Quarterly profits tripled at Royal Bank of Scotland in the first three months of the year as the taxpayer-owned bank continued on its long road to recovery.
First quarter profits surged to £792 million, a 206 per cent increase on the same period a year previously when profits came in at £259 million.
It comes after the bank, which is still 72 per cent owned by the taxpayer, hit an annual profit for the first time in a decade earlier this year.
The lender has been struck by a series of issues, from the GRG restructuring scandal to PPI but did now show any charges for either in Friday’s set of results
Operating profit in the period rose 70 per cent to £1.21 billion and chief executive Ross McEwan said the results are a sign of the progress the bank is making.
‘This is a good set of results, showing the progress we are making, despite a more competitive market. Our income is up, costs are down and our capital has strengthened again,’ he said.
The group booked £209 million in restructuring costs and £19 million in conduct and litigation charges in the first three months of the year.
The lender has been struck by a series of issues, from the GRG restructuring scandal to PPI complaints, but did not show any charges for either in Friday’s set of results.
It is also yet to reach what is expected to be a multibillion-dollar settlement with the US Department of Justice over claims that it mis-sold mortgage-backed securities in the run-up to the financial crisis.
The penalty is likely to dent the bank’s full-year performance but, once a settlement is reached, it will allow RBS to kick-start the process of resuming dividends.
RBS chief executive Ross McEwan (pictured) said the results are a sign of the progress the bank is making
The threat of the settlement continued to spook investors with the RBS share price dropping 0.8 per cent in early trading to 270p a share.
The government said last year that plans to reprivatise RBS were under way, with the aim of selling £15 billion of its shares by 2023.
However, it faces a £26.2 billion loss on its stake, with the lender’s shares languishing well below the average 502p share price paid during the 2008 and 2009 bailout, at around 270p at today’s prices.
Richard Hunter, head of markets at Interactive Investor, said sentiment surrounding RBS stock was steadily improving and it had gained eight per cent over the year as compared to the FTSE 100’s 1.8 per cent gain.
‘RBS continues to move away from its previous existence as something of a financial basket case, although the journey is far from over,’ Hunter said.
He added: ‘Operationally, there are still areas to be addressed, with a slightly disappointing reduction in net interest margin and a downturn in mortgage lending due to fierce competition being notable examples.
‘The real issues, however, are rather larger than the content of this quarterly update.
‘There remain three major hurdles to be cleared in the form of settlement of the US legacy issues once and for all, the removal of the UK government stake and the resumption of the dividend.’