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RBS and Barclays are two of the largest British banks.The business models of both banks have changed significantly since the economic downturn, with their paths diverging considerably.RBS, in particular, has shrunk considerably in size - moving away from a business model that was operationally as well as geographically much more diversified and relied considerably on investment bank operations to one that depends almost completely on traditional loans-and-deposits banking.Although Barclays has also cut down on its trading operations, its business model remains much more diversified and Retail business remains its key revenue driver.In this dashboard, Trefis compares key operating metrics for the UK Retail business of the largest British banks.
How do UK retail revenues for RBS and Barclays compare for the most recent year?
As of 2018, Barclays' UK retail revenues stood at £6.6 billion, nearly 4.5% more than RBS's revenues of £6.3 billion.
RBS UK (Personal & Business Banking)
Barclays UK (Personal & Business Banking)
Barclays' UK retail business is bigger than that of RBS. As of 2018, Barclays' UK retail revenues stood at £6.6 billion, nearly 4.5% more than RBS's revenues of £6.3 billion.However, RBS is growing at a much faster rate than Barclays and seems to be closing the gap.RBS's revenue has grown 4% over 2015-2018, going up from £6 billion to £6.3 billion in 2018.On the other hand, Barclays' revenue has declined by 1.2%, losing £80 million in total revenue over the same time period.Moreover, both the banks saw a fall in revenues in 2018 as increased uncertainty over Brexit, as well as low consumer sentiment adversely impacted the bank's business.
UK Retail contributes nearly 47% to RBS's total revenues while the contribution of Barclays is lower at 31%
RBS UK Personal & Business Banking as % of total revenue
Barclays UK Personal & Business Banking as % of total revenue
RBS overhauled its business in 2012 when the bank slashed its investment banking activities to focus more on retail banking operations. The large-scale reorganization plan was triggered by conditions imposed on RBS as a part of its bail-out at the peak of the recession as well as stricter regulatory changes in the wake of the downturn.
As a result, RBS’s UK retail business now accounts for nearly half of the bank’s total revenues.
On the other hand, Barclays has a more diversified business model, with Barclays UK accounting for about one-third of the bank’s total revenues.
Barclays' loan balance is nearly 15% higher than RBS's
RBS Total Loans
BCS Total Loans
As of 2018, Barclays had total outstanding loans of £188 billion while RBS's loan figure stood at £162 billion- roughly 15.6% less than that of Barclays.
Notably, the gap between loans issued by the banks has widened over the years. This metric was just 3% in 2015 and has grown to almost 16% in 2018.
Barclays also nudges ahead in the customer deposits
RBS Customer Deposits
BCS Customer Deposits
As of 2018, Barclays had total deposits of £197 billion while RBS's deposits figure stood at £184 billion- 7% less than that of Barclays.
Notably, the gap between the customer deposits with the banks has contracted over the years. This metric was 26% in 2015 and now stands at just 7%.
Also, Barclays Has A Higher Net Interest Margin
RBS Average interest margin
BCS Average interest margin
Barclays' average interest margin in 2018 was 3.2% nearly 40bps ahead of the RBS's margin of 2.8%.
Conclusion: Barclays' UK Retail Business Is Larger, although RBS generates more profits
Barclays has larger retail operations in the UK but RBS's business is more profitable.RBS has been generating higher profits than Barclays due to its better operating margin.To sum things up, there is not much to separate between the banks' retail operations in the UK. RBS's continuous focus on the retail operation is helping the bank generate more profits but Barclays is still the larger bank in terms of revenues, as well as loans and deposits.Although RBS is closing the gap Barclays has a strong network in the UK and we expect Barclays to maintain its pole position in the coming years.
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