Impact on bottom line
£900m PPI claims see Royal Bank of Scotland swing to loss
PPI has hit profits at RBS
Royal Bank of Scotland slumped to an attributable loss of £315 million for the third quarter compared to a £448m profit for the same period last year as it suffered a surge in last minute claims on mis-sold payment protection insurance.
The bank was hit with a further £900m provision for PPI in the run up to the August deadline which turned last year’s operating profit of £961m into an operating loss before tax of £8 million.
For the first nine months of 2019, RBS reports an operating profit before tax of £2.7bn and an attributable profit of £1.7bn.
RBS’s bank’s net interest margin – the difference between the interest income generated by a bank and the amount paid out to lenders (a measure of underlying profitability) – fell to 1.97% from 2.02% in the previous quarter.
In the first hour of trading the bank’s shares fell 2.44% to 228.25p while the FTSE 100 was 52 points (0.72%) higher at 7,313.
Chief financial officer, Katie Murray, commented: “These results demonstrate our solid underlying performance in a tough operating environment. The core retail and commercial bank continues to perform well, and we are making good progress against our targets for the year.