Interim Results - Part 6 of 7

Companies

NATWEST GROUP (NWG)

UK 100

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Contents
Financial assets	2
Exposure summary	2
Sector concentration	3
Asset quality	7
Debt securities	13
AFS reserves by issuer	13
Ratings	13
Asset-backed securities	14
Equity shares	15
Credit derivatives	17
Problem debt management	18
Wholesale renegotiations	18
Retail forbearance	20
Loans, REIL, provisions and impairments	23
- Sector and geographical regional analyses	23
- REIL flow statement	29
- Impairment provisions flow statement	31
- Impairment charge analysis	34
Key loan portfolios	36
Commercial real estate	36
Residential mortgages	42
Interest only retail loans	47
Ulster Bank Group (Core and Non-Core)	51
Credit risk assets	55
Asset quality	56
Sector and geographical region analyses	58

	Gross exposure	IFRS offset (1)	Carrying value	Non-IFRS offset (2)	Exposure post offset
30 June 2013	£m	£m	£m	£m	£m

Cash and balances at central banks	89,620	-	89,620	-	89,620
Reverse repos (3)	154,730	(55,447)	99,283	(19,090)	80,193
Lending (4)	451,389	(1,439)	449,950	(32,612)	417,338
Debt securities	138,231	-	138,231	-	138,231
Equity shares	11,431	-	11,431	-	11,431
Derivatives (5)	672,659	(298,965)	373,694	(343,812)	29,882
Settlement balances	25,834	(7,868)	17,966	(2,785)	15,181

Total	1,543,894	(363,719)	1,180,175	(398,299)	781,876
Short positions	(27,979)	-	(27,979)	-	(27,979)

Net of short positions	1,515,915	(363,719)	1,152,196	(398,299)	753,897

31 December 2012

Cash and balances at central banks	79,308	-	79,308	-	79,308
Reverse repos	143,207	(38,377)	104,830	(17,439)	87,391
Lending (4)	464,691	(1,460)	463,231	(34,941)	428,290
Debt securities	164,624	-	164,624	-	164,624
Equity shares	15,237	-	15,237	-	15,237
Derivatives (5)	815,394	(373,476)	441,918	(408,004)	33,914
Settlement balances	8,197	(2,456)	5,741	(1,760)	3,981
Other financial assets	924	-	924	-	924

Total	1,691,582	(415,769)	1,275,813	(462,144)	813,669
Short positions	(27,591)	-	(27,591)	-	(27,591)

Net of short positions	1,663,991	(415,769)	1,248,222	(462,144)	786,078

(1)	Relates to offset arrangements that comply with IFRS criteria and to transactions cleared through and novated to central clearing houses, primarily London Clearing House and US Government Securities Clearing Corporation.
(2)	This reflects the amounts by which the Group's credit risk is reduced through arrangements such as master netting agreements and cash management pooling. In addition, the Group holds collateral in respect of individual loans and advances. This collateral includes mortgages over property (both personal and commercial); charges over business assets such as plant, inventories and trade debtors; and guarantees of lending from parties other than the borrower. The Group also obtains collateral in the form of securities relating to reverse repo and derivative transactions.
(3)	Securities received as collateral for reverse repos were £99.3 billion (31 December 2012 - £104.7 billion).
(4)	Lending: non-IFRS offset includes cash collateral posted against derivative liabilities of £22.4 billion (31 December 2012 - £24.6 billion) and cash management pooling of £10.2 billion, (31 December 2012 - £10.3 billion).
(5)	Derivatives: non-IFRS offset includes cash collateral received against derivative assets of £27.7 billion (31 December 2012 - £34.1 billion).

		Reverse repos	Lending			Derivatives	Other financial assets	Balance sheet value	Offset	Exposure post offset (1)
				Securities
				Debt	Equity
30 June 2013		£m	£m	£m	£m	£m	£m	£m	£m	£m

Central and local government		1,562	9,745	81,193	-	5,102	1,133	98,735	(5,173)	93,562
Financial institutions	- banks (2)	37,540	30,415	8,171	1,188	270,323	89,620	437,257	(275,920)	161,337
	- other (3)	59,986	38,518	46,487	2,762	81,859	15,761	245,373	(104,091)	141,282
Personal	- mortgages	-	150,103	-	-	-	-	150,103	-	150,103
	- unsecured	-	29,139	-	-	-	8	29,147	-	29,147
Property		-	68,132	442	393	3,903	-	72,870	(1,189)	71,681
Construction		-	7,722	27	108	667	11	8,535	(1,533)	7,002
Manufacturing		171	22,622	358	2,548	1,682	156	27,537	(2,475)	25,062
Finance leases and instalment credit		-	14,734	1	2	33	-	14,770	(1)	14,769
Retail, wholesale and repairs		-	21,668	218	640	797	30	23,353	(1,752)	21,601
Transport and storage		-	19,109	999	129	2,778	430	23,445	(1,093)	22,352
Health, education and leisure		-	16,812	67	137	769	335	18,120	(939)	17,181
Hotels and restaurants		-	8,069	25	88	365	-	8,547	(207)	8,340
Utilities		-	6,415	330	901	2,645	-	10,291	(1,869)	8,422
Other		24	28,500	472	2,640	2,771	102	34,509	(2,057)	32,452

Total gross of provisions		99,283	471,703	138,790	11,536	373,694	107,586	1,202,592	(398,299)	804,293
Provisions		-	(21,753)	(559)	(105)	-	-	(22,417)	n/a	(22,417)

Total		99,283	449,950	138,231	11,431	373,694	107,586	1,180,175	(398,299)	781,876

		Reverse repos	Lending			Derivatives	Other financial assets	Balance sheet value	Offset	Exposure post offset (1)
				Securities
				Debt	Equity
31 December 2012		£m	£m	£m	£m	£m	£m	£m	£m	£m

Central and Government		441	9,853	97,339	-	5,791	591	114,015	(5,151)	108,864
Financial institutions	- banks (2)	34,783	31,394	11,555	1,643	335,521	79,308	494,204	(341,103)	153,101
	- other (3)	69,256	42,198	50,104	2,672	80,817	5,591	250,638	(97,589)	153,049
Personal	- mortgages	-	149,625	-	-	-	-	149,625	-	149,625
	- unsecured	-	32,212	-	-	-	4	32,216	-	32,216
Property		-	72,219	774	318	4,118	-	77,429	(1,333)	76,096
Construction		-	8,049	17	264	820	-	9,150	(1,687)	7,463
Manufacturing		326	23,787	836	1,639	1,759	144	28,491	(3,775)	24,716
Finance leases and instalment credit		-	13,609	82	1	13	-	13,705	-	13,705
Retail, wholesale and repairs		-	21,936	461	1,807	914	41	25,159	(1,785)	23,374
Transport and storage		-	18,341	659	382	3,397	2	22,781	(3,240)	19,541
Health, education and leisure		-	16,705	314	554	904	59	18,536	(964)	17,572
Hotels and restaurants		-	7,877	144	51	493	11	8,576	(348)	8,228
Utilities		-	6,631	1,311	638	3,170	50	11,800	(2,766)	9,034
Other		24	30,057	1,886	5,380	4,201	172	41,720	(2,403)	39,317

Total gross of provisions		104,830	484,493	165,482	15,349	441,918	85,973	1,298,045	(462,144)	835,901
Provisions		-	(21,262)	(858)	(112)	-	-	(22,232)	n/a	(22,232)

Total		104,830	463,231	164,624	15,237	441,918	85,973	1,275,813	(462,144)	813,669

Interim Results - Part 6 of 7

Contents

Financial assets

Exposure summary

Financial assets (continued)

Sector concentration

Financial assets: Sector concentration (continued)

Financial assets: Sector concentration (continued)

Financial assets: Sector concentration (continued)

Financial assets (continued)

Asset quality: Group

Financial assets: Asset quality: Core

Equity shares

Wholesale renegotiations

Problem debt management: Wholesale renegotiations (continued)

Retail forbearance

Problem debt management: Retail forbearance (continued)

Problem debt management: Retail forbearance (continued)

Residential mortgages

Key loan portfolios*: Residential mortgages (continued)

Key loan portfolios*: Residential mortgages (continued)

Key loan portfolios*: Residential mortgages (continued)

UK Retail

Ulster Bank

Key loan portfolios*: Residential mortgages (continued)

RBS Citizens

Ulster Bank

RBS Citizens

Ulster Bank Group (Core and Non-Core)

Companies

UK 100

Latest directors dealings

(1)	This shows the amount by which the Group's credit risk exposure is reduced through arrangements, such as master netting agreements, which give the Group a legal right to set off the financial asset against a financial liability due to the same counterparty. In addition, the Group holds collateral in respect of individual loans and advances to banks and customers. This collateral includes mortgages over property (both personal and commercial); charges over business assets such as plant, inventories and trade debtors; and guarantees of lending from parties other than the borrower. The Group obtains collateral in the form of securities in reverse repurchase agreements. Cash and securities are received as collateral in respect of derivative transactions.
(2)	Financial institutions - banks includes £89.6 billion (31 December 2012 - £79.3 billion) relating to cash and balances at central banks.
(3)	Loans made by the Group's consolidated conduits to asset owning companies are included within Financial institutions - other.

·	Financial asset exposures after offset decreased by £32 billion or 4% to £782 billion, reflecting the Group's focus on reducing its funded balance sheet, primarily through ongoing sales and run-off in Non-Core and downsizing of Markets.

·	Reductions across securities (debt: £26 billion; equity: £4 billion), lending (£11 billion), reverse repos (£7 billion) and derivatives (£4 billion) were partially offset by higher cash holdings (£10 billion) and settlement balances (£11 billion). Conditions in the financial markets and the Group's continued focus on risk appetite and sector concentration resulted in the trends seen.

·	Exposures to central and local governments decreased by £15 billion principally in debt securities. This was driven by Markets de-risking its balance sheet, management of the Group Treasury liquidity portfolio as well as some risk reduction in respect of eurozone exposures. The Group's portfolio comprises exposures to central governments and sub-sovereigns such as local authorities, primarily in the Group's key markets in the UK, Western Europe and the US.

·	Exposure to financial institutions was £4 billion lower, with decreases of £24 billion across securities, loans and derivatives, driven by economy-wide subdued activity being partially offset by increased higher cash holdings and settlement balances.
	○	The banking sector is one of the largest in the Group's portfolio. The sector is well diversified geographically and by exposure with derivative exposures being largely collateralised. Exposures to banks increased by £8 billion during the year, primarily due to higher cash placings with central banks, primarily the Bank of England, the US Federal Reserve, the European Central Bank and other Eurozone central banks.
	○	Exposure to other financial institutions is spread across a wide range of financial companies including insurance, securitisation vehicles, financial intermediaries including broker dealers and central counterparties (CCPs), financial guarantors - monolines and CDPCs - and funds (unleveraged, hedge and leveraged funds). The portfolio decreased by £12 billion. Entities in this sector remain vulnerable to market shocks or contagion from the banking sector.


·	The Group's exposure to property and construction sector decreased by £5 billion, principally in commercial real estate lending. The majority of the Group's Core commercial real estate property exposure is within UK Corporate (72%).
·	Retail, wholesale and repairs sector decreased by £2 billion, reflecting de-leveraging of customers in the retail sector.

·	Air and land transport and storage exposure increased by £3 billion. Asset-backed loans to ocean-going vessels was broadly unchanged at £10.5 billion. The downturn in the shipping sector continued in 2013, with an oversupply of vessels and lower charter rates. At 30 June 2013, £1.0 billion (31 December 2012 - £0.7 billion) of loans were included in risk elements in lending with an associated provision of £0.2 billion and impairment charge was less than £100 million for H1 2013.

·	In lending:
	○	UK Retail's lending to homeowners decreased by £0.5 billion, as new business was constrained due to the re-training of mortgage advisors. Unsecured lending balances also fell.
	○	UK Corporate lending decreased by £2.4 billion, as business demand for credit remains weak.
	○	Non-Core continued to make significant progress on its balance sheet strategy by reducing lending by £9 billion across all sectors, principally property and construction, within which commercial real estate lending decreased by £3.2 billion principally reflecting run-off (£2.6 billion).

For a discussion on debt securities and derivatives, see pages 13 and 17 respectively.

		Loans and advances
	Cash and balances at central banks	Banks				Customers				Settlement balances and other financial assets	Derivatives	Commitments	Contingent liabilities	Total
	Cash and balances at central banks	Reverse repos	Derivative cash collateral	Other	Total	Reverse repos	Derivative cash collateral	Other	Total	Settlement balances and other financial assets	Derivatives	Commitments	Contingent liabilities	Total
30 June 2013	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m

AQ1	88,366	11,143	3,101	5,768	20,012	33,670	11,486	36,434	81,590	7,566	85,799	63,238	7,603	354,174
AQ2	-	4,167	6,114	607	10,888	1,020	1,832	11,452	14,304	452	92,159	20,823	3,851	142,477
AQ3	934	5,603	2,294	4,053	11,950	3,518	4,491	39,937	47,946	3,150	120,941	27,789	8,220	220,930
AQ4	192	13,153	1,485	5,154	19,792	11,649	1,810	91,186	104,645	3,600	53,762	37,768	5,230	224,989
AQ5	128	2,061	186	920	3,167	9,910	434	89,828	100,172	1,452	16,409	29,525	2,315	153,168
AQ6	-	1,407	16	233	1,656	100	41	41,076	41,217	195	1,754	14,319	1,262	60,403
AQ7	-	6	-	144	150	1,859	29	31,816	33,704	10	1,525	16,958	1,013	53,360
AQ8	-	-	-	112	112	-	7	9,728	9,735	40	171	5,490	150	15,698
AQ9	-	-	-	132	132	-	12	17,500	17,512	13	930	1,726	230	20,543
AQ10	-	-	-	-	-	17	-	669	686	10	244	626	163	1,729
Past due	-	-	-	1	1	-	-	13,632	13,632	331	-	-	-	13,964
Impaired	-	-	-	95	95	-	-	37,888	37,888	1,147	-	-	-	39,130
Impairment provision	-	-	-	(83)	(83)	-	-	(21,670)	(21,670)	-	-	-	-	(21,753)

	89,620	37,540	13,196	17,136	67,872	61,743	20,142	399,476	481,361	17,966	373,694	218,262	30,037	1,278,812

		Loans and advances
	Cash and balances at central banks	Banks (1)				Customers (2)				Settlement balances and other financial assets	Derivatives	Commitments	Contingent liabilities	Total
	Cash and balances at central banks	Reverse repos	Derivative cash collateral	Other	Total	Reverse repos	Derivative cash collateral	Other	Total	Settlement balances and other financial assets	Derivatives	Commitments	Contingent liabilities	Total
31 December 2012	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m

AQ1	78,003	17,806	3,708	8,495	30,009	42,963	15,022	32,256	90,241	2,671	99,882	62,440	7,822	371,068
AQ2	12	3,556	4,566	514	8,636	710	704	10,551	11,965	185	108,107	20,207	2,792	151,904
AQ3	1,046	5,703	2,241	2,738	10,682	2,886	3,917	21,688	28,491	539	152,462	23,392	7,419	224,031
AQ4	100	6,251	1,761	2,729	10,741	14,079	2,144	99,771	115,994	1,202	57,650	39,832	5,648	231,167
AQ5	-	1,183	469	785	2,437	8,163	679	86,581	95,423	659	12,082	27,501	2,508	140,610
AQ6	-	282	39	356	677	86	50	36,891	37,027	73	1,476	13,140	1,353	53,746
AQ7	-	2	-	186	188	1,133	12	32,032	33,177	191	2,536	17,824	949	54,865
AQ8	-	-	-	68	68	4	2	10,731	10,737	8	247	5,607	146	16,813
AQ9	1	-	-	93	93	-	7	14,958	14,965	137	979	1,088	93	17,356
AQ10	-	-	-	-	-	-	-	684	684	1	448	832	149	2,114
Past due	-	-	-	-	-	-	249	9,528	9,777	991	-	-	-	10,768
Impaired	-	-	-	133	133	-	-	17,418	17,418	-	-	-	-	17,551
Impairment provision	-	-	-	(113)	(113)	-	-	(9,949)	(9,949)	-	-	-	-	(10,062)

	79,162	34,783	12,784	15,984	63,551	70,024	22,786	363,140	455,950	6,657	435,869	211,863	28,879	1,281,931

(1)	Core, Non-Core split excludes £2,036 million of loans to banks in relation to Direct Line Group.
(2)	Core, Non-Core split excludes £881 million of loans to customers in relation to Direct Line Group.

	30 June 2013				31 December 2012
	UK	US	Other (1)	Total	UK	US	Other (1)	Total
AFS reserves by issuer	£m	£m	£m	£m	£m	£m	£m	£m

Government (2)	6,671	16,573	12,554	35,798	9,774	19,046	16,155	44,975
Banks	353	96	5,622	6,071	1,085	357	7,419	8,861
Other financial institutions	2,760	8,763	9,702	21,225	2,861	10,613	10,416	23,890
Corporate	27	-	120	147	1,318	719	1,130	3,167

Total	9,811	25,432	27,998	63,241	15,038	30,735	35,120	80,893

Of which ABS (3)	2,920	12,931	12,680	28,531	3,558	14,209	12,976	30,743

AFS reserves (gross)	197	188	(982)	(597)	667	763	(1,277)	153

(1)	Includes eurozone countries as detailed in Appendix 5 Country risk.
(2)	Includes central and local government.
(3)	Asset-backed securities.

	Central and local government			Banks	Other financial institutions	Corporate	Total	Total	Of which ABS
	UK	US	Other	Banks	Other financial institutions	Corporate	Total	Total	Of which ABS
30 June 2013	£m	£m	£m	£m	£m	£m	£m	%	£m

AAA	-	26	17,493	1,411	9,852	60	28,842	21	9,386
AA to AA+	14,897	28,392	6,208	217	25,439	293	75,446	55	27,271
A to AA-	-	35	7,113	1,467	2,685	135	11,435	8	2,450
BBB- to A-	-	-	6,311	4,614	4,318	939	16,182	12	7,480
Non-investment grade	-	-	717	243	3,069	652	4,681	3	2,898
Unrated	-	1	-	219	1,124	301	1,645	1	933

	14,897	28,454	37,842	8,171	46,487	2,380	138,231	100	50,418

31 December 2012

AAA	17,471	31	17,167	2,304	11,502	174	48,649	30	10,758
AA to AA+	-	36,357	7,424	1,144	26,403	750	72,078	44	28,775
A to AA-	-	6	11,707	2,930	3,338	1,976	19,957	12	2,897
BBB- to A-	-	-	6,245	4,430	4,217	1,643	16,535	10	7,394
Non-investment grade	-	-	928	439	3,103	614	5,084	3	2,674
Unrated	-	1	2	308	1,541	469	2,321	1	1,087

	17,471	36,395	43,473	11,555	50,104	5,626	164,624	100	53,585

·	AAA rated debt securities decreased as the UK was downgraded from AAA to AA+ during the first half of the year and also reflected the Group's reduced holding of debt securities.

·	The decrease in holdings of debt securities rated A to AA- was primarily driven by a reduction in Japanese bonds.

·	Non-investment grade and unrated debt securities accounted for 5% of the portfolio.

	RMBS (1)
	Government sponsored or similar (2)	Prime	Non- conforming	Sub-prime	MBS covered bond (1)	CMBS (1)	CDOs (1)	CLOs (1)	ABS covered bond	ABS other	Total
30 June 2013	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m

AAA	1,743	2,713	1,538	26	521	347	73	1,087	25	1,313	9,386
AA to AA+	22,269	595	84	23	103	3,332	7	525	49	284	27,271
A to AA-	201	197	289	60	49	678	64	239	-	673	2,450
BBB- to A-	1,015	54	150	115	5,093	311	12	275	9	446	7,480
Non-investment grade (3)	3	623	482	406	353	354	275	201	-	201	2,898
Unrated (4)	-	78	10	405	-	10	40	300	-	90	933

	25,231	4,260	2,553	1,035	6,119	5,032	471	2,627	83	3,007	50,418

Of which in Non-Core	-	541	391	179	-	635	410	1,765	-	423	4,344

31 December 2012

AAA	2,454	2,854	1,487	11	639	396	92	1,181	165	1,479	10,758
AA to AA+	23,692	613	88	26	102	2,551	7	887	340	469	28,775
A to AA-	201	302	275	33	155	808	74	146	20	883	2,897
BBB- to A-	990	53	141	86	4,698	441	32	291	8	654	7,394
Non-investment grade (3)	20	641	454	330	136	304	421	133	-	235	2,674
Unrated (4)	-	108	8	298	-	23	94	388	-	168	1,087

	27,357	4,571	2,453	784	5,730	4,523	720	3,026	533	3,888	53,585

Of which in Non-Core	-	651	404	154	-	780	494	2,228	-	850	5,561

(1)	RMBS: residential mortgage-backed securities; CMBS: commercial mortgage-backed securities; CDOs: collateralised debt obligations; CLOs: collateralised loan obligations.
(2)	Includes US agency and Dutch government guaranteed securities.
(3)	Comprises held-for-trading (HFT) £1,467 million (31 December 2012 - £1,177 million), designated at fair value (DFV) nil (31 December 2012 - £7 million), available-for-sale (AFS) £1,226 million (31 December 2012 - £1,173 million) and loans and receivables (LAR) £205 million (31 December 2012 - £317 million).
(4)	Comprises HFT £768 million (31 December 2012 - £808 million), AFS £107 million (31 December 2012 - £149 million) and LAR £58 million (31 December 2012 - £130 million).

	30 June 2013
	HFT					AFS/DFV (1)
Countries	Banks £m	Other FI (2) £m	Corporate £m	Total £m	HFT short positions £m	Banks £m	Other FI (2) £m	Corporate £m	Total £m	Total £m	AFS reserves £m

Spain	7	-	344	351	(2)	-	-	64	64	415	(52)
Ireland	-	71	11	82	-	-	7	-	7	89	-
Italy	11	-	23	34	-	-	5	16	21	55	-
Portugal	-	-	3	3	-	-	-	-	-	3	-
Greece	-	-	1	1	-	-	-	-	-	1	-

Eurozone Periphery	18	71	382	471	(2)	-	12	80	92	563	(52)

Netherlands	-	151	389	540	(23)	-	40	46	86	626	(22)
Germany	4	135	403	542	(10)	-	-	-	-	542	-
France	10	42	90	142	(185)	-	-	156	156	298	33
Luxembourg	-	210	38	248	(7)	-	-	3	3	251	-
Other	22	24	103	149	(14)	-	3	-	3	152	2

Total eurozone	54	633	1,405	2,092	(241)	-	55	285	340	2,432	(39)

Countries
US	62	416	2,013	2,491	(288)	458	269	68	795	3,286	16
UK	145	428	1,897	2,470	(36)	8	283	267	558	3,028	64
China	284	109	296	689	(54)	-	-	-	-	689	8
Japan	-	155	112	267	(10)	-	1	-	1	268	-
Australia	80	43	104	227	-	-	-	5	5	232	-
Taiwan	1	60	138	199	-	-	-	-	-	199	-
South Korea	1	27	145	173	-	-	-	1	1	174	-
Hong Kong	3	72	93	168	-	-	-	6	6	174	3
Switzerland	8	13	87	108	(5)	-	40	-	40	148	38
Russia	15	4	104	123	-	-	-	-	-	123	-
India	14	-	100	114	-	-	-	-	-	114	-
Romania	1	110	-	111	-	-	-	-	-	111	-
Canada	3	2	76	81	(404)	-	-	-	-	81	-
Other	51	37	263	351	(23)	-	5	16	21	372	8

Total	722	2,109	6,833	9,664	(1,061)	466	653	648	1,767	11,431	98

	31 December 2012
	HFT					AFS/DFV (1)
Countries	Banks £m	Other FI (2) £m	Corporate £m	Total £m	HFT short positions £m	Banks £m	Other FI (2) £m	Corporate £m	Total £m	Total £m	AFS reserves £m

Spain	18	-	51	69	-	-	-	92	92	161	(41)
Ireland	-	126	47	173	(3)	-	17	-	17	190	-
Italy	7	1	33	41	(15)	-	5	-	5	46	-
Portugal	-	-	5	5	-	-	-	-	-	5	-
Greece	-	-	6	6	-	-	-	-	-	6	-

Eurozone periphery	25	127	142	294	(18)	-	22	92	114	408	(41)

Netherlands	20	157	465	642	(21)	-	40	156	196	838	(19)
Germany	33	1	106	140	(54)	-	-	-	-	140	-
France	10	75	103	188	(10)	-	1	143	144	332	23
Luxembourg	14	196	46	256	(1)	-	6	34	40	296	1
Other	18	26	116	160	(15)	-	3	-	3	163	1

Total eurozone	120	582	978	1,680	(119)	-	72	425	497	2,177	(35)

Countries
US	208	619	2,645	3,472	(132)	307	419	18	744	4,216	7
UK	372	144	2,483	2,999	(35)	35	70	320	425	3,424	73
China	331	147	357	835	(3)	-	14	3	17	852	7
Japan	24	67	973	1,064	(1)	-	2	-	2	1,066	-
Australia	77	45	159	281	(17)	-	-	-	-	281	-
Taiwan	2	31	259	292	(11)	-	-	-	-	292	-
South Korea	32	72	880	984	-	-	-	-	-	984	-
Hong Kong	2	81	97	180	-	-	-	4	4	184	2
Switzerland	4	-	71	75	(13)	-	34	-	34	109	31
Russia	16	4	158	178	-	-	-	-	-	178	-
India	29	68	220	317	-	-	-	-	-	317	-
Romania	-	123	-	123	-	-	-	-	-	123	-
Canada	14	25	200	239	(277)	-	-	2	2	241	2
MDB and supranationals (3)	-	-	-	-	-	-	-	156	156	156	-
Other	70	48	492	610	(3)	-	5	22	27	637	(3)

Total	1,301	2,056	9,972	13,329	(611)	342	616	950	1,908	15,237	84

(1)	Designated as at fair value through profit or loss balances are £414 million (31 December 2012 - £533 million) comprising £54 million other financial institutions (31 December 2012 - £61 million) and £360 million corporate (31 December 2012 - £472 million).
(2)	Other financial institutions (FI) including government sponsored entities.
(3)	MDB - Multilateral development banks.

	30 June 2013				31 December 2012
	Notional		Fair value		Notional		Fair value
	Bought	Sold	Bought	Sold	Bought	Sold	Bought	Sold
Group	£bn	£bn	£bn	£bn	£bn	£bn	£bn	£bn

Client-led trading & residual risk	218.6	206.6	2.8	2.7	250.7	240.7	3.4	3.1
Credit hedging - banking book (1)	5.3	0.2	0.2	-	5.4	0.4	0.1	-
Credit hedging - trading book
- rates	9.2	6.1	0.2	0.1	9.4	5.8	0.1	0.1
- credit and mortgage markets	4.3	1.9	0.6	0.4	22.4	16.0	0.9	0.7
- other	1.2	0.3	-	-	1.4	0.6	-	-

Total	238.6	215.1	3.8	3.2	289.3	263.5	4.5	3.9

Core

Client-led trading	195.5	192.6	2.6	2.4	231.4	228.4	3.0	2.7
Credit hedging - banking book	1.6	-	-	-	1.7	-	-	-
Credit hedging - trading book
- rates	8.0	5.0	0.2	0.1	7.8	4.6	0.1	0.1
- credit and mortgage markets	0.2	-	-	-	13.9	13.6	0.2	0.2
- other	1.2	0.3	-	-	1.3	0.5	-	-

	206.5	197.9	2.8	2.5	256.1	247.1	3.3	3.0

Non-Core

Residual risk	23.1	14.0	0.2	0.3	19.3	12.3	0.4	0.4
Credit hedging - banking book (1)	3.7	0.2	0.2	-	3.7	0.4	0.1	-
Credit hedging - trading book
- rates	1.2	1.1	-	-	1.6	1.2	-	-
- credit and mortgage markets	4.1	1.9	0.6	0.4	8.5	2.4	0.7	0.5
- other	-	-	-	-	0.1	0.1	-	-

	32.1	17.2	1.0	0.7	33.2	16.4	1.2	0.9

By counterparty

Monoline insurers	3.2	-	0.2	-	4.6	-	0.4	-
CDPCs (2)	21.9	-	0.2	-	21.0	-	0.2	-
Banks	88.1	92.1	1.5	1.7	127.2	128.6	2.3	2.8
Other financial institutions	124.7	123.0	1.7	1.5	135.8	134.9	1.4	1.1
Corporates	0.7	-	0.2	-	0.7	-	0.2	-

	238.6	215.1	3.8	3.2	289.3	263.5	4.5	3.9

(1)	Credit hedging in the banking book principally relates to portfolio management in Non-Core.
(2)	Credit derivative product company.

	Half year ended 30 June 2013			Year ended 31 December 2012
	Performing	Non- performing	Provision coverage	Performing	Non- performing	Provision coverage
Sector (1)	£m	£m	%	£m	£m	%

Property	791	322	25	1,954	3,288	18
Transport	87	177	16	832	99	23
Telecommunications, media and technology	123	38	5	237	341	46
Retail and leisure	173	27	-	487	111	34
Other	231	74	-	792	245	28

	1,405	638	18	4,302	4,084	22

Arrangement type (1)	Half year ended 30 June 2013 %	Year ended 31 December 2012 %

Variation in margin	2	9
Payment concessions and loan rescheduling	87	69
Forgiveness of all or part of the outstanding debt	12	29
Other (2)	18	20

(1)	The total above exceeds 100% as an individual case can involve more than one type of arrangement.
(2)	Main types of 'other' concessions include formal 'standstill' agreements, release of security and amendments to negative pledge.

●	Renegotiations completed during the first half of 2013, subject to thresholds as explained above, amounted to £2.0 billion. In H1 2013 renegotiations were most prevalent in the Group's most significant corporate sectors and in those industries experiencing difficult markets, notably property and transport as the Group sought to support viable customers. The majority of renegotiations granted to borrowers in the property sector were payment concessions and loan rescheduling.

●	Year-on-year analysis of renegotiated loans may be skewed by individual material cases reaching legal completion during a given year. This is particularly relevant when comparing the value of renegotiations completed in the property and seaborne transport sectors where negotiations can be lengthy. In the first half of 2013, the decrease in completed renegotiations was driven by a lack of large individual material cases reaching legal completion during the period.

●	Provisions for the non-performing loans disclosed above are individually assessed and renegotiations are taken into account when determining the level of provision. The provision coverage is affected by the timing of write-offs and provisions. In some cases loans are fully or partially written off on the completion of a renegotiation. Non-performing renegotiated loans also include loans against which no provision is held. Where these cases are large they can have a significant impact on the provision coverage within a specific sector.

●	Loans renegotiated since January 2011 and still outstanding at 30 June 2013 amounted to £16.3 billion (31 December 2012 - £17.7 billion). Of the loans renegotiated by GRG since January 2011, 7% had been returned to performing portfolios managed by the business by 30 June 2013 (31 December 2012 - 6%).

●	Renegotiations are likely to remain significant, particularly in those industries experiencing difficult markets. At 30th June 2013, loans totalling £13.6 billion (31 December 2012 - £13.7 billion) were in the process of being renegotiated but had not yet reached legal completion (these loans are not included in the tables above). Property and transport represent 70% and 11% respectively of the in-process renegotiations. 73% of the in-process renegotiations were non-performing loans (31 December 2012 - 69%), with associated provision coverage of 33% (31 December 2012 - 32%). The principal types of arrangements offered include variation in margin, payment concessions and loan rescheduling and forgiveness of all or part of the outstanding debt.

●	56% of 'completed' and 96% of 'in progress' renegotiated cases (by value) were managed by GRG.

	No missed payments		1-3 months in arrears		>3 months in arrears		Total
	Balance	Provision	Balance	Provision	Balance	Provision	Balance	Provision	Forborne balances
	£m	£m	£m	£m	£m	£m	£m	£m	%

30 June 2013
UK Retail (1,2)	4,121	20	438	19	448	61	5,007	100	5.1
Ulster Bank (1,2)	1,114	150	585	79	627	244	2,326	473	11.8
RBS Citizens	-	-	185	20	211	9	396	29	1.8
Wealth (3)	121	18	4	-	22	1	147	19	1.7

	5,356	188	1,212	118	1,308	315	7,876	621	4.9

31 December 2012

UK Retail (1,2)	4,006	20	388	16	450	64	4,844	100	4.9
Ulster Bank (1,2)	915	100	546	60	527	194	1,988	354	10.4
RBS Citizens	-	-	179	25	160	10	339	35	1.6
Wealth	38	-	-	-	7	-	45	-	0.5

	4,959	120	1,113	101	1,144	268	7,216	489	4.9

(1)	Forbearance in UK Retail and Ulster Bank above capture all instances where a change has been made to the contractual payment terms including those where the customer is up-to-date on payments and there is no obvious evidence of financial stress
(2)	Includes the current stock position of forbearance deals agreed since early 2008 for UK Retail and early 2009 for Ulster Bank.
(3)	Wealth forbearance stock at 30 June 2013 included the RBS International portfolio.

	UK Retail	Ulster Bank	RBS Citizens	Wealth	Total
30 June 2013 (1)	£m	£m	£m	£m	£m

Interest only conversions - temporary and permanent	1,301	759	-	5	2,065
Term extensions - capital repayment and interest only	2,401	274	-	36	2,711
Payment concessions	226	1,092	368	19	1,705
Capitalisation of arrears	938	264	-	-	1,202
Other	414	-	28	87	529

	5,280	2,389	396	147	8,212

31 December 2012 (1)

Interest only conversions - temporary and permanent	1,220	924	-	6	2,150
Term extensions - capital repayment and interest only	2,271	183	-	27	2,481
Payment concessions	215	762	339	9	1,325
Capitalisation of arrears	932	119	-	-	1,051
Other	452	-	-	3	455

	5,090	1,988	339	45	7,462

(1)	As an individual case can include more than one type of arrangement, the analysis in the table on forbearance arrangements exceeds the total value of cases subject to forbearance.
(2)	Includes all deals agreed during the half year (new customers and renewals) regardless of whether they remain active at the period end.

●	At 30 June 2013, stock levels of £5.0 billion represented 5.1% of the total mortgage assets, an increase of 3.4% from 31 December 2012; balances were flat between Q1 and Q2 2013.

●	The flow of new forbearance in Q2 2013 continued to fall (£429 million compared with an average of £494 million per quarter in the preceding four quarters). The 24 month rolling stock of forbearance (where the treatment has been provided in the last 24 months) is £2.1 billion and fell slightly in the first half of the year.

●	Approximately 82% of forbearance assets (31 December 2012 - 83%) were up-to-date with payments (compared with approximately 97% of the assets not subject to forbearance activity).

●	Of the total stock of assets subject to forbearance treatment, 45% were term extensions, 25% interest-only conversions and 18% capitalisations of arrears.

●	The growth of interest only stock reflects an extension of the definition to include customers who were historically on Capital and Interest repayments and who converted to a mix of capital and interest and interest only; the underlying level of transfers is negligible and the remaining stock reflects legacy policy.

●	The provision cover on assets subject to forbearance was around 4.6 times that on assets not subject to forbearance.

●	At 30 June 2013, 11.8% of total mortgage assets (£2.3 billion) were subject to a forbearance arrangement, an increase from 10.4% (£2.0 billion) at 31 December 2012. This reflected Ulster Bank's proactive strategies to contact customers in financial difficulty to offer assistance. Forbearance deals agreed during H1 2013 increased by 11% compared to H2 2012. However the number of customers approaching Ulster Bank for assistance for the first time remained broadly stable.

●	The majority of the forbearance treatments offered by Ulster Bank are short to medium term concessions (interest only conversions and payment concessions). They account for 77% of forbearance assets at 30 June 2013 (85% at 31 December 2012). These concessions are offered for periods of between one and five years and incorporate different levels of repayment based on the customer's ability to pay.

●	Interest only arrangements represented 32% of forbearance assets at 30 June 2013, a decrease from 46% at 31 December 2012.

●	Similarly, of those customers offered payment concession (46%), the number of customers who were temporarily permitted to pay less than the interest only fell (6% of forbearance assets at 30 June 2013; 11% at 31 December 2012). Customers who agreed a reduced payment (greater than interest only) and payment holidays accounted for 26% and 7% respectively at 30 June 2013.

●	Permanent forbearance treatments, capitalisations and term extensions each represented 11% of the forbearance portfolio at 30 June 2013, increasing from 6% and 9% respectively as of 31 December 2012.

●	Where performing cases are subject to forbearance, they attract a higher provision than assets not subject to forbearance. The majority of forbearance arrangements were in the performing book (73%).

●	At 30 June 2013, 7% of forbearance customers were subject to one of the new treatments developed to assist customers as part of the longer term strategies.

					Credit metrics
30 June 2013		Gross loans £m	REIL £m	Provisions £m	REIL as a % of gross loans %	Provisions as a % of REIL %	Provisions as a % of gross loans %	Impairment charge YTD £m	Amounts written-off YTD £m

Government (1)		9,745	-	-	-	-	-	-	-
Finance		38,518	618	315	1.6	51	0.8	33	10
Personal	- mortgages	150,103	6,749	2,036	4.5	30	1.4	284	155
	- unsecured	29,139	2,780	2,270	9.5	82	7.8	253	390
Property		68,132	21,676	10,145	31.8	47	14.9	862	771
Construction		7,722	1,434	682	18.6	48	8.8	125	100
Manufacturing		22,622	708	412	3.1	58	1.8	57	61
Finance leases (2)		14,734	301	203	2.0	67	1.4	(1)	87
Retail, wholesale and repairs		21,668	1,183	622	5.5	53	2.9	47	83
Transport and storage		19,109	1,331	316	7.0	24	1.7	76	111
Health, education and leisure		16,812	1,445	653	8.6	45	3.9	153	36
Hotels and restaurants		8,069	1,551	688	19.2	44	8.5	29	85
Utilities		6,415	253	112	3.9	44	1.7	60	-
Other		28,500	2,059	1,236	7.2	60	4.3	228	206
Latent		-	-	1,980	-	-	-	(36)	-

		441,288	42,088	21,670	9.5	51	4.9	2,170	2,095

of which:
UK
- residential mortgages		109,291	2,348	494	2.1	21	0.5	36	24
- personal lending		17,312	2,322	1,991	13.4	86	11.5	175	296
- property		49,646	10,655	4,088	21.5	38	8.2	500	594
- construction		6,023	1,044	487	17.3	47	8.1	105	99
- other		117,822	4,079	2,441	3.5	60	2.1	156	294
Europe
- residential mortgages		18,438	3,361	1,351	18.2	40	7.3	161	5
- personal lending		1,322	235	219	17.8	93	16.6	10	16
- property		14,045	10,864	5,992	77.4	55	42.7	372	165
- construction		1,362	344	178	25.3	52	13.1	13	-
- other		25,000	4,696	3,269	18.8	70	13.1	478	339
US
- residential mortgages		22,033	1,013	185	4.6	18	0.8	88	125
- personal lending		9,280	221	60	2.4	27	0.6	67	77
- property		4,143	118	26	2.8	22	0.6	(8)	12
- construction		311	37	8	11.9	22	2.6	7	1
- other		30,873	383	674	1.2	176	2.2	1	34
RoW
- residential mortgages		341	27	6	7.9	22	1.8	(1)	1
- personal lending		1,225	2	-	0.2	-	-	1	1
- property		298	39	39	13.1	100	13.1	(2)	-
- construction		26	9	9	34.6	100	34.6	-	-
- other		12,497	291	153	2.3	53	1.2	11	12

		441,288	42,088	21,670	9.5	51	4.9	2,170	2,095

Banks		30,415	95	83	0.3	87	0.3	(9)	28

					Credit metrics
31 December 2012		Gross loans (1) £m	REIL £m	Provisions £m	REIL as a % of gross loans %	Provisions as a % of REIL %	Provisions as a % of gross loans %	Impairment charge YTD £m	Amounts written-off YTD £m

Government (1)		8,485	-	-	-	-	-	-	-
Finance		39,658	185	149	0.5	81	0.4	54	338
Personal	- mortgages	146,770	6,229	1,691	4.2	27	1.2	786	234
	- unsecured	30,366	2,717	2,306	8.9	85	7.6	568	718
Property		43,602	4,672	1,674	10.7	36	3.8	748	214
Construction		6,020	757	350	12.6	46	5.8	119	60
Manufacturing		22,234	496	225	2.2	45	1.0	118	63
Finance leases (2)		9,201	159	107	1.7	67	1.2	35	41
Retail, wholesale and repairs		20,842	791	439	3.8	55	2.1	181	129
Transport and storage		14,590	440	112	3.0	25	0.8	72	21
Health, education and leisure		15,770	761	299	4.8	39	1.9	109	67
Hotels and restaurants		6,891	1,042	473	15.1	45	6.9	138	56
Utilities		5,131	10	5	0.2	50	0.1	-	-
Other		26,315	1,374	794	5.2	58	3.0	190	175
Latent		-	-	1,325	-	-	-	(146)	-

		395,875	19,633	9,949	5.0	51	2.5	2,972	2,116

of which:
UK
- residential mortgages		109,511	2,440	457	2.2	19	0.4	122	32
- personal lending		19,562	2,454	2,133	12.5	87	10.9	474	594
- property		35,532	2,777	896	7.8	32	2.5	395	181
- construction		5,101	671	301	13.2	45	5.9	109	47
- other		108,713	2,662	1,737	2.4	65	1.6	499	379
Europe
- residential mortgages		17,446	3,060	1,124	17.5	37	6.4	521	24
- personal lending		1,540	143	138	9.3	97	9.0	29	11
- property		4,896	1,652	685	33.7	41	14.0	350	6
- construction		513	60	39	11.7	65	7.6	4	10
- other		22,218	2,280	1,711	10.3	75	7.7	362	267
US
- residential mortgages		19,483	702	102	3.6	15	0.5	141	176
- personal lending		8,209	119	34	1.4	29	0.4	65	112
- property		2,847	112	13	3.9	12	0.5	3	27
- construction		384	5	-	1.3	-	-	1	3
- other		28,267	252	432	0.9	171	1.5	(111)	90
RoW
- residential mortgages		330	27	8	8.2	30	2.4	2	2
- personal lending		1,055	1	1	0.1	100	0.1	-	1
- property		327	131	80	40.1	61	24.5	-	-
- construction		22	21	10	95.5	48	45.5	5	-
- other		9,919	64	48	0.6	75	0.5	1	154

		395,875	19,633	9,949	5.0	51	2.5	2,972	2,116

Banks		28,881	133	113	0.5	85	0.4	23	29