Restatement Document

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	Year ended 31 December 2012			Year ended 31 December 2011
	Previously reported (1)	Adjustments	Restated	Previously reported (1)	Adjustments	Restated
	£m	£m	£m	£m	£m	£m

Net interest income	11,695	(278)	11,417	12,689	(376)	12,313

Non-interest income (excluding insurance net premium income)	10,374	294	10,668	10,764	347	11,111
Insurance net premium income	3,718	(3,718)	-	4,256	(4,256)	-

Non-interest income	14,092	(3,424)	10,668	15,020	(3,909)	11,111

Total income (2)	25,787	(3,702)	22,085	27,709	(4,285)	23,424
Operating expenses (3)	(14,619)	765	(13,854)	(15,478)	632	(14,846)

Profit before insurance net claims and impairment losses	11,168	(2,937)	8,231	12,231	(3,653)	8,578
Insurance net claims	(2,427)	2,427	-	(2,968)	2,968	-

Operating profit before impairment losses	8,741	(510)	8,231	9,263	(685)	8,578
Impairment losses	(5,279)	-	(5,279)	(7,439)	2	(7,437)

Operating profit	3,462	(510)	2,952	1,824	(683)	1,141
Own credit adjustments	(4,649)	-	(4,649)	1,914	-	1,914
Payment Protection Insurance costs	(1,110)	-	(1,110)	(850)	-	(850)
Interest Rate Hedging Products redress and related costs	(700)	-	(700)	-	-	-
Regulatory fines	(381)	-	(381)	-	-	-
Sovereign debt impairment and related interest rate hedge adjustments	-	-	-	(1,268)	-	(1,268)
Integration and restructuring costs	(1,550)	135	(1,415)	(1,064)	43	(1,021)
Gain on redemption of own debt	454	-	454	255	-	255
Write-down of goodwill and other intangible assets	(518)	394	(124)	(11)	11	-
Other items
- Asset Protection Scheme	(44)	-	(44)	(906)	-	(906)
- Amortisation of purchased intangible assets	(178)	-	(178)	(222)	-	(222)
- Strategic disposals	113	-	113	(104)	(1)	(105)
- Bank levy	(175)	-	(175)	(300)	-	(300)
- Bonus tax	-	-	-	(27)	-	(27)
- RFS Holdings minority interest	(20)	-	(20)	(7)	-	(7)

Operating loss including the results of Direct Line Group discontinued operations	(5,296)	19	(5,277)	(766)	(630)	(1,396)
Direct Line Group discontinued operations	131	(131)	-	(424)	424	-

Operating loss before tax	(5,165)	(112)	(5,277)	(1,190)	(206)	(1,396)
Tax charge	(469)	28	(441)	(1,127)	52	(1,075)

Loss from continuing operations	(5,634)	(84)	(5,718)	(2,317)	(154)	(2,471)

(Loss)/profit from discontinued operations, net of tax
- Direct Line Group	(184)	-	(184)	301	-	301
- Other	12	-	12	47	-	47

(Loss)/profit from discontinued operations, net of tax	(172)	-	(172)	348	-	348
				-
Loss for the period	(5,806)	(84)	(5,890)	(1,969)	(154)	(2,123)
Non-controlling interests	123	13	136	(28)	-	(28)
Other owners' dividends	(288)	(13)	(301)	-	-	-

Loss attributable to ordinary and B shareholders	(5,971)	(84)	(6,055)	(1,997)	(154)	(2,151)

(1)	Operating profit as reported in the Annual Results for the year ended 31 December 2012.
(2)	Adjustments to total income relate to the elimination of DLG income, comprising instalment income of £126 million (2011 - £145 million), investment income of £243 million (2011 - £302 million), other income of £45 million (2011 - £75 million) and insurance net premium income of £3,718 million (2011 - £4,256 million), offset by net fees and commissions payable of £430 million (2011 - £493 million).
(3)	Adjustments to operating expenses relate to the elimination of DLG of £877 million (2011 - £838 million), including certain DLG related activities and charges in Group Centre, partially offset by the increase of £112 million (2011 - £206 million) in pension costs resulting from the implementation of IAS 19.

	Half year ended 30 June 2012
	Previously reported (1)	Adjustments	Restated
	£m	£m	£m

Net interest income	5,980	(150)	5,830

Non-interest income (excluding insurance net premium income)	5,722	133	5,855
Insurance net premium income	1,867	(1,867)	-

Non-interest income	7,589	(1,734)	5,855

Total income (2)	13,569	(1,884)	11,685
Operating expenses (3)	(7,861)	428	(7,433)

Profit before insurance net claims and impairment losses	5,708	(1,456)	4,252
Insurance net claims	(1,225)	1,225	-

Operating profit before impairment losses	4,483	(231)	4,252
Impairment losses	(2,649)	-	(2,649)

Operating profit	1,834	(231)	1,603
Own credit adjustments	(2,974)	-	(2,974)
Payment Protection Insurance costs	(260)	-	(260)
Integration and restructuring costs	(673)	54	(619)
Gain on redemption of own debt	577	-	577
Other items
- Asset Protection Scheme	(45)	-	(45)
- Amortisation of purchased intangible assets	(99)	-	(99)
- Strategic disposals	152	-	152
- RFS Holdings minority interest	(17)	-	(17)

Operating loss including the results of Direct Line Group discontinued operations	(1,505)	(177)	(1,682)
Direct Line Group discontinued operations	(121)	121	-

Operating loss before tax	(1,626)	(56)	(1,682)
Tax charge	(413)	14	(399)

Loss from continuing operations	(2,039)	(42)	(2,081)

Profit from discontinued operations, net of tax
- Direct Line Group	105	-	105
- Other	1	-	1

Profit from discontinued operations, net of tax	106	-	106

Loss for the period	(1,933)	(42)	(1,975)
Non-controlling interests	19	6	25
Other owners' dividends	(76)	(6)	(82)

Loss attributable to ordinary and B shareholders	(1,990)	(42)	(2,032)

(1)	Operating profit as reported in the Interim Results for the half year ended 30 June 2012.
(2)	Adjustments to total income relate to the elimination of DLG, comprising instalment income of £62 million, investment income of £163 million, other income of £14 million and insurance net premium income of £1,867 million, offset by net fees and commissions payable of £222 million.
(3)	Adjustments to operating expenses relate to the elimination of DLG of £484 million, including certain DLG related activities and charges in Group Centre, partially offset by the increase of £56 million in pension costs resulting from the implementation of IAS 19.

	Quarter ended 31 March 2013			Quarter ended 30 June 2012
	Previously reported (1)	Adjustments	Restated	Previously reported (2)	Adjustments	Restated
	£m	£m	£m	£m	£m	£m

Net interest income	2,722	(50)	2,672	2,973	(66)	2,907

Non-interest income (excluding insurance net premium income)	2,429	60	2,489	2,536	77	2,613
Insurance net premium income	699	(699)	-	929	(929)	-

Non-interest income	3,128	(639)	2,489	3,465	(852)	2,613

Total income (3)	5,850	(689)	5,161	6,438	(918)	5,520
Operating expenses (4)	(3,543)	162	(3,381)	(3,877)	243	(3,634)

Profit before insurance net claims and impairment losses	2,307	(527)	1,780	2,561	(675)	1,886
Insurance net claims	(445)	445	-	(576)	576	-

Operating profit before impairment losses	1,862	(82)	1,780	1,985	(99)	1,886
Impairment losses	(1,033)	-	(1,033)	(1,335)	-	(1,335)

Operating profit	829	(82)	747	650	(99)	551
Own credit adjustments	249	-	249	(518)	-	(518)
Payment Protection Insurance costs	-	-	-	(135)	-	(135)
Interest Rate Hedging Products redress and related costs	(50)	-	(50)	-	-	-
Integration and restructuring costs	(131)	9	(122)	(213)	32	(181)
Loss on redemption of own debt	(51)	-	(51)	-	-	-
Other items
- Asset Protection Scheme	-	-	-	(2)	-	(2)
- Amortisation of purchased intangible assets	(41)	-	(41)	(51)	-	(51)
- Strategic disposals	66	(72)	(6)	160	-	160
- RFS Holdings minority interest	100	-	100	8	-	8

Operating profit/(loss) including the results of Direct Line Group discontinued operations	971	(145)	826	(101)	(67)	(168)
Direct Line Group discontinued operations	(145)	145	-	(39)	39	-

Operating profit/(loss) before tax	826	-	826	(140)	(28)	(168)
Tax charge	(350)	-	(350)	(268)	7	(261)

Profit/(loss) from continuing operations	476	-	476	(408)	(21)	(429)

Profit from discontinued operations, net of tax
- Direct Line Group	127	-	127	17	-	17
- Other	2	-	2	(4)	-	(4)

Profit from discontinued operations, net of tax	129	-	129	13	-	13

Profit/(loss) for the period	605	-	605	(395)	(21)	(416)
Non-controlling interests	(131)	-	(131)	5	6	11
Other owners' dividends	(81)	-	(81)	(76)	(6)	(82)

Profit/(loss) attributable to ordinary and B shareholders	393	-	393	(466)	(21)	(487)

Capital resources

Components of capital (Basel 2.5)

Companies

UK 100

Latest directors dealings

Key metrics

Core performance ratios
- Net interest margin	2.16%		2.15%	2.16%		2.13%
- Cost:income ratio (4)	59%		59%	60%		60%
- Return on equity	9.8%		8.8%	10.4%		9.3%
- Adjusted earnings per ordinary and B share	18.3p	(3.8p)	14.5p	6.1p	(4.7p)	1.4p
- Adjusted earnings per ordinary and B share assuming an expected tax rate of 24.5% (2011 - 26.5%)	41.9p	(3.7p)	38.2p	41.0p	(4.7p)	36.3p

Capital and balance sheet	£bn	£bn	£bn

Total third party assets (excluding derivatives)	93.7	(1.2)	92.5
Total third party assets (including derivatives)	104.7	(1.1)	103.6

	Year ended 31 December 2012			Year ended 31 December 2011
	Previously reported	Adjustments	Restated	Previously reported	Adjustments	Restated
	£m	£m	£m	£m	£m	£m

UK Retail	4,969	-	4,969	5,508	-	5,508
UK Corporate	4,723	-	4,723	4,863	-	4,863
Wealth	1,170	-	1,170	1,104	-	1,104
International Banking	2,122	-	2,122	2,555	-	2,555
Ulster Bank	845	-	845	947	-	947
US Retail & Commercial	3,091	-	3,091	3,037	(6)	3,031

Retail & Commercial	16,920	-	16,920	18,014	(6)	18,008
Markets	4,483	-	4,483	4,415	-	4,415
Direct Line Group	3,717	(3,717)	-	4,072	(4,072)	-
Central Items	379	15	394	20	7	27

Core	25,499	(3,702)	21,797	26,521	(4,071)	22,450
Non-Core	288	-	288	1,188	(214)	974

Total	25,787	(3,702)	22,085	27,709	(4,285)	23,424

	31 December 2012
	Previously reported	Adjustments	Revised
	£m	£m	£m

Shareholders' equity (excluding non-controlling interests)
Shareholders' equity per balance sheet	68,130	548	68,678
Preference shares - equity	(4,313)	-	(4,313)
Other equity instruments	(431)	(548)	(979)
	63,386	-	63,386

Non-controlling interests
Non-controlling interests per balance sheet	2,318	(548)	1,770
Non-controlling preference shares	(548)	548	-
Other adjustments to non-controlling interests for regulatory purposes	(1,367)	-	(1,367)
	403	-	403

Regulatory adjustments and deductions
Own credit	691	-	691
Defined pension benefit adjustment	913	-	913
Unrealised losses on available-for-sale (AFS) debt securities	410	-	410
Unrealised gains on AFS equity shares	(63)	-	(63)
Cash flow hedging reserve	(1,666)	-	(1,666)
Other adjustments for regulatory purposes	(198)	-	(198)
Goodwill and other intangible assets	(13,545)	-	(13,545)
50% excess of expected losses over impairment provisions (net of tax)	(1,904)	-	(1,904)
50% of securitisation positions	(1,107)	-	(1,107)
	(16,469)	-	(16,469)

Core Tier 1 capital	47,320	-	47,320

Other Tier 1 capital
Preference shares - equity	4,313	-	4,313
Preference shares - debt	1,054	-	1,054
Innovative/hybrid Tier 1 securities	4,125	-	4,125
	9,492		9,492

Tier 1 deductions
50% of material holdings	(295)	-	(295)
Tax on excess of expected losses over impairment provisions	618	-	618
	323		323

Total Tier 1 capital	57,135	-	57,135

Key metrics

Core performance ratios
- Net interest margin	2.21%		2.21%	2.20%		2.19%
- Cost:income ratio (5)	64%		63%	62%		61%
- Return on equity	8.2%		7.7%	9.3%		8.7%
- Adjusted earnings per ordinary and B share	5.6p	(0.3p)	5.3p	4.4p	(0.8p)	3.6p
- Adjusted earnings per ordinary and B share assuming a normalised tax rate of 23.25% (2012 - 24.5%)	8.3p	(0.6p)	7.7p	9.7p	(0.7p)	9.0p