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RBS bank posts first annual net profit in 10 years
[LONDON] State-rescued Royal Bank of Scotland on Friday announced its first annual post-tax profit since 2007, or the eve of the global financial crisis, following a huge drop in litigation costs.
RBS, saved a decade ago by the UK government in the world's biggest banking bailout, posted a net profit of £752 million (S$1.38 billion) in 2017 following nine straight annual losses, the Edinburgh-based lender said in a statement.
"I am pleased to report to shareholders that... for the first time in ten years we have delivered a bottom Iine profit," chief executive Ross McEwan said in the earnings release.
"We still have more to do on cost reduction, however this reflects the progress we have made in making the bank more efficient," he added.
The return to profit comes after RBS suffered a net loss of £7 billion in 2016 on massive litigation and restructuring costs.
The bank had been hit by litigation and conduct costs of almost £5.9 billion in 2016, largely over its role in the 2008 US subprime housing crisis.
Its litigation bill for 2017 was vastly reduced to around £1.3 billion.
RBS is 71-per cent owned by the British government after the lender was saved with £45.5 billion of taxpayers' cash at the height of the global financial crisis.
As the bank slowly recovers, the UK government announced in November plans to relaunch its sale of RBS by selling about two-thirds of its majority stake for roughly £15 billion.
It is hoped that some £3 billion of shares would be sold each year up until 2023.
The government decided in 2015 to start selling a chunk of its then stake of about 80 per cent in RBS but the plan was carried out only partially owing to the lender's low share price.
In recent years, Mr McEwan has overseen a massive overhaul of operations, slashing the bank's investment banking activities and axing tens of thousands of jobs.
In total, RBS suffered net losses of about £60 billion since the state rescue.
In 2017, RBS was slapped by US regulators with a huge S$5.5 billion fine over its role in the subprime mortgage crisis more than a decade ago.
However, it has yet to reach a separate settlement with the Department of Justice.
"RBS continues to cooperate with the Department of Justice," the British bank said in Friday's statement, adding that "the duration, timing for resolution and outcome" of US probes "remain uncertain".