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Bank says it expects to meet 2017 targets

RBS shows ‘return to sustainable profit’

McEwan: delivering better service (photo by Terry Murden)

Royal Bank of Scotland confirmed progress in its turnaround plans after reporting an half-year attributable profit of £939 million, its first in three years.

This compared to a loss of £2.045 billion last year.

Operating profit before tax came in at £1.95 billion against a £274m loss last time.

The bank said it was on track to deliver all its 2017 financial targets. However, it expects to make a full year loss “due to the legacy issues”.

Last month the bank reached a £4.2bn penalty deal with the US Federal Housing Finance Agency but expects further settlements this year.

It said it will set up an office in Amsterdam for NatWest markets – the rump of its diminished investment banking business – to serve European customers post-Brexit, if required. Set up costs will be in the “low tens of millions” and it will employ no more than 150 staff.

CEO Ross McEwan said: “We’re doing what we said we would at our full year results in February – growing income, reducing cost and improving returns for shareholders, while also starting to deliver a better service for customers.

“We see the first six months of this year as proof of the investment case for this bank: our path to sustainable profitability is becoming clearer and closer and we have resolved some of the most significant issues this bank faced.”

Key Highlights

  • RBS reports an operating profit before tax of £1,951m and an attributable profit of £939m for H1 2017 – first attributable H1 profit in 3 years
  • Core bank adjusted operating profit was £2,678m and the core bank has now generated an average of more than £1bn in adjusted operating profit for the last 10 quarters
  • RBS has grown net lending to UK households and businesses by 4.1% on an annualised basis, ahead of the bank’s full year target of 3%.
  • Restructuring costs were £790m
  • Litigation and conduct costs were £396m
  • CET 1 ratio is 14.8% ahead of the bank’s 13% target and up 70bpps on Q1
  • Operating costs are down £494m in H1 and the bank is on track to meet its full year target of £750m for the year

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