Thu, 15th Nov 2018
Royal Bank of Scotland has confirmed that it is setting aside £100 million which will be used to help it deal with the more uncertain economic outlook. RBS is among the first of the big banks to be taking such precautions as the Brexit deadline approaches.
Ross McEwan, RBS chief executive, told journalists that they have to be prepared for their customers, regardless of how Brexit plays out. The bank has allocated £200 million for the July-to-September period which will cover the costs of the mis-selling of payment protection insurance.
The announcement came as the bank said that it had seen a 14% increase in third-quarter profits, up to £448 million. The same period last year the bank saw profits of £392 million.
While the bank has seen a profit rise, analysts had been predicting an even better performance, and in response to the announcement shares dipped by 5%. Laith Khalaf, a senior analyst at Hargreaves Lansdown, called the £100 m reserve a ‘Brexit blow’ and an impairment of assets that highlight how the bank feels that this is a period of great economic uncertainty. He added that it also shows that the fortunes of the bank are significantly influenced by the domestic economy, and that a bad Brexit may well hit the price of RBS shares.
The bank is 62% publicly owned, having been bailed out by the UK government during the financial crisis. It paid out its first dividend since the bailout this month.