First quarter losses more than double at Royal Bank of Scotland
PUBLISHED: 10:35 29 April 2016 | UPDATED: 10:35 29 April 2016
Royal Bank of Scotland has reported a first-quarter pre-tax loss of £968million, more than double last year's figure of £446m.
The loss reflects the impact of its £1.2billion payment last month to the Treasury to buy out a crucial part of its £45bn.
The payment ended a dividend access share (DAS) agreement with the Government which was put in place in 2009 and prevented it paying dividends to any shareholders before the Treasury.
The bank said: “RBS remains on track with its plan to build a strong, simple, fair bank for customers and shareholders.”
Income fell from £3.5bn to £3bn following the sale of its Citizens business in the US and the decision to dramatically scale back its overseas and investment banking offering.
The cost of restructuring the bank came in at £238m, with RBS expecting the figure to grow to £1bn for the year.
On Thursday, RBS warned of a greater-than-expected hit from the cost of spinning off its Williams & Glyn arm, which it has to sell to comply with EU state aid rules following its state bailout.
It also warned that there was a “significant risk” that it would not meet the deadline to separate the 316-branch Williams & Glyn business by the end of 2017.
It is now looking at other ways to spin off the business, adding that the “overall financial impact on RBS is now likely to be significantly greater than previously estimated” due to complexities of separating the business.
RBS chief executive Ross McEwan said: “Today’s results show the strength and resilience of the bank we are fast becoming. This bank has great brands and great market positions and, piece by piece, we are building a solidly performing, profitable bank doing great things for customers and returning value for shareholders.
“One quarter in, capital remains strong, costs continue to fall, our customer scores are improving and we’re seeing growth in the businesses and the markets we like.”
Mr McEwan added that RBS had not seen significant behavioural change in the market as a result of “Brexit” fears.
However, he added: “Larger corporates are holding back on investment for the next six to eight weeks. We are very well prepared for what may or may not happen.”
He said that a return to full-year profit would be dictated by the bank’s ongoing restructuring and conduct and litigation liabilities.
It has been a tough first quarter for the UK banking sector in general.
Barclays posted a 25% fall in first quarter profits on Wednesday after its corporate and investment banking arm saw underlying profits fall 31% and Lloyds Banking Group yesterday posted 6% fall in underlying profits, despite being more focused on retail banking compared with Barclays and RBS.