RBS reports Q3 profits

RBS have today reported a third successive quarterly profit, improved capital and further progress in de-risking.

Related topics:  Finance News
Rozi Jones
31st October 2014
rbs royal bank of scotland

Q3 2014 attributable profit was £896 million, up from £230 million in Q2 2014 and a loss of £828 million in Q3 2013. Profit before tax was £1,270 million compared with £1,010 million in Q2 2014 and a loss of £634 million in Q3 2013.

The quarter included net impairment provision releases of £801 million, principally in Ulster Bank and RBS Capital Resolution, and litigation and conduct costs of £780 million.

RBS continues to make progress in building its capital ratios. The Common Equity Tier 1 ratio has strengthened 220 basis points since the year end and 70 basis points in the quarter to 10.8%.

Capital build was supported by further progress in the nine months to 30 September in de-risking the balance sheet, including further disposals and run-off in RCR, with funded assets down £11 billion, a 16% reduction in RWAs in Corporate & Institutional Banking, including running down our US- backed product franchise, and the sale of €9 billion of securities in the RBS N.V. liquidity portfolio.

Personal & Business Banking showed income growth of 3% in the quarter. Operating profit in Q3 2014 was £881 million, up 66% on Q2 2014.

Commercial & Private Banking had an improved performance with income up 1% compared with Q2 2014. Operating profit in Q3 2014 was £471 million, up 23% on Q2 2014.

Corporate & Institutional Banking had a weak quarter with an operating loss of £557 million which reflected litigation and conduct costs of £562 million, including £400 million relating to potential costs following investigations into the foreign exchange market, and significantly lower income.

Further progress has been made on improving efficiency, with adjusted operating expenses down 5% over the quarter. RBS remains on track to deliver its £1 billion operating cost reduction target for 2014, at constant foreign exchange rates.

The quarter saw RBS achieve the largest ever IPO of a US bank, listing 28.75% of Citizens Financial Group. We continue to target an IPO of Williams & Glyn towards the end of 2016.

RBS confirms it will retain Ulster Bank following completion of the strategic review.

Ross McEwan, Chief Executive, said:

“In February I placed trust at the heart of my new strategy for our bank. We have taken the first steps towards that goal, with early progress in making RBS simpler, clearer and fairer.

"We are reducing costs, and are on track to achieve our capital targets.

"UK and Ireland are showing signs of growth, and impairment trends are significantly better than we had anticipated at the start of the year.

"We have confirmed today that Ulster Bank remains a core part of our bank. We have a good market position and believe that, with investment, Ulster Bank can deliver attractive shareholder returns in the future.

"But we know we still have a long list of conduct and litigation issues to deal with and much, much more to do to restore our customers’ trust in us.”

Graham Spooner, investment research analyst at The Share Centre, comments:

“RBS pleased the market this morning with Q3 results that showed the bank is making progress in improving its balance sheet. Profit for the quarter came in at £896m, compared to a loss last year, helped by a reduction in bad debt. Investors will be pleased to hear the bank continues with its cost cutting and is on track to achieve its capital targets.

“However, RBS announced it has set aside a further £400m for potential fines regarding the foreign exchange investigation and  more provision for PPI repayments.

“The share price has outperformed the market recently on hopes that the bank is ahead on its restructuring plans and further improvements announced today show signs of positivity for long suffering investors.

“Whilst we continue to believe there are better opportunities in the market for investors, we have put our ‘sell’ recommendation on the stock under review in light of improving trends from the bank.”

More like this
Latest from Property Reporter
Latest from Protection Reporter
CLOSE
Subscribe
to our newsletter

Join a community of over 30,000 intermediaries and keep up-to-date with industry news and upcoming events via our newsletter.