2018 to be a 'milestone year'
RBS confirms loss but expects profit next year
Royal Bank of Scotland confirmed its ninth consecutive year in the red with an attributable annual loss of £6.95 billion.
Chief executive Ross McEwan described it as “disappointing” but said the bank expects to be profitable next year. He said it would be “a big milestone for the bank”.
He said the cost structure of the bank was still “far too high” and £2bn in costs will come out, involving more job losses, but he declined to give figures. It is also likely to mean more branch closures.
The loss reflects £10bn of one-off charges, including £5.9bn of conduct costs and £2.1bn of restructuring costs which includes the £750m provision that followed the proposal to halt the sale of the Williams & Glyn division.
There is also a final £1.2bn special dividend payment to the Treasury and £825m of Capital Resolution disposal costs
The underlying situation remains positive with adjusted operating profit of £4.2bn in the core bank, up 4% on last year, generating an 11% adjusted return on equity
The bank provided £24bn in net new lending into the economy, exceeding our lending target and making it the “fastest growing bank in the UK,” said Mr McEwan.
Its cost target exceeded for 3rd year running, with another £750m this year
It anticipates a bottom line profit next year if it resolves W&G and RMBS issues this year,
In a statement McEwan said: “The bottom line loss we have reported today is, of course, disappointing but given the scale of the legacy issues we worked through in 2016, it should not come as a surprise.
“These costs are a stark reminder of what happens to a bank when things go wrong and you lose focus on the customer, as this bank did before the financial crisis.
“We made good progress throughout 2016 against our strategy. Our core business generated £4.2bn in adjusted pre-tax operating profit for the year – that’s an average of £1 billion per quarter for the last eight quarters.
“We were the fastest growing large bank in the UK last year with £24bn of new lending into the economy supporting over a million businesses and home owners.
“This bank has great potential. We believe that by going further on cost reduction and faster on digital transformation we will deliver a simpler, safer and even more customer-focused bank.”