PGCBM-17

Name : Vadan Mehta

SMS ID: 106360

Location; Borivali, Mumbai

Subject: FMB

Course: PGCBM 17

Take-Home Assignments: Royal Bank of

Scotland(RBS)

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INTRODUCTION
This document pertains to be take home assignment for Financial
markets and Banking (FMB). As per assignment requirements, students
suppose to study, analyze and document the financial performance of
particular bank. In this regard, I have been given Royal Bank of
Scotland (RBS) for the purpose.

Assignment Methodology:

I have attempted the financial performance of the RBS group, from

annual reports, available at http://www.investors.rbs.com. This report
is containing three parts
1) Financial data
2) 2008 Crisis
3) Summary

About Royal Bank of Scotland:

The Royal Bank of Scotland Group (LSE: RBS) is a British state
owned banking and insurance holding company in which HM Treasury
holds an 84% controlling share (economic interest; actual voting rights
will not rise above 75% in order to retain stock listing). The group is
based in Edinburgh, Scotland, and is the world's largest company by
assets. The group controls the Royal Bank of Scotland plc,[5] founded
in 1727 by a Royal Charter of King George I, the National Westminster
Bank, which can trace its lineage back to 1650, and Ulster Bank in
Ireland.[6]
RBS Group is the largest banking group in Scotland, and at its earlier
peak was the second largest in the UK and Europe (fifth in stock
market value), and the fifth largest in the world by market
capitalization. According to Forbes Global 2000, it was the tenth largest
company in the world. Its shares have a primary listing on the London
Stock Exchange. The registered head office of the group and the UK
clearing bank are located at St Andrew Square, Edinburgh. In 2005,
Queen Elizabeth II opened the bank's new head office building in
Gogarburn, Edinburgh.The RBS Group operates a wide variety of
banking brands offering personal and business banking, private
banking, insurance and corporate finance throughout its operations
located in Europe, North America and Asia. In the UK and Republic of
Ireland, the main subsidiary companies are: The Royal Bank of
Scotland; National Westminster Bank; Ulster Bank; Drummonds; and

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Coutts & Co. In the United States, it owns Citizens Financial Group,
the 8th largest bank in the country. From 2004 to 2009 it was the
second largest shareholder in the Bank of China, itself the world's fifth
largest bank by market capitalisation in February 2008.[8] Insurance
companies include Churchill Insurance, Direct Line, Privilege, and NIG.
The group issues banknotes in Scotland and Northern Ireland and, as of
2008, Royal Bank of Scotland is the only bank in the UK still to print a
£1 note.

Internationalization

The first international office of the bank was opened in New York in
1960. Subsequent international banks were opened in Chicago, Los
Angeles, Houston and Hong Kong. In 1988 the bank acquired Citizens
Financial Group, a bank based in Rhode Island, United States. Since
then, Citizens has acquired several other American banks, and in 2004
acquired Charter One Bank to become the 8th largest bank in the
United States.

The Royal Bank also opened offices in Europe and now has subsidiaries
in: Austria, Switzerland, France, Italy, Germany, Greece, Spain,
Portugal, Denmark, Norway, Sweden and the Federation of Bosnia and
Herzegovina. In the Asia-Pacific region, the bank has offices in:
Australia, China, Hong Kong, India, Japan and Singapore.

Acquisitions

On 11 February 2000, the Royal Bank of Scotland won the take over of
National Westminster Bank (Natwest). This deal has made RBS the
second largest banking group in the UK after HSBC Holdings. NatWest
and the Royal Bank of Scotland became subsidiaries of the holding
company; the Royal Bank of Scotland Group. NatWest as a distinct
banking brand was retained, although many back office functions of
the bank were merged with the Royal Bank's leading to over 18,000
job losses throughout the UK.

In August 2005, the bank expanded into China, acquiring a 10% stake
in the Bank of China for £1.7 billion [14].

A new international headquarters was built at Gogarburn on the

outskirts of Edinburgh, and was opened by Queen Elizabeth II and

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Prince Philip, Duke of Edinburgh in 2005. The St Andrew Square office

still remains the official registered head office.

The bank was the 2005 recipient of the Wharton Infosys Business
Transformation Award, an award given to enterprises and individuals
who use information technology in a society-transforming way.

The Group was part of a consortium with Belgian bank Fortis and
Spanish bank Banco Santander that acquired Dutch Bank ABN AMRO a
on 10 October 2007. Rivals speculated that RBS had overpaid for the
Dutch bank[15] although the bank pointed out that of the £49bn paid for
ABN AMRO, RBS's share was only £10bn (equivalent to £167

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Financial Performance
Based on data from http://www.investors.rbs.com, following financial
summary snap shot obtained:

2005 2006 2007 2008 2009

Capital
£m £m £m £m £m
base

Total assets 776827 871432 1900519 2401652 1,696,486

(£m)
739283 825942 1809093 2321154 1,601,855
Total
liabilities
(£m)

Total Equity 37,544 45,490 91,426 80,498 94,631

(£m)
(Loss)/profi 5,558 6,497 7,712 -34,373 -2,323
t for the
year
28,218 30,041 44,364 69,847 76,421
Tier 1
capital

Tier 2 22,437 27,491 33,693 32,223 15,389

capital
Tier 3 - - 200 260
capital
Less: 50,655 57,532 78,257 102,330 91,810
- -7282 -10583 -10283 -4155 -4,565
Supervisory
deductions
Total 43373 46949 67974 98175 87,245
capital
Risk 371000 400300 609000 695800 541,000
Weigthed
Capital
Net interest 9,918 10,596 12,069 18,675 16,504
income
Financial Ratios

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Capital- 6%
Assets 5% 5% 5% 3%
Ratio
Tier 1
Capital 7.61% 7.50% 7.28% 10.04% 14.13%
Ratio
Basel Risk
Weighted
11.69% 11.73% 11.16% 14.11% 16.13%
Capital
Ratio
Net Interest
1.28% 1.22% 0.64% 0.78% 0.97%
Margin
Return of
15% 14% 8% -43% -2%
Equity
Return on
0.72% 0.75% 0.41% -1.43% -0.14%
Asset

Notes:
1) Only Statutory balance sheet figures were taken.

2) Detailed Balances Sheets and Income statements (From year

2008 to 2005) is available at Annexure 1,2 and 3.

3) Data, can be obtained for verification purpose at

http://www.investors.rbs.com/our_performance/annualreports.cf
m?year=2009

4) 2008 data are on a Basel II basis; data for 2007 are on a Basel I
basis.

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Analyzing the performance

Based on above information, financial trends are plotted in chart
mentioned below:

RBS Key Financial Perform

18.00%

16.00%

14.00%

12.00%

10.00%

8.00%
Observation
1)6.00%
Tier-1 Capital ratio rose from 7% to 14% during 2005 to 2009.
This ratio gives us the proportion of equity held against the
amount of risk weighted assets. It means that Tier-1 capital has
increased and Risk weighted assets are decreasing
4.00%
proportionally.
2) Basel Risk weighted capital ratio (total Capital ratio, inclusive for
Tier-2 and Tier-3 Capital) has increased from 11.6% to 16.1%.
2.00%
3) Net Interest margin has decrease from 1.27% to 0.97% (Lowest
was at 0.76% (2007). This ratio gives us the extent of gross
0.00%
profits earned on the traditional activity of investing in interest
bearing assets. Traditionally, a lower/declining
2005 2006 value
2007of this ratio 2008
has been considered as an indicator of greater efficiency in the
-2.00%
banking sector. However, a low/declining value of this ratio is

-4.00%
Year
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 PGCBM-17

indicative of greater competition and could possibly drive banks

to take on greater risks to increase their profitability.
4) Return on Equity is heavily dropped from 13% to -2% (Lowest
was at-40% during 2008). This ratio gives us the extent of
returns earned by the bank on the capital invested by
shareholders. Minus ratio indicates that RBS is suffering from loss
then profit. Same fact is indicted on Return on asset ratio.
Negative RoE is due to heavy loss RBS has incurred during
financial year 2008 due to volatile international financial markets
and huge investment has been made on acquisition of ABN
Amro.

2008 Financial Crisis

As we can see from Chart above that , RBS,s RoE has been dropped
from 12% to -40% at 2008. Key financial figures for 2008 is below:

Pro forma
Underlying profit (1)
£80 million
Loss attributable to
£7.9 billion
ordinary shareholders (2)
Total income (3) £26.9 billion
Impairment losses (4) £7.0 billion
Credit market losses (5) £7.8 billion
Write-down of
goodwill and
£16.2 billion
other intangible
assets (6)
Total capital ratio 14.20%
Core Tier 1 capital ratio
(7) 7.00%
Tier 1 capital ratio 9.90%
Basic loss per ordinary
(61.0p)
share (8)

Statutory
Loss before tax £40.7 billion
Loss attributable to
£24.1 billion
ordinary shareholders
Basic loss per ordinary
(145.7p)
share
Core Tier 1 capital ratio 6.80%

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RBS estimated bad debts and write-downs on the value of past

acquisitions could leave it as much as £16.2 bn (in the red) for 2008 –
higher than the current record of £15bn set by mobile phone group
Vodafone in 2006.. The reason for this debacle is huge
investment in risky asset, as CDS market and senseless

Ref. : Moneycenral.msn.com

acquisition of ABM Amro. The share prices are plunged by 70%

as per figure ( ref: www.moneycentral.msn.com)
Rapid Acquisitions

First grumblings from RBS shareholders started in 2004 when RBS

bought the US-based Charter One bank for $10.3bn (£5.9bn). Other
major deals, such as the take over of Churchill Insurance and the
purchase of a $1.6bn stake in Bank of China, reinforced the impression
among skeptics of an RBS taking too many risks. By the time of the
Charter One deal, questions were being asked about the bank's capital,
and by the end of 2006 vocal shareholders' demands for a buy back
were met and RBS has publicly ruled out any more big deals.

But then came ABN Amro. Just as the credit markets were freezing
over, consortium of RBS, Fortis and Santander were ramping up their
bidding war with rival suitor Barclays. In desire to win, it now looks as if
RBS went too far, creating an internally-funded cash offer that
Barclays' share bid did not stand a chance of beating but that left RBS
dangerously leveraged. The RBS consortium bid €71 billion, as
opposed to Barclays’s €66 billion – and this notwithstanding the fact
that ABN had sold off its American subsidiary LaSalle, which was one of
RBS’s reasons for being interested in the deal in the first place. The
ABN deal totally stretched a balance sheet that was already stretched.
ABN deal has pushed RBS over the edge and into the abyss. After
repeated protestations of his bank's financial health, RBS has surprised
shareholders in April with one of the biggest rights issues in British
corporate history, aimed at raising more than £12bn to shore-up a

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balance sheet that was suffering under £16bn-worth of writedowns.

But it was too late and between then and the start of this month RBS
lost more than 80 per cent of its market capitalization.

Credit Default Swaps

After the billions lost over the US subprime market and leveraged
loans, investment banks such as Morgan Stanley, Deutsche Bank,
Barclays, UBS and RBS face losses on credit default swaps (CDS) –
contracts that allow an investor to be repaid if a company loan or a
bond defaults.

CDS contracts became a favourite tool of speculators, mostly hedge

funds, which bought the contracts without having any link to the
original lending. They bought the contract to trade or in the
expectation the company would in fact default, meaning they could
claim back the full value of a loan they never made.

ABN was not the only problem for RBS. Alongside the eight-year
acquisition spree, RBS also massively expanded its investment banking
business, building on both the City-leading conventional products
inherited with NatWest and also the small Greenwich Capital operation
concentrating on the then-novel field of mortgage-backed securities in
the US. It was the combination of acquisition and the aggressive push
into the area of investment banking, many of which subsequently
soured, that caused the problem.

RBS said a review of past acquisitions, most notably its share of Dutch
bank ABN Amro, would result in a non-cash hit of £15bn-£20bn. It
also expects core losses of between £7bn and £8bn as a result of
credit and market conditions in the year 2008’ss fourth quarter

These rapid and unplanned acquistions have made RBS one the top 10
banks of the world but also increased the riskiness of the business.

Derivatives

Where on the balance sheet are all these bad debt and toxic assets are
reflecting ? The losses were so huge that one shouldn’t have to look for
them in this way – in fact it’s bizarre to be doing so, minutely parsing
the accounts for evidence of a gigantic disaster. While examining the
balance sheet, one can see that derivatives are increasing rapidly (as
shown in Chart)

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Derivatives

1,200,000

1,000,000

800,000
YEAR 2004 2006 2007 2008 2009

Asset 95,6 116,6 337,4 992,5 441,4

Derivativ 63 81 10 59 54
es
600,000
Lia
96,4 118,1 332,0 971,3 424,1
Derivativ
38 12 60 64 41
es

Derivatives, assets and liabilities increased reflecting the acquisition of

ABN Amro, growth in trading volumes and the effects of interest and
400,000rate movements amidst current market conditions.’ Looking
exchange
at the balance sheet, we see that derivatives have indeed become a
much, much bigger part of it, to the tune of £337 billion of assets
(2007) , as opposed to £116 billion the year before. Is that where it all
went wrong? When you read the report’s words about derivatives, it
makes them sound as if they were used to hedge risks: ‘Companies in
200,000
the Group transact derivatives as principal either as a trading activity
or to manage balance sheet foreign exchange, interest rate and credit
risk.’ Nothing there about the famous sub-prime mortgage derivatives

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2004 2006 2007

 PGCBM-17

which have blown up the global banking system. When we go looking

for sub-prime elsewhere in the 2008 RBS Annual report, we find this:

The Group has a leading position in structuring, distributing and

trading asset-backed securities (ABS). These activities include buying
mortgage-backed securities, including securities backed by US sub-
prime mortgages, and repackaging them into collateralised debt
obligations (CDOs) for subsequent sale to investors. The Group retains
exposure to some of the super senior tranches of these CDOs which
are all carried at fair value.

At 31 December 2007 the Group’s exposure to these super senior

tranches,  net of hedges and write-downs, totalled £2.6 billion to high
grade CDOs, which include commercial loan collateral as well as prime
and sub-prime mortgage collateral, and £1.3 billion to mezzanine
CDOs, which are based primarily on residential mortgage collateral.
Both categories of CDO have high attachment points.[3] There was
also £1.2 billion of exposure to sub-prime mortgages through a trading
inventory of mortgage-backed securities and CDOs and £100 million
through securitisation residuals.

Right. So they have a ‘leading position’ in this stuff. It consists of £2.6

billion in allegedly high grade CDOs, £1.3 billion in the next grade
down, and another £1.2 billion of diverse exposure to sub-prime, for a
total of £5.1 billion. Thus crisis in Sub-prime category had big hit for
RBS as well.

SUMMARY

A balance sheet is divided into assets and liabilities. Assets are things
which belong to you, liabilities are things which belong to other people.
A bank balance sheets list customer deposits as liabilities and
customer’s borrowed loan as assets. High levels of deposits mean high
levels of liabilities; and high levels of liabilities oblige a bank to have
high levels of assets. Since banks are mainly in the business of lending
money, high levels of assets mean high levels of loans. That means
that a bank’s main assets are other people’s debts. This is another
distinctive feature of bank balance sheets, the fact that its principal
assets are other people’s debts to it. Thus any bank should be very

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much careful while dealing with liquidity, it has since that liquidity is
belongs to someone else.

RBS, in it’s hunger for expansion has forgotten this basic fact and as a
result ended by being a defaulter.

Reference:

1) www.rbs.com
2) www.investorrbs.com
3) It’s Finished by John Lanchester
4) The rise and fall of 'Fred the Shred' by Sarah Arnott
5) The Rise and Fall of RBS: How Fred Goodwin Went from Hero to
Zero by Chris Sinner
6) www.moneycentral.msn.com
7) Financial Markets & Banking, compiled by Prof.Santosh Sangem

Annexure 1
CONSOLIDATED BALANCE SHEET

Statutory Statutory
2009 2008 2007 2006 2005
Assets £m Assets £m Assets £m Assets £m £m
Cash and Cash and Cash and Cash and
balances at 52,261 balances at 12,400 balances at 17,866 balances at 6,121 4,759
central banks central banks central banks central banks
Net loans and Loans and
Treasury and Treasury and
advances to 56,656 advances to 138,197 18,229 5,491 5,538
other eligible bills other eligible bills
banks banks

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Reverse 82,606 70,587

repurchase Loans and Loans and Loans and
agreements 35,097 advances to 874,722 advances to 219,460 advances to
and stock customers banks banks
borrowing
Loans and Loans and Loans and
advances to 91,753 Debt securities 267,549 advances to 829,250 advances to 466,893 417,226
banks customers customers
Net loans and
advances to 687,353 Equity shares 26,330 Debt securities 276,427 Debt securities 127,251 120,965
customers
Reverse
repurchase
Settlement
agreements 41,040 17,832 Equity shares 53,026 Equity shares 13,504 9,301
balances
and stock
borrowing
Loans and
Settlement Property, plant
advances to 728,393 Derivatives 992,559 16,589 18,420 18,053
balances and equipment
customers
Debt securities 267,254 Intangible assets 20,049 Derivatives 337,410 Derivatives 116,681 95,663
Property, plant Settlement
Equity shares 19,528 18,949 Intangible assets 48,492 7,425 6,005
and equipment balances
Settlement Property, plant
12,033 Deferred tax 7,082 18,750 Intangible assets 18,904 19,932
balances and equipment
Prepayments, Prepayments, Prepayments,
Derivatives 441,454 accrued income 24,402 accrued income 19,066 accrued income 8,136 8,798
and other assets and other assets and other assets

Intangible Assets of Assets of

17,847 1,581 45,954
assets disposal groups disposal groups

Property, plant
19,397
and equipment
Deferred
7,039
taxation
Prepayments,
accrued income
20,985
and other
assets
Assets of
18,542
disposal groups
1,696,48 2,401,65 1,900,51
Total assets Total assets Total assets Total assets 871,432 776,827
6 2 9
Liabilities
Deposits by Deposits by Deposits by
Liabilities 258,044 312,633 132,143 110,407
banks banks banks
Customer Customer Customer
Bank deposits 104,138 639,512 682,365 384,222 342,867
accounts accounts accounts
Repurchase
agreements Debt securities in Debt securities in Debt securities in
38,006 300,289 273,615 85,963 90,420
and stock issue issue issue
lending
Settlement Settlement Settlement
Deposits by
142,144 balances and 54,277 balances and 91,021 balances and 49,476 43,988
banks
short positions short positions short positions
Customers
545,849 Derivatives 971,364 Derivatives 332,060 Derivatives 118,112 96,438
deposits
Repurchase Accruals, Accruals, Accruals,
agreements deferred income deferred income deferred income
68,353 31,482 34,024 15,660 14,247
and stock and other and other and other
lending liabilities liabilities liabilities
Customer Retirement Retirement Retirement
614,202 2,032 496 1,992 3,735
accounts benefit liabilities benefit liabilities benefit liabilities
Debt securities 267,568 Deferred tax 4,165 Deferred taxation 5,510 Deferred taxation 3,264 1,695

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in issue
Settlement
Insurance Insurance Insurance
balances and 50,876 9,976 10,162 7,456 7,212
liabilities liabilities liabilities
short positions
Subordinated Subordinated Subordinated
Derivatives 424,141 49,154 37,979 27,654 28,274
liabilities liabilities liabilities
Accruals,
deferred Liabilities of Liabilities of
30,327 859 29,228
income and disposal groups disposal groups
other liabilities
Retirement 2,321,15 1,809,09
2,963 Total liabilities Total liabilities Total liabilities 825,942 739,283
benefit liabilities 4 3
Deferred
2,811 Equity
taxation
Insurance
10,281 Minority interests 21,619 Minority interests 38,388 Minority interests 5,263 2,109
liabilities
Subordinated Shareholders’
37,652 Equity owners 58,879 Equity owners 53,038
liabilities equity
Liabilities of Called up share
18,890 815 826
disposal groups capital
1,601,85
Total liabilities Reserves 39,412 34,609
5

Minority
16,895
interests
Owners' equity 77,736
Total equity 94,631 Total equity 80,498 Total equity 91,426 Total equity 45,490 37,544

Total liabilities 1,696,48 Total liabilities 2,401,65 Total liabilities 1,900,51 Total liabilities
871,432 776,827
and equity 6 and equity 2 and equity 9 and equity

Annexure 2
INCOME STATEMENT
Not 2008 2007 2006 2005 2004
e £m £m £m £m £m
49,52 32,25 24,68 21,33 16,6
Interest receivable
2 2 8 1 32
- - - - -
Interest payable 30,84 20,18 14,09 11,41 7,56
7 3 2 3 1

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9,07
18,67 12,06 10,59
Net interest income 1 9,918 1
5 9 6

6,47
Fees and commissions receivable 2 9,831 8,278 7,116 6,750
3

-
- - -
Fees and commissions payable 2 -2,386 1,92
2,193 1,922 1,841
6

1,98
(Loss)/income from trading activities 2 -8,477 1,292 2,675 2,343
8

Other operating income (excluding 2,13

2 1,899 4,833 3,564 2,953
insurance premium income) 8

5,64
Insurance net premium income 24 6,326 6,087 5,973 5,779
7

18,29 17,40 15,98 14,3

Non-interest income 7,193
7 6 4 20

25,86 30,36 28,00 25,90 23,3

Total income
8 6 2 2 91

10,24 5,18
Staff costs 7,338 6,723 5,992
1 8
1,17
Premises and equipment 2,593 1,703 1,421 1,313
7

2,32
Other administrative expenses 5,464 2,969 2,658 2,816
3

1,67
Depreciation and amortisation 3,154 1,932 1,678 1,825
4

Write-down of goodwill and other 32,58

— —
intangible assets 1

54,03 13,94 12,48 11,94 10,3

Operating expenses 3
3 2 0 6 62

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13,0
29
-
(Loss)/profit before other operating 16,42 15,52 13,95
28,16
charges and impairment 4 2 6
5

4,26
Insurance net claims 24 4,430 4,624 4,458 4,313
0
1,48
Impairment 12 8,072 1,968 1,878 1,707
5
-
7,28
Operating (loss)/profit before tax 40,66 9,832 9,186 7,936
4
7
1,99
Tax 6 -2,323 2,044 2,689 2,378
5
-
(Loss)/profit from continuing 5,28
38,34 7,788 6,497 5,558
operations 9
4
Profit/(loss) from discontinued
20 3,971 -76 —
operations, net of tax
-
5,28
(Loss)/profit for the year 34,37 7,712 6,497 5,558
9
3

(Loss)/profit attributable to:

-
Minority interests 10,83 163 104 57 177
2
Other owners 7 596 246 191 109 256

-
4,85
Ordinary shareholders 24,13 7,303 6,202 5,392
6
7
Per 25p ordinary share:
(145.7 169.4 157.
Basic earnings 10 p) 64.0p 54.4p p 4p
(145.7 168.3 155.
Diluted earnings 10 p) 63.4p 53.9p p 9p
52.5
Dividends 8 19.3p 27.0p 21.6p 60.6p p

KEY FINANCIALS
Pro forma Statutory

for the year ended 2008 2007 2008 2007 2006 2005

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31 December £m £m £m £m £m £m
Total income (1) 26,875 33,564 25,868 30,366 28,002 25,569

Underlying profit (2) 80 10,314 — — 9,414 8,251

(Loss)/profit
-8,127 8,962 -40,667 9,832 9,186 7,936
before tax (3)
(Loss)/profit
attributable to
-24,051 6,823 -24,137 7,303 6,202 5,392
ordinary
shareholders
Cost:income ratio
(4) 59.20% 49.50% 208.90% 45.90% 42.10% 42.40%

Basic
(loss)/earnings per (61.0p) 40.8p (145.7p) 64.0p 194.7 169.4
share (pence) (5)
Adjusted
(loss)/earnings per (5.2p) 44.5p — — 200 175.9
share (pence) (5, 6)

at 31 December

Pro forma Statutory

2008 2007 2008 2007
£m £m £m £m
Total assets 2,218,693 1,595,066 2,401,652 1,840,829 871,432 776,827
Loans and
advances to 731,165 700,191 874,722 828,538 466,893 417,226
customers

Deposits 780,395 860,621 897,556 994,657 516,365 453,274

Owners' equity 58,879 53,038 58,879 53,038 40,227 35,435

Risk asset ratio –
9.90% 7.00% 10.00% 7.30% 7.50% 7.60%
Tier 1 (7)
Risk asset ratio –
14.20% 11.30% 14.10% 11.2 11.70% 11.70%
Total
Notes: -1

• Pro forma total income excludes credit market write-downs and one-off items and share
of shared assets. In the consolidated income statement, these items are included in total
income.-2

• Underlying profit represents pro forma profit before tax, credit market write-
downs and one-off items impairment losses on reclassified assets, purchased
intangibles amortisation, write-down of goodwill and other intangible assets,
integration costs, restructuring costs and share of shared assets. -3

• Pro forma excludes write-down of goodwill and other intangible assets.

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• Pro forma cost:income ratio represents operating expenses excluding purchased

intangibles amortisation, write-down of goodwill and other intangible assets,
integration costs, restructuring costs and share of shared assets expressed as a
percentage of total income excluding credit market write-downs and one-off
items.
-5

• Prior year per share data have been restated to reflect the rights issue in June
2008 and the capitalisation issue in September 2008.
-6

• Adjusted earnings per share is based on earnings adjusted for purchased

intangibles amortisation, write-down of goodwill and other intangible assets,
integration costs, restructuring costs, share of shared assets and credit market
write-downs and one-off items.
-7

• 2008 data are on a Basel II basis; data for 2007 are on a Basel I basis.

Annexure 3

Key Ratios from

www.moneycentral.msn.com

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Net Retur Return Interest

Price Price Book Debt/
Yea Avg Profit n on on Coverag
/ / Value/ Equit
r P/E Margi Equity Assets e
Sales Book Share y
n (%) (%) (%)
-
290.
2009 4 16.65 0.52 -19.6 $42.43 0.51 -3.4 -0.2 0.8
-
2008 83.1 6.81 0.78 -87.8 $45.91 0.86 -47 -1.2 -0.3
200 $163.0
7 452 61.7 2.53 35.2 7 0.75 14.4 0.4 1.5
$127.6
2006 NA NA NA 38.6 5 0.72 15.9 0.7 1.7
$110.9
2005 NA NA NA 38.9 1 0.84 15.5 0.7 1.7
$106.9
2004 NA NA NA 36.2 2 0.6 12.3 0.7 2
2003 NA NA NA 28.2 $88.11 0.65 16.4 0.9 2.1
2002 NA NA NA 35.3 $93.30 0.52 15.6 NA 1.8

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