30th Oct 2015 07:25
LONDON (Alliance News) - Royal Bank of Scotland Group PLC on Friday reported improved third-quarter net profit, as it booked a big gain on the loss of control of Citizens, the US retail bank it is selling, and warned that the costs of restructuring and addressing past conduct and litigation are not about to go away.
The bank said it made a GBP952 million net profit in the three months to September 30, compared with GBP896 million in the corresponding quarter the prior year. That included a GBP1.15 billion gain on the loss of control of Citizens, and the bank also confirmed that it is set to sell its remaining 20.9% stake in that bank.
"RBS remains well on track to achieve substantially all its priority targets for 2015. The cost savings target for the year has already been exceeded and strong improvements were recorded in the bank's annual employee engagement survey," the bank said in a statement.
"In the fourth quarter of 2015, we expect restructuring costs to remain high as we continue to implement our core bank transformation and disposal losses to be elevated within the overall guidance on disposal losses, although the timing and quantum of these losses are subject to market conditions," RBS said.
"Whilst legacy issues continue to be addressed, material further and incremental costs and provisions in respect of conduct and litigation related matters are expected, and could be substantially greater than the aggregate provisions RBS has recognised. The timing and quantum of any future costs, provisions and settlements, however, remain uncertain," the bank added.
Third-quarter restructuring costs rose to GBP847 million from GBP167 million a year before, while litigation and conduct costs fell to GBP129 million from GBP780 million. The bank said it swung to a third-quarter operating loss of GBP134 million from a GBP1.11 billion operating profit a year before. Adjusted operating profit fell to GBP842 million from GBP2.05 billion.
The third-quarter results are the first since Chief Executive Ross McEwan said at the end of July that he wants to go "further and faster" with the restructuring of the bank. McEwan has set out a strategy of focusing the bank of lending to customers in the UK and the Republic of Ireland, and in February said it no longer intended to operate a standalone investment bank.
The lender remains largely owned by the UK government, which retains 72.9% of the bank after selling a 5.4% stake to institutions at a loss in August, the first sale since RBS was the recipient of a GBP45.5 billion bailout in the credit crisis of 2008-09.
By Samuel Agini; [email protected]; @samuelagini
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