RBS endures sharp fall in Q3 profits

British taxpayer-backed Royal Bank of Scotland has revealed a sharp fall in third-quarter profits.

Pre-tax profit before one-time items and restructuring costs came in at £842m for the quarter, compared to £2.05bn a year earlier.

The bank announced the sale of its final 20.9% stake in US bank Citizens worth £1.1bn.

RBS endures sharp fall in Q3 profits

The bank, which is 73% owner by the taxpayer, revealed litigation costs of £129m for the quarter, principally relating to mortgage-backed securities.

Income was down £596m compare to Q3 last year, which the bank said was driven by a £394m decline in Corporate & Institutional Banking.

“Income pressures were also seen in UK personal & business banking and commercial banking where good loan volume growth was offset by continued competitive pressure on asset margins.”

Elsewhere, there was continued growth in its mortgage lending, up 3.6% on the second quarter to £3.8bn. It added that gross new mortgage lending was 42% up on a year ago, “representing a 12% market share of new lending against our stock market share of 8.5%”.

In July the Government began the process of privatising RBS by selling a £2.1bn stake in the bank – at a loss of more than £1bn to the taxpayer.

Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, described today’s results as mixed, adding: “RBS continues to atone for past mistakes in a turnaround which is complicated, costly and protracted.

“There are some signs of cheer – the Citizens stake is now out of the way entirely, operating expenses and impairments are both moving in the right direction, whilst the capital cushion is healthy. In addition, even though it is no more than the thin end of the wedge, the British government has begun to reduce its stake, albeit leaving a hefty 73% interest.

“Less positively, restructuring costs remain very high, there has been pressure on the investment bank and personal divisions due to reshaping costs and margin pressure respectively, whilst a dividend payment remains a distant dream with the earliest date being the first quarter of 2017.

“In an interest rate environment such as this, the lack of any yield is another factor which has resulted in investors shunning the shares.”

More in this Section

UK stock markets pause for breath after plummeting on coronavirus fearsUK stock markets pause for breath after plummeting on coronavirus fears

UK warned it faces ‘tough road ahead’ as red lines drawn ahead of trade talksUK warned it faces ‘tough road ahead’ as red lines drawn ahead of trade talks

Battle lines drawn for Brexit trade talksBattle lines drawn for Brexit trade talks

Capitalism in need of rethink, Bank of England chief economist saysCapitalism in need of rethink, Bank of England chief economist says


Lifestyle

Kya deLongchamps advises us to research, plan and keep our heads during online auctionsHow to keep your head during an online auction

Columnist and trained counsellor Fiona Caine offers guidance to a woman who’s growing resentful of her widowed mum’s needy behaviour.Ask a counsellor: My mother is so clingy since losing my dad – what can I do?

Amid all the uncertainty, this year’s London Fashion Week has quietly set about its task of asking how women will dress for the decade ahead, writes Paul McLauchlan.The trends you'll be wearing next season - from London Fashion Week

More From The Irish Examiner