ROYAL Bank of Scotland has reported its first quarterly profit since 2015, with chief executive Ross McEwan hailing the results a “major milestone”.
The taxpayer-owned lender made a £259 million profit in the first three months of the year, compared with a £968m loss in the same quarter of 2016.
It is the first time since the third quarter of 2015 that RBS, which is 72 per cent owned by the Government, has turned a quarterly profit.
The numbers will come as welcome relief to McEwan, who has presided over a string of recent poor results, which add up to a staggering £58 billion of losses since RBS was bailed out by the Government at the height of the financial crisis.
The return to profitability has come at a cost for staff and customers. About 16,000 jobs have been cut in the past year, with more to come, and more branches will be shut over and above the 158 closures announced last month.
However, McEwan said: “These results reflect very much what we talked about at full year.
“This bank has a very strong core with great potential, and we believe that by going further on cost reduction and faster on digital trans- formation we will deliver a simpler, safer and even more customer- focused bank, with a compelling investment case.”
The core bank’s adjusted operating profit also rose in the quarter, from £303m to £1.3bn.
The figures also show that RBS booked £577m in restructuring costs.
In February, when RBS reported a £7bn annual loss, McEwan ordered a £2bn four-year cost-cutting drive, expected to result in significant additional job losses and branch closures.
To this end, the bank took £278m in costs out of the business in the period. Last week, Chancellor Philip Hammond made the stark admission that the Government is prepared to sell its stake in RBS at a loss to the public purse.
The Government bought its 72 per cent holding in the bank for £45bn in 2008, at £5.02 a share, as part of a bail-out at the height of the financial crisis.
Shares are now trading at around half that price.
It is understood that only once RBS’s legacy issues, such as fines in the US and state-aid obligations, are dealt with will the Government begin selling down the taxpayers’ stake.
Asked whether the bank owes the public an apology in light of the Chancellor’s comments, McEwan said: “I don’t think it’s a matter of an apology, we just have to go back to when the Government stepped in.
“The price that was paid was the price of the day. It was the right thing to do to save the bank. The stake sale is in the hands of the Government. The core bank is really strong and we can see that in the results today.”
The results come a day after the bank moved closer to reaching a settlement with all five shareholder groups that brought compensation claims against it in connection with its 2008 rights issue, overseen by disgraced former chief executive Fred Goodwin.
McEwan said the lender, which has come under fire over its spiralling legal costs of defending the case, said he believes the bank has a “strong defence to the claim”.
The case, which comes to trial next month if a settlement is not reached, is becoming one of the most costly civil defences in British history.
RBS has already spent more than £100m preparing its defence, with that figure expected to rise to £125m if it goes to court.
Shares in RBS were up nearly two per cent in morning trading.
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