RBS reports £259m profit in Q1 2017

Ross McEwan

Ross McEwan, CEO of RBS, said the results represented an “important step” on the path to profitability.

According to the banking group’s quarterly results:

• Core bank adjusted operating profit of £1.3bn, up 30 per cent or £303m from Q1 2016
• Core bank income total was £3.154bn, up from £2.815bn in Q1 2016 and £2.914bn in Q4 2016
• Restructuring costs were £577m
• Adjusted return on equity in the core bank is 13.8 per cent, up from 10.9 per cent at Q1 2016 and 8.5 per cent at Q4 2016
• Costs are down £278m, 37 per cent of RBS’ £750m target for 2017
• CET ratio is 14.1 per cent which compares with 13.4 per cent at Q4 2016
• £3.7bn increase in net lending from Q4.

Mr McEwan said: “We’re pleased to post a bottom line profit of £259 million for Q1. These results reflect very much what we talked about at full year. Firstly, a strong and improving core bank and secondly, fewer remaining legacy issues. Core income is up on last year, adjusted costs are down, and we’re making better use of capital. These drive a 13.8% adjusted return on equity, an improving productivity in the core bank, and are important steps on our path to profitability.

“Our six core businesses made an adjusted operating profit of £1.3 billion in Q1. RBS has now averaged an adjusted core operating profit of over £1 billion for the last nine quarters.

“This bank has a very strong core with great potential, and we believe that by going further on cost reduction and faster on digital transformation – we will deliver a simpler, safer and even more customer-focused bank, with a compelling investment case.”

However, the RBS figures will contrast unfavourably with those of Lloyds Banking Group, which has recovered much faster from the financial crisis.

In the first quarter of 2017, Lloyds made £1.3 billion in pre-tax profit from a portfolio that includes Bank of Scotland and Scottish Widows, compared with £0.65bn in the same period last year.