Interim Management Statement
HIGHLIGHTS FOR THE THREE MONTHS ENDED 31 MARCH 2016
Robust financial performance with stable underlying profit and strong underlying returns
· Underlying profit of £2.1 billion with an underlying return on required equity of 13.8 per cent
· Positive operating jaws of 1 per cent achieved with lower operating costs offset by marginally lower income
· Credit quality remains strong with a 6 per cent reduction in impairment and an asset quality ratio of 14 basis points
· Statutory profit before tax of £0.7 billion after the expected £0.8 billion charge relating to Enhanced Capital Notes (ECNs) which were redeemed in the period
· Strong balance sheet maintained with a CET1 ratio of 13.0 per cent (pre dividend accrual), after 0.4 per cent impact of ECNs
· Tangible net assets per share increased to 55.2 pence (31 December 2015: 52.3 pence), driven by underlying profit and reserve movements
Our differentiated UK focused business model continues to deliver in a challenging operating environment
· Cost discipline and low risk business model providing competitive advantage
· Strong underlying capital generation of c.60 basis points
2016 guidance reaffirmed
· Net interest margin for the year expected to be around 2.70 per cent
· Year-on-year reduction in cost:income ratio targeted
· Asset quality ratio for the year expected to be around 20 basis points
· Expect to generate around 2 per cent of CET1 capital per annum