RBS back in black with £2bn profit

RBS chief executive Stephen Hester
RBS chief executive Stephen Hester
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PART-NATIONALISED Royal Bank of Scotland today reported a return to profit, which it said demonstrated its improved strength since the banking crisis of 2008.

The Edinburgh-based bank published results showing pre-tax profits of £2 billion in the three months to September 30, compared with a £678 million loss in the previous quarter and a £1.6bn loss the previous year.

The bank slashed its bad debts and offset a plunge in income at its under-pressure investment arm.

In a statement, RBS said its retail operation was “holding up well”, but the investment bank side was “only modestly profitable”.

Revenue across the bank dropped to £6.36bn, down from £7.92bn a year earlier but better than the £6.2bn forecast by analysts.

RBS said net profit was £1.23bn compared with a £1.15bn net loss a year earlier, largely because of a £2.36bn accounting gain to reflect a decline in the value of the bank’s own debt.

Operating profit after stripping out a series of one-time items sank 63 per cent to £267m, from £726m.

Stephen Hester, RBS chief executive, said the results highlighted the external pressures facing banks, and economies more broadly, which were making the road to recovery longer and bumpier than hoped for.

RBS was forced to seek the biggest banking bail-out in the world in 2008. Around 27,000 jobs worldwide have been cut since the crisis.

Stock market turbulence, driven by increased global recession fears, saw income at the bank’s investment arm Global Banking and Markets fall 29 per cent to £1.1bn in the period.

However, retail banking revenues held at £4.1bn and bad debt charges were cut to £1.5bn, down £72m on the previous quarter, which was hit by Irish land values.

RBS said it expected difficult market conditions in the fourth quarter, with banks around the world hit by Europe’s debt crisis, and the part-nationalised lender added it had taken more writedowns on its Greek exposure.

In a statement, Mr Hester said: “RBS’s third quarter results show the improved strength and resilience we have built up since 2008.

“They also highlight the external pressures facing banks, and economies more broadly, which are making the road to recovery longer and bumpier than hoped for.”