28th Apr 2006 14:05
Royal Bank of Scotland Group PLC28 April 2006 The Royal Bank of Scotland Group plc AGM Statement 28 April 2006 The Meeting will deal with the proposed Resolutions as outlined in the Notice ofMeeting issued to Shareholders dated 13 March 2006 and will provide a summary ofthe business and financial performance of the Group in 2005. The following is an extract from the speech to be made by Sir George Mathewson,Chairman, at the meeting. "I am delighted to report another excellent set of results for the Group in2005. Total income at £25.6 billion was up by 14%, and operating profit at £8.25billion was up by 16%." "Our basic earnings per share increased by 13%, and our adjusted earnings pershare increased by 8%. " "As a result of these strong earnings, and disciplined balance sheet growth, weincreased our Tier 1 capital ratio to 7.6%, and produced a good return on equityof over 18%." "Since we bought NatWest six years ago, in March 2000, we have increased theGroup's total income by £14.5 billion, or 131%. And, of this total, over 60% hascome from organic growth in income. This is equivalent to growing more than awhole new NatWest in six years." "Over recent years we have increased the diversity of our activities bygeography and have reduced our dependence on the UK. In 2005, 42% of ouroperating profit came from outside the UK - up from 34% in 2004 and only 15%when we bought NatWest." "You will all be familiar with our strong position in the US, where Citizens nowranks as the eighth largest bank in the US by both total assets and by deposits,and the Group's total activities in the US rank sixth among US banks. " "But it is also worth highlighting the progress we have made in building up ourEuropean businesses. In fact, our operating profit from Europe in 2005 was morethan the profit made by Citizens prior to the acquisition of Charter One in2004." "Both Europe and the US are, and will continue to be, significant parts of ourbusiness." "In 2005, our Group cost:income ratio was 42.4% - slightly higher than theprevious year, reflecting the acquisition of Charter One, which had a highercost:income ratio than the Group." "Excluding acquisitions, the Group cost:income ratio was held flat at just under42%, despite significant investments to enhance customer service and supportfuture growth across our activities." "When we bought NatWest, the Group cost income ratio was nearly 58%. Its currentlevel of 42% compares very favourably with large UK and international banks." "In total, our lending to customers increased by 16%, while provisions for baddebts increased by only 7%. Overall, our portfolio credit quality and metricsremained stable." "In view of the Group's Tier 1 capital ratio at the end of 2005, and ourassessment of the capital outlook going forward, we decided that there wascapacity to return capital to shareholders." "In implementing this decision, our thoughts turned first to dividends. We areproud of our dividend record - we increased our dividend by 15% or more eachyear for 12 years in succession up to 2004 - but our earnings over this periodgrew even faster, so our payout ratio declined to 34% for 2004 and, at thislevel, had fallen behind the payout ratios of our peers and the market moregenerally. " "So we are recommending a 29% increase in our final dividend for 2005, making a25% increase in the total dividend for the year and taking our payout ratio for2005 up to 41%." "Beyond this proposed dividend increase, the numbers supported a furtherdistribution to shareholders and, as you will know, along with the announcementof our 2005 results at the end of February, we announced our intention to returnup to £1 billion to shareholders through share repurchases, by February 2007. " "Another development during 2005 was our establishment of an exclusive strategicpartnership with the Bank of China." "As you may be aware, our investment in Bank of China was formally completedjust before the year end in December 2005. This investment, while a goodinvestment in its own right, will also enable us to access joint venture andbusiness opportunities in China. The purchase was financed by the sale of ourshareholding in Banco Santander. We have been very encouraged by progress to date in building our relationshipwith Bank of China, both in terms of developing joint business opportunities ina number of areas, and in helping Bank of China to improve their internalstructures and systems." "In pursuing our goal of generating superior, sustainable value for ourshareholders, we need to do more than deliver good financial results. We need toadd value for our customers and our people. We must also contribute to thecommunities in which we operate." "To measure our progress in adding value for our people, we participate eachyear in a detailed analysis of employee opinion carried out for us - and forother large banks in the UK and internationally - by the independent researchfirm ISR. In 2005, 86% of our employees completed the Employee Opinion Survey,2% more than the previous year and 20% more than the industry average." "It is particularly satisfying to be able to report that RBS improved its score- over already strong scores in 2004 - in each of the 14 categories surveyed byISR." "In comparing our results with those of other financial groups, RBS outperformedthe Global Financial Services Norm, for the first time, in each of the 14categories surveyed - an outstanding achievement by any standards." "During 2005 the value of our community investment programme was £56.2 million,a significant increase from the £46 million we contributed in 2004." "It is more difficult to get measures of our success in adding value to thecommunities in which we operate, but we do look at published measures ofCorporate Responsibility. In 2005 our overall score in the Dow Jones Corporate Responsibility Index roseby 12% to 76%, placing us fourth among global banks. " "Also in 2005, the international organisation AccountAbility placed our 2004Corporate Responsibility report 14th among the world's top 100 companies, and2nd among the world's banks." "2005 was another year of excellent performance by our Group. Increased earningsand strong capital generation enabled us to keep investing for future growth aswell as to raise our dividend significantly and to embark on a programme ofshare repurchases." "These results demonstrate the strength and momentum of the Group and thecapabilities of the diverse business platform we have built. I believe that ourplatform provides us with a diverse range of opportunities in a number ofgeographies." "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." Forward Looking StatementsThis 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:
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