The Royal Bank of Scotland Group plc ("the Group")

Annual General Meeting Statement ("the Statement")

26 April 2002

Speaking at today's Group Annual General Meeting in Edinburgh, Sir George Mathewson, Chairman, said that performance at The Royal Bank Group remains on track and that the business continues to perform well.

The following is extracted from the Statement made by Sir George at the meeting.

In 2001, we increased our Group operating profit by 32 per cent, from £4,401 million to £5,801 million. Over the two years 2000 and 2001, we increased our Group operating profit by 73 per cent. In 2001, we increased our adjusted earnings per share by 25 per cent; over the two years by 63 per cent. We are recommending a dividend increase of 15 per cent for 2001. If the recommended increase in dividend is approved, the increase over two years will have been 33 per cent.

The growth in our profits reflected increased contributions from all divisions. And the shape of our growth in profits was very good; total income was up by 18 per cent, expenses by only 3 per cent.

As a result of these movements in income and costs, we achieved a further significant improvement in our cost:income ratio, from 53.5 per cent to 46.9 per cent. Our net interest margin was maintained, at about 3 per cent.

We have continued to make excellent progress on delivering the revenue benefits and cost savings associated with the acquisition of NatWest.

We originally promised integration benefits totalling £4,140 million over the four years 2000 to 2003. In light of the progress we have made over the first two years, we announced in February that we expect to deliver transaction benefits totalling £5,550 million over this period - £1,410 million greater than our original plan. Beyond 2003, we expect to deliver integration benefits which will increase our profit before tax each year by £2,030 million - £300 million more than our original plan.

These are significant increases in integration benefits, but we also expect the cost of achieving them to be higher. As we said in February, we expect that the total one-off costs associated with achieving the integration benefits will be £2,300 million, against our original plan of £1,400 million.

At previous Meetings, we have mentioned our strength, diversity and flexibility. These are real qualities evident across the Royal Bank Group. They give us confidence that we shall be able to continue to deliver on our promises to shareholders and provide customers with improved service, with well rewarded and highly motivated staff, while allowing us to make a major contribution to the communities in which we operate.

It is my firm belief that these qualities, our strategies and the opportunities that are now open to us, enable us to provide superior returns to shareholders now, and will in the future.

All resolutions were passed on a show of hands.