Royal Bank of Scotland (RBS) has reported first quarter profits of £792m, up 206%, as income grows and costs fall.
The bank said its earnings performance demonstrated the “progress” it had made in its turnaround – announcing its first annual profit in a decade just months ago.
However, it is expected to agree a multi-billion pound penalty with US authorities this year to settle claims it mis-sold mortgage-backed securities ahead of the financial crisis.
Such a deal would have a significant impact on its bottom line.
RBS had no update for investors on the negotiations with the US Department of Justice.
It did report a significant fall in costs for misconduct and other reasons – factors which have dragged down profitability for years and helped delay the sale of the taxpayers’ remaining 72% stake back to private hands.
However, it is anticipated that £3bn worth of RBS shares will now be offloaded by the Government in each of the next five financial years, albeit at an expected loss of billions to the public purse because the bank’s share price is well below its 2008 bailout value.
RBS said restructuring costs totalled £209m and conduct and litigation charges £19m during the first three months of the year.
Unlike its major peers, also outlining their progress this week, there were no further provisions to cover the cost of the payment protection insurance (PPI) mis-selling scandal.
RBS reported an operating profit before tax of £1.2bn – 70% up on the same period in 2017 – aided by a £400m drop in operating costs which was bolstered by “increased digitisation”.
As lenders come under pressure over branch closures, RBS said 55% of its personal unsecured loans sales now came via its digital channels while 5.75 million customers were now using its mobile app.
Chief executive, Ross McEwan, said: “This is a good set of results, showing the progress we are making, despite a more competitive market. Our income is up, costs are down and our capital has strengthened again.”
Its shares – down 2% in the year to date – rose fractionally in early trading to stand at 273p.
Analysts said price reflected continued nerves about the size of the looming settlement with the US government.
From – SkyNews