Robust financial performance with increased underlying profits and returns
Underlying profit of £8.1 billion, up 5 per cent (up 10 per cent excluding TSB); underlying return on equity of 15.0 per cent (2014: 13.6 per cent)
Total income up 1 per cent to £17.6 billion
− Net interest income of £11.5 billion, up 5 per cent, driven by further margin improvement to 2.63 per cent
− Other income 5 per cent lower at £6.2 billion, largely due to disposals and run-off, with expected recovery in the last quarter despite impact of weather related insurance claims (c.£60 million)
Operating costs lower at £8.3 billion despite additional investment and Simplification costs; market-leading cost:income ratio further improved by 0.5 percentage points to 49.3 per cent
Impairment charge down 48 per cent to £568 million; asset quality ratio improved by 9 basis points to 0.14 per cent
Statutory profit before tax of £1.6 billion (2014: £1.8 billion), with increased PPI charge
PPI provision of £4.0 billion includes additional £2.1 billion in fourth quarter reflecting action on proposed time-bar
Capital generation in year of 300 basis points pre dividend and PPI costs
Strong balance sheet with pro forma common equity tier 1 (CET1) ratio of 13.0 per cent (2014: 12.8 per cent), 13.9 per cent before 2015 dividends; pro forma leverage ratio of 4.8 per cent (2014: 4.9 per cent)
Tangible net assets per share post dividend of 52.3 pence, 53.8 pence pre dividend (31 Dec 2014: 54.9 pence). Significant improvement post year end and now estimated at 55.6 pence at 19 February
Our differentiated UK focused business model continues to deliver
Improving customer satisfaction while helping Britain prosper through sustainable growth in targeted segments: net lending to SMEs up 5 per cent, and supporting 1 in 4 first-time buyers
Simpler and more efficient; accelerated delivery of cost initiatives and targeting further efficiency savings
Low risk business model and cost discipline provide security and competitive advantage
Simple, UK focused, multi-brand model and actively responding to lower for longer interest rates
Completion of sale of TSB to Banco Sabadell
UK government stake reduced to approximately 9 per cent
Guidance reflects improved business performance, low risk business model and lower interest rate environment
Net interest margin for 2016 expected to increase to around 2.70 per cent
Asset quality ratio for 2016 expected to be around 20 basis points
Continue to target return on required equity of 13.5 to 15.0 per cent and around 45 per cent cost:income ratio with reductions every year; based on current interest rate assumptions, we now expect these to be delivered in 2018 and as we exit 2019, respectively
Capital generation guidance improved; now expect to generate around 2 percentage points of CET1 per annum, pre dividend
Increased ordinary dividend with payment of a special dividend
The Board has recommended a final ordinary dividend of 1.5 pence per share, making a total ordinary dividend for the year of 2.25 pence per share, in line with our progressive and sustainable ordinary dividend policy
In addition, the Board has recommended a capital distribution in the form of a special dividend of 0.5 pence per share
