You’ll see from the results we are posting today this is a bank moving forward on its plan. It’s a plan to build a stronger, simpler, fairer bank for both customers and shareholders. A bank no longer chasing global market share, but instead focusing squarely on our core strength here in the UK and the Republic of Ireland. A bank determined to earn back customers’ trust and be the best in the country.
As I’ve outlined before there are three phases to our plan. Phase one was 2014 – we got the capital up, the costs down and simplified the structure of the bank. This gave us the financial strength to go further faster with our strategy.
We are now in phase two and there are three clear jobs: rundown the exit bank, get through as much of the restructuring and conduct charges as timescales and court dates allow and most importantly, transform the performance in our core businesses.
By next year, our plan moves us quickly to the third phase: a solidly performing bank, with improving customer service scores, higher returns and the majority of exceptional items that overshadow the profitability in our core business behind us.
Today’s results show the growing strength of our go-forward customer businesses. Our underlying performance is heading in the right direction. We posted an attributable profit of £293 million for Q2 2015 but that moves to a loss of £153 million for the half year. This reflects the £1.5bn of restructuring and £1.3bn of conduct costs we are actively working through the business. But I want to be clear on this; I don’t like seeing any loss, and I won’t rest until these charges and costs are behind us so that we can start delivering sustainable profits at the bottom line too.
Since we signalled our intention to reshape this business we’ve moved quickly, selling over two-thirds of our north American loan portfolio, as well as the majority of our Australian and Hong Kong businesses. We have sold two further tranches of Citizens, as well as our International Private Banking business and exited the last material portfolio of RBS Capital Resolution in Ireland. Yes, going further, faster means higher restructuring costs hitting the headline numbers – but it also means a much stronger bank in the long term.
This will continue to be a purposefully noisy year as we go further, faster on restructuring and deal with the conduct issues from the past. We have made no secret there are some tough issues coming down the track, not least on mortgage backed securities in the US - putting these issues behind us is a vital part of our plan.
I welcome the Government’s intention to start selling down its stake; it will be a significant moment for this bank. For our part we will continue to push ahead with our strategy as we seek to deliver a bank the country can be proud of.