25 per cent increase in dividend you approved last year. Indeed,the Group has established a long track record of very strong dividend growth.If approved, this will be the 14th consecutive year in which our dividend hasincreased by 15 per cent or more." "In reaching their recommendation the Board took account of a number of factors,including, the strong capital-generative nature of our activities, and veryimportantly, the opportunities for growth in our businesses. This 25 per centincrease in dividend will bring our pay-out ratio to 45 per cent, up from 41per cent last year. The Board considers this ratio to be appropriate for theGroup's current circumstances." "All of the Divisions contributed to our income growth of 10 per cent, with aparticularly good result in Corporate Markets. Once again we saw somewhatfaster growth internationally, with income up 11 per cent compared to growth inthe UK of 9 per cent." "Net interest income rose by 7 per cent to £10.6 billion, and our net interestmargin at 2.47 per cent was slightly better than expectations." "Non-interest income grew by 11 per cent to £17.4 billion and now accounts for62 per cent of Group income, up a percentage point from this time last year." "With income up 10 per cent, we held our costs growth to just 8 per cent. Theemphasis here was investment in direct expenses in those customer facingbusinesses with strong income growth potential while maintaining good costdiscipline in our bank office activities. We have, for example, expanded ourcorporate business in the US, increased our team of financial planning managersby 25 per cent in the UK and recruited experienced private bankers in Asia." "The cost:income ratio for the Group improved further to 42.1 per cent." "We are delivering strong organic growth without overstretching our balancesheet or our risk envelope. Credit metrics have remained stable and the returnon equity has increased to 19 per cent." "The Group has performed well in 2006, so let me now say a few words about theGroup's prospects for growth in the future." "Our view of the economic backdrop is positive and we anticipate continuedgrowth in the world economy, and that provides a favourable environment for ourbusinesses." "Our income doesn't come from one market, and that has positioned us to deliversustained growth even when some of our divisions face headwinds in theirbusinesses, as was the case last year for RBS Insurance, Retail Markets andCitizens." "Our view is that the headwinds are abating somewhat in these areas, so we lookforward to continuing growth." "Our income doesn't come from one geography, either. In fact, 42 per cent of ouroperating profit now comes from outside the UK." "The growth in our income outside the UK reflects in particular the powerfulperformance of our Corporate Markets business in the US and Europe. You willnotice, too, our achievements in Asia-Pacific, where we have started in recentyears to invest significantly in both Corporate Markets and Wealth Management." "That is what we have achieved on our own in Asia. But we have also made goodprogress in developing our partnership with Bank of China." "Our joint credit card business has already issued over 1.2 million creditcards. In addition, we have agreed to expand the scope of our joint business to includeall credit cards and merchant acquiring in Mainland China. Our new jointprivate banking initiative opened for business in Beijing and Shanghai lastmonth. And together we have completed a number of significant transactions inshipping, aviation and trade finance. All in all, a very good start." "Of course a crucial requirement for growth is to have the capital strength tosupport it and I'm happy to report that our capital ratios remain right in themiddle of our target range." "We will continue to invest in our businesses, but as we have said before, ouractivities are strongly capital-generative. This has allowed us to return asignificant amount of capital to you, our shareholders, through dividend andshare repurchase. The indication we have received from you is that yourpreference is for this capital to be returned in the form of dividends and thisis reflected in the 25 per cent increase in this year's dividend." "Our goal as a Group is to generate superior sustainable value for ourshareholders. But to succeed in this, we must do more than deliver goodfinancial results - we need to manage our business in a responsible andsustainable way." "In 2006 we consulted extensively with our stakeholders, and the issues thatmatter most to them provide the focus for our Corporate responsibility strategy." "Customer service is central to building and developing our franchise. RBS hasonce again secured top position and NatWest is joint second among major HighStreet banks for extremely satisfied customers." "The Group continues to hold the highest market share in UK corporate bankingand we are now the joint leader in the UK personal current account market. Wehave continued to invest in customer service with more staff, better training,improved online services and, importantly to our customers, we don't useoffshore call centres." "We have played a major part in financial inclusion through our commitment tomaintaining our branch network - the largest in the UK. We have also continuedto develop our ATM network and we have the largest network of free-to-use ATMsin the UK." "Our Face2Face with Finance programme has become the UK's most widely-usedfinancial education programme for schools." "Financial crime is something that weighs heavily on our customers' minds, andit is important that our Group does everything possible to manage and reduce theextent of crime. We have achieved considerable success in combating fraud in2006: our losses from internet fraud actually fell, while the industry'sinternet fraud losses increased substantially." "It would not be possible to achieve the results we have without the tremendouscontribution made by our people, and I would like to take this opportunity tothank them on your behalf for their continued dedication, initiative and hardwork." "The environment has appropriately become the focus of much attention. I ampleased to say that with our adoption of the Equator Principles and our approachto sustainability in all we do, RBS has established a fine reputation as aresponsibly managed company." "The driving force behind everything we do in our communities comes from ourpeople." "In 2006 over 25,000 employees in the UK took part in our employee givingprogrammes, including the Give As You Earn scheme and the Community Cashbackawards, generating more than £12 million for over 8,000 charities and goodcauses. "In the United States, Citizens contributed $27 million to 4,500 non-profitorganisations in 13 states." "2006 was another year of excellent performance by our Group with customersatisfaction high and good returns to shareholders." "The Group has continued to perform well in the first few months of this year inline with the comments which we made at the full year results presentation on 28February." "When your Company is capable of producing this kind of performance, some of youmay be wondering why we should be considering a possible transaction with ABNAMRO. When Barclays and ABN AMRO announced their intention to merge, it wasclearly the Board's fiduciary duty to consider what the possible implications ofsuch a move might be for our Company." "After careful consideration, we made an announcement earlier today outliningthe proposals we and our good friends Fortis and Santander have collectivelymade to ABN AMRO. These proposals, which are subject to a number of conditions,we believe are superior for ABN AMRO's shareholders and are straightforward froma shareholder, regulatory and execution perspective. Your Board is confidentthat a transaction based on these proposals would create value for our ownshareholders and enhanced growth prospects for our own businesses." "We have not rushed lightly into this, but an opportunity that fits so closelywith our strategic priorities does not arise often, and it would have beenirresponsible of us not to explore such an opportunity to the full. You canrest assured that any offer, if made, will have been carefully evaluated. TheBoard will act prudently but with great determination, and will only proceed ifit is in the best interests of our shareholders to do so." Forward Looking Statements This announcement contains forward looking statements, including such statementswithin the meaning of Section 27A of the US Securities Act of 1933 and Section21E of the Securities Exchange Act of 1934. These statements concern or mayaffect future matters, such as the Group's future economic results, businessplans and strategies, and are based upon the current expectations of thedirectors. They are subject to a number of risks and uncertainties that mightcause actual results and events to differ materially from the expectationsexpressed in the forward looking statements. Factors that could cause orcontribute to differences in current expectations include, but are not limitedto, regulatory developments, competitive conditions, technological developmentsand general economic conditions. The Group assumes no responsibility to updateany of the forward looking statements contained in this announcement. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
RBS.L