Ann: CYBG PLC Third Quarter 2019 Trading Update, page-146

I did not realise RoTE was calculated on a pre-tax basis, thank you for pointing this out (I hadn't actually ever thought about how this was calculated)

@Jausty1919

RoTE actually does use Underlying profit after tax. You can find its exact definition at page 246 of the 2018 Annual Report (see picture below):

What I meant in my previous post was that, simply annualising the earnings figures from the March 2018 semester, it is the Underlying profit before tax that currently generates a return on net tangible assets of just over 10% pa.

In numbers (for the semester ending on March 31st 2018):

Underlying profit before tax: 286m GBP

Net Assets: 5,358m GBP

Intangible Assets: 495m GBP

Minority Interests: 422m GBP

Therefore, the annualised return on tangible equity (adjusted by minority interests) is:

286m*2/(5,358m-495m)*(1-422m/(5,358m-495m)) = 10.7%

That happens to be very close to the reported Underlying RoTE of 10.4% because the effective tax rate for the semester was very low, but it is not going to remain that low once all the integration costs (and other one-off items) are out of the way.

So, I personally find it easier to think in terms of a current pre-tax return of 10%-11% pa on tangible book value, for modelling purposes.

Let me know if there is anything unclear.

Cheers