Segment performance Q4 2016 compared with Q4 2015 ● An operating profit of £10 million compared with an operating loss of £516 million in Q4 2015 which included a goodwill impairment of £498 million. An adjusted operating profit of £23 million compared with a loss of £13 million in Q4 2015 reflecting lower adjusted operating expenses and a net impairment release in Q4 2016. ● Income increased by £3 million, or 2%, principally reflecting higher asset volumes, partially offset by asset margin pressure. ● Adjusted operating expenses reduced by £13 million, or 8%, reflecting cost efficiencies, with headcount down 10%. RBS International 2016 compared with 2015 ● Operating profit decreased by £17 million to £190 million principally reflecting increased impairment losses and operating expenses. Adjusted operating profit of £195 million was £16 million lower than 2015. ● Total income increased by £7 million to £374 million primarily reflecting higher asset volumes. Net interest margin fell by 12 basis points to 1.36% reflecting asset margin pressures. ● Adjusted operating expenses of £169 million were £13 million, or 8%, higher than 2015, reflecting a number of one-off charges. ● A net impairment loss of £10 million was reported in 2016. ● Net loans and advances of £8.8 billion increased by £1.5 billion compared with 2015 reflecting balance draw-downs in the corporate lending portfolio, mainly within the Funds sector. ● Customer deposits of £25.2 billion grew by £3.9 billion compared with 2015 principally reflecting the transfer of the Luxembourg branch into RBSI from Capital Resolution during Q2 2016. ● RWAs were £9.5 billion, an increase of £1.2 billion compared with 2015 reflecting asset growth. Q4 2016 compared with Q3 2016 ● Operating profit decreased by £21 million to £33 million. Adjusted operating profit of £36 million was £17 million lower than Q3 2016 primarily driven by increased adjusted operating expenses. ● Adjusted operating expenses increased by £21 million, or 53%, principally due to the annual UK bank levy charge, £19 million. ● Net loans and advances were broadly stable compared with Q3 2016. Q4 2016 compared with Q4 2015 ● Operating profit decreased by £22 million to £33 million. Adjusted operating profit decreased by £18 million to £36 million primarily driven by increased adjusted expenses. ● Adjusted operating expenses increased by £20 million, or 49%, reflecting an increased bank levy and a number of one-off charges. 43 RBS – Annual results 2016