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RBS reports first-half profit as recovery gathers pace
[LONDON] Royal Bank of Scotland on Friday said it posted a profit in the first half of 2017 following a £2 billion (S$3.6 billion) loss in the same period last year amid hefty restructuring and legal costs.
RBS, which has not made an annual profit since 2007, made £939 million in pretax profit in the six months to end-June. The bank was rescued in a £45.5 billion taxpayer bailout at the height of the financial crisis. RBS said it is in discussions with the Dutch central bank to use its license in the Netherlands to conduct its trading business there following Britain's exit from the European Union.
RBS, in common with British-based rivals like Barclays and HSBC, has undergone a multi-year programme of restructuring including shedding billions of pounds worth of assets worldwide since the 2008 financial crisis.
"We are doing what we said we would, growing income, reducing costs and improving returns," chief executive Ross McEwan told reporters on a conference call.
While the bulk of that restructuring is now done, RBS is behind its rivals in returning to profitability and faces a host of outstanding legal problems that could hinder the resumption of dividends, a key sign of rehabilitation for investors.
The bank took an additional £396 million in conduct charges in the first half of the year for resolving some of these problems.
The biggest of RBS's legal problems remains its outstanding settlement with the US Department of Justice (DOJ) over mis-selling of mortgage backed securities during the build up to the 2008 crisis.
The bank did not provide any update as to when it expects to settle that case.
RBS last month agreed to pay US$5.5 billion to settle a similar case with the US Federal Housing Finance Agency, but analysts expected the remaining DOJ case to cost the bank billions more.
RBS said its core capital ratio, a key measure of financial strength, rose to 14.8 per cent.