RBS posts third consecutive quarterly profit
27 October 2017
Royal Bank of Scotland (RBS) has posted its third consecutive quarter in the black after swinging to a third quarter profit.
The bank, which is still 72% owned by the taxpayer, recorded a £392 million profit for the three months to September 30, which compares with a £469 million loss in the same period last year.
Chief executive Ross McEwan again signalled that the lender is moving on from its troubled past.
He said: "Our strategy to deliver a simpler, safer, customer-focused bank, is working.
"We have grown income, reduced costs, made better use of our capital and continued to make progress on our legacy conduct issues.
"Our core bank continues to generate strong profits and we remain on track to hit our financial targets."
Third quarter adjusted operating profit came in at £1.2 billion compared with £1.3 billion last year.
Mr McEwan has stripped out £708 million in costs so far this year, with the lender on track to hit a £750 million target for 2017.
RBS also detailed £125 million in third-quarter conduct and litigation costs and £244 million in restructuring charges.
When added to costs booked in the first half, it takes the total for the year to date to £1.5 billion.
The group has racked up several billion in litigation and conduct costs since it was rescued by the Government at the height of the financial crisis.
Earlier this year, RBS agreed a £4.2 billion US settlement over claims that it mis-sold toxic mortgage bonds in the run-up to the crisis.
However, it is yet to reach a separate settlement with the Department of Justice (DoJ), which is expected later in the year, although Mr McEwan has warned that there is a chance it could drag on into next year.
If a settlement is reached this year, it is likely to push the bank into a full year loss.
However, Mr McEwan said that once a settlement is reached, it would give the Government an opportunity to look at selling down its holding in the bank.
The chief executive added that he was pleasantly surprised at the resilience of the economy, but warned that an interest rate rise – which the market is expecting – will “have an impact for people with mortgages”.
The bank also said that it is reducing exposure to unsecured consumer lending as concerns continue to mount over a household debt boom.
Shares rose 2% in morning trading to 286p.
RBS, seldom out of the headlines, was warned by Britain’s financial watchdog on Monday that it may still face action over its treatment of small business customers.
Despite dismissing “serious allegations”, the Financial Conduct Authority (FCA) said it was investigating whether there was “any basis for further action” after publishing an interim report into RBS’s Global Restructuring Group (GRG) following intense political pressure.
On Thursday, the bank also paid out $44 million (£33.4 million) to settle a US criminal investigation that accused its traders of lying to customers over bond prices.
Philip Toscano/PA Wire