Bank of Scotland Plc
Bank of Scotland plc: BoS 2016 Half-year Report
DGAP-News: Bank of Scotland plc / Key word(s): Half Year Results Bank of Scotland plc For the half-year to 30 June 2016 Member of the Lloyds Banking Group This document contains certain forward looking statements with respect to the business, strategy and plans of the Bank of Scotland Group and its current goals and expectations relating to its future financial condition and performance. Statements that are not historical facts, including statements about the Bank of Scotland Group’s or its directors’ and/or management’s beliefs and expectations, are forward looking statements. By their nature, forward looking statements involve risk and uncertainty because they relate to events and depend upon circumstances that will or may occur in the future. Factors that could cause actual business, strategy, plans and/or results (including but not limited to the payment of dividends) to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward looking statements made by the Bank of Scotland Group or on its behalf include, but are not limited to: general economic and business conditions in the UK and internationally; market related trends and developments; fluctuations in interest rates (including low or negative rates), exchange rates, stock markets and currencies; the ability to access sufficient sources of capital, liquidity and funding when required; changes to the Bank of Scotland Group’s or Lloyds Banking Group plc’s, Lloyds Bank plc’s or HBOS plc’s credit ratings; the ability to derive cost savings; changing customer behaviour including consumer spending, saving and borrowing habits; changes to borrower or counterparty credit quality; instability in the global financial markets, including Eurozone instability, the exit by the UK from the European Union (EU) and the potential for one or more other countries to exit the EU or the Eurozone and the impact of any sovereign credit rating downgrade or other sovereign financial issues; technological changes and risks to cyber security; natural, pandemic and other disasters, adverse weather and similar contingencies outside the Bank of Scotland Group’s or Lloyds Banking Group plc’s or Lloyds Bank plc’s or HBOS plc’s control; inadequate or failed internal or external processes or systems; acts of war, other acts of hostility, terrorist acts and responses to those acts, geopolitical, pandemic or other such events; changes in laws, regulations, accounting standards or taxation, including as a result of an exit by the UK from the EU, a further possible referendum on Scottish independence; changes to regulatory capital or liquidity requirements and similar contingencies outside the Bank of Scotland Group’s or Lloyds Banking Group plc’s control; the policies, decisions and actions of governmental or regulatory authorities or courts in the UK, the EU, the US or elsewhere including the implementation and interpretation of key legislation and regulation; the ability to attract and retain senior management and other employees; requirements or limitations on Lloyds Banking Group plc, Lloyds Bank plc, HBOS plc and the Bank of Scotland Group as a result of HM Treasury’s investment in Lloyds Banking Group plc; actions or omissions by the Bank of Scotland Group’s directors, management or employees including industrial action; the extent of any future impairment charges or write-downs caused by, but not limited to, depressed asset valuations, market disruptions and illiquid markets; the value and effectiveness of any credit protection purchased by the Bank of Scotland Group; the inability to hedge certain risks economically; the adequacy of loss reserves; the actions of competitors, including non-bank financial services and lending companies; and exposure to regulatory or competition scrutiny, legal, regulatory or competition proceedings, investigations or complaints. Please refer to the latest Annual Report on Form 20-F filed by Lloyds Banking Group plc with the US Securities and Exchange Commission for a discussion of certain factors together with examples of forward looking statements. Except as required by any applicable law or regulation, the forward looking statements contained in this document are made as of today’s date, and the Bank of Scotland Group expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward looking statements. The information, statements and opinions contained in this document do not constitute a public offer under any applicable law or an offer to sell any securities or financial instruments or any advice or recommendation with respect to such securities or financial instruments. CONTENTS
FINANCIAL REVIEW Principal activities The Group’s revenue is earned through interest and fees on a broad range of financial services products including current and savings accounts, personal loans, credit cards and mortgages within the retail market; loans and capital market products to commercial, corporate and asset finance customers; and private banking. Review of results Total income decreased by £108 million, or 3 per cent, to £3,750 million for the half year to 30 June 2016 from £3,858 million in the half year to 30 June 2015. Net interest income decreased by £163 million, or 5 per cent, to £3,231 million in the half year to 30 June 2016 compared with £3,394 million in the same period in 2015. Other income increased by £55 million to £519 million in the half year to 30 June 2016, compared with £464 million in the same period in 2015, due mainly to a £246 million increase in other operating income, more than offsetting a £158 million decrease in net trading income. Net fee and commission income was £33 million, or 14 per cent, lower at £203 million in the half year to 30 June 2016 compared with £236 million in the half year to 30 June 2015, reduced levels of card and current account fees were more than offset by increases in other fees receivable, however fee and commission expense was £56 million, or 40 per cent, higher at £197 million in the half year to 30 June 2016 compared to £141 million in the first half of 2015. Other operating income was £246 million higher at £255 million in the half year to 30 June 2016 compared with £9 million in the half year to 30 June 2015, in part due to a gain of £112 million arising on a restructuring of capital instruments within the Lloyds Banking Group. There was a regulatory provisions charge of £149 million in the half-year to 30 June 2016 compared to £547 million in the same period in 2015. No further provision has been taken for PPI, where complaint levels over the first half have been broadly in line with expectations. The Group’s current PPI provision reflects the Group’s interpretation of the Financial Conduct Authority’s (FCA) consultation paper regarding a potential time bar and the Plevin case and conclusion by mid-2018. The Group awaits the FCA’s final decision however, should the time bar be longer than the proposed two years or the FCA’s final decision be significantly delayed, then the Group may need to reassess its provision. There was a charge of £149 million to cover a range of other conduct issues, of which £139 million was in respect of arrears related activities on secured and unsecured retail products. Other operating expenses increased by £29 million, or 2 per cent, to £1,613 million in the half year to 30 June 2016 compared with £1,584 million in the half year to 30 June 2015 as reductions in staff costs and premises and equipment costs were more than offset by increases in other expenses. Impairment losses decreased by £67 million to £24 million in the half year to 30 June 2016 compared with £91 million in the half year to 30 June 2015. The impairment charge in respect of loans and receivables was £65 million lower at £33 million in the half year to 30 June 2016 compared to £98 million in the same period in 2015. The tax charge for the half year to 30 June 2016 was £540 million (half year to 30 June 2015: £311 million), representing an effective tax rate of 27 per cent. The effective tax rate reflects the impact of the bank surcharge. http://www.rns-pdf.londonstockexchange.com/rns/5432F_1-2016-7-28.pdf
2016-07-28 Dissemination of a Corporate News, transmitted by DGAP – a service of EQS Group AG. |