Group profile

2008 HIGHLIGHTS

Statutory profit before tax reduced by 80 per cent to £807 million. A resilient underlying business performance was offset by the impact of market dislocation and adverse volatility relating to the Group’s insurance businesses.

A resilient business performance. Profit before tax, on a continuing businesses basis, totalled £2,426 million, a decrease of 35 per cent which reflected the impact of £1,270 million of market dislocation and higher impairment levels.

Robust income performance. Income, excluding market dislocation, grew by nine per cent reflecting strong revenue growth from the Group’s relationship banking businesses. On a statutory basis, income was eight per cent lower at £9,872 million.

Excellent cost management. The Group’s cost:income ratio, excluding market dislocation, improved by 1.1 percentage points to 47.0 per cent.

In a difficult economic environment, asset quality remains satisfactory. Impairment losses increased by 68 per cent to £3,012 million, reflecting the impact of market dislocation, the slowdown in the UK economic environment and the impact of the falling house price index.

Robust capital ratio and a strong liquidity and funding position maintained throughout the recent turbulence in global financial markets.

GROUP RESULTS SUMMARY

*Excluding volatility, a provision in respect of certain historic US dollar payments, a provision for the Financial Services Compensation Scheme levy, goodwill impairment and, in 2007, results of discontinued businesses, profit on sale of businesses and the settlement of overdraft claims.