RBS records third quarter profit of nearly £400 million
(30 October 2017 – United Kingdom) Royal Bank of Scotland (RBS) posted a £392 million (A$670 million) net profit in the third quarter, as the majority government-owned bank seeks to move past its recent bad history including a bailout following the 2008 global financial crisis and more a more recent fine from US authorities.
The bank, which is 71 percent owned by the UK government, moved into profit from a £469 million attributable loss in the same period last year, in the three months to the end of September.
The results were spurred by lower costs, and a decrease in restructuring and conduct charges paid to settle regulatory matters. Conduct costs totaled to £125 million, down from £425 million a year ago, while restructuring expenses totaled £244 million, compared with £469 million a year ago.
RBS has resolved a number of legacy issues over the last financial year, including settling a large £4.2 billion fine with the US Federal Housing Finance Agency in July and meeting a condition set by the European Commission in return for its £45.5 billion bailout.
However, it still faces a multibillion-dollar fine from the US Department of Justice for mis-selling bad mortgage-backed securities before the financial crisis.
Ross McEwan, RBS chief executive, said “we remain optimistic of reaching a final settlement this financial year,” noting that only a couple of banks remain in the queue to settle ahead of RBS. He added: “There have been discussions at the lower levels . . . no substantial conversations beyond that.”
Philip Hammond, the UK chancellor, said recently that the selldown of the taxpayers’ stake would restart once some of the larger problems facing the bank — the DoJ mortgage fine — were resolved.
RBS reported a £871 million operating profit before tax in the third quarter, up from £255 million in the same period a year earlier.
Next year, the bank expects to deliver its first annual profit since 2007.
RBS’s income declined to £3.2 billion from £3.3 billion a year ago, as record-low interest rates continue to weigh on UK banks and as the lender sells off riskier assets.
RBS reported an adjusted cost-income ratio, stripping out one-off items, of 55.6 percent, down from 57.3 percent a year ago.
McEwan is looking to reduce costs by £750 million this year, which involves would involve reducing jobs and shifting to digital services. McEwan said the bank had taken out £708 million of costs so far this year, and was “on track” to hit the £750 million target.
RBS said its capital reserves amounted to 15.5 percent, up from 14.8 percent last quarter.
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