Bank of Scotland plc 2009 results

FORWARD LOOKING STATEMENTS  

This announcement contains forward looking statements with respect to the
business, strategy and plans of Bank 
of Scotland plc, its current goals and expectations relating to its future
financial condition and performance. 
Statements that are not historical facts, including statements about the
Group's or the Group's management's 
belief and expectations, are forward looking statements. By their nature,
forward looking statements involve risk 
and uncertainty because they relate to events and depend on circumstances that
will occur in the future. The 
actual future results of Bank of Scotland plc may differ materially from the
results expressed or implied in these 
forward looking statements as a result of a variety of factors, including,
without limitations, UK domestic and global 
economic and business conditions, the ability to derive cost savings and other
benefits as well as to mitigate 
exposures from the integration with the Lloyds Banking Group, risks concerning
borrower credit quality, market 
related trends and developments, changing demographic trends, changes in
customer preferences, changes to 
regulation, the policies and actions of Governmental and regulatory authorities
in the UK or jurisdictions outside 
the UK, including other European countries and the US, exposure to regulatory
scrutiny, legal proceedings or 
complaints, competition and other factors. Please refer to the rights issue
prospectus issued by 
Lloyds Banking Group plc on 3 November 2009 for a discussion of such factors
together with examples of forward 
looking statements. The forward looking statements contained in this
announcement are made as at the date of 
this announcement, and Bank of Scotland plc undertakes no obligation to update
any of its forward looking 
statements. 
BANK OF SCOTLAND PLC 

FINANCIAL REVIEW 

Results 

The consolidated income statement is on page 6 and shows that the loss before
tax for the year ended 
31 December 2009 is £15,284 million and the loss attributable to equity
shareholders is £12,240 million. 

Principal activities 

Bank of Scotland plc (the ‘Bank') together with its subsidiaries (the 'Group')
provide a range of banking and 
financial services through branches and offices in the UK and overseas. 

The Group's revenue is earned through interest and fees on a broad range of
financial services products including 
current and savings accounts, personal loans, credit cards and mortgages within
the retail market; loans and 
capital market products to commercial, corporate and asset finance customers;
and private banking. 

Acquisition of the Group by Lloyds Banking Group plc 

On 16 January 2009, Lloyds Banking Group plc acquired 100 per cent of the
ordinary share capital of HBOS plc, 
the Group's parent company. 

Business review 

The loss before tax increased by £4,649 million or 44 per cent to £15,284
million. The trading surplus increased 
by 75 per cent or £2,386 million to £5,584 million but is more than offset by
the increase in the impairment charge, 
which reflects the weak credit environment and current economic conditions. 

Net interest income decreased by £2,345 million or 27 per cent to £6,195
million as both interest income and 
interest expense fell in response to the historically low interest rate
environment that has prevailed throughout the 
current year. Other income increased by £4,338 million from £632 million to
£4,970 million. During the year, the 
Bank received a payment of £3,000 million from its fellow banking subsidiary,
Lloyds TSB Bank plc, to support the 
financial and reputational position of the Group and to facilitate the ongoing
integration of the Group's banking 
operations. Net trading income improved by £2,382 million from a loss of £2,938
million to a loss of £556 million, 
reflecting the inclusion of substantial write-downs associated with the
dislocation in financial markets in 2008. The 
Group's insurance activities have ceased following the sale of St. Andrew's in
the last quarter of 2008. Net fee and 
commission income decreased £483 million or 31 per cent to £1,096 million
reflecting lower volumes of new 
business. 

Operating expenses decreased 6 per cent or £356 million to £5,581 million,
principally as a result of lower 
depreciation. This was offset by increased goodwill impairment which increased
by £243 million to £385 million. 
The 2009 charge was principally in respect of Lex Vehicle Leasing Services. 

Impairment losses increased by £8,005 million or 66 per cent. This largely
represents falls in the values of 
commercial real estate and the impact of the economic deterioration during the
year, including the effects of rising 
unemployment and reduced corporate cash flows. Significant provisions were
required against the Group's Irish 
and Australian commercial real estate portfolios. 

The Group suffered an additional loss of £100 million in 2009 in respect of the
disposal of the Australian 
businesses, BankWest and St. Andrews, in addition to the £845 million loss
recorded in 2008.


CONTACTS 

For further information please contact:: 

INVESTORS AND ANALYSTS 

Michael Oliver
Director of Investor Relations 
020 7356 2167 
email: michael.oliver@ltsb-finance.co.uk 


Douglas Radcliffe 
Head of Investor Relations 
020 7356 1571 
email: douglas.radcliffe@ltsb-finance.co.uk


MEDIA 

Shane O'Riordain 
Group Communications Director 
020 7356 1849 
email: shane.o'riordain@lloydsbanking.com 


Registered office: Bank of Scotland plc, The Mound, Edinburgh EH1 1YZ 
Registered in Scotland no. SC327000