31st Oct 2014 07:25
LONDON (Alliance News) - Royal Bank of Scotland Group PLC Friday reported a swing to third-quarter pretax profit, but results included hundreds of millions of pounds of litigation and conduct costs, relating to matters such as regulators' probe into the foreign exchange markets and a further charge taken for the payment protection insurance scandal.
In a statement, RBS, which is 80%-owned by the UK government, said it made a GBP1.27 billion pretax profit in the quarter ended September 30, compared with a GBP634 million pretax loss in the corresponding quarter last year. The quarterly performance was supported by net impairment provision releases of GBP801 million, primarily in Ulster Bank and RBS Capital Resolution.
The quarterly performance was achieved despite the bank setting aside GBP780 million relating to litigation and conduct costs, including GBP400 million for regulators' investigations into alleged manipulation in the foreign exchange market and GBP100 million for PPI due to higher-than-expected reactive complaint volumes.
RBS said its common equity tier 1 ratio has strengthened 220 basis points since the year end and 70 basis points in the quarter to 10.8%. Its leverage ratio increased to 3.9% from 3.7% over the course of the quarter.
"In February I placed trust at the heart of my new strategy for our bank. We have taken the first steps towards that goal, with early progress in making RBS simpler, clearer and fairer," Chief Executive Ross McEwan said in a statement.
"We are reducing costs, and are on track to achieve our capital targets."
"UK and Ireland are showing signs of growth, and impairment trends are significantly better than we had anticipated at the start of the year. We have confirmed today that Ulster Bank remains a core part of our bank. We have a good market position and believe that, with investment, Ulster Bank can deliver attractive shareholder returns in the future," McEwan said.
However, he also noted the banking group's "long list of conduct and litigation issues" to deal with, adding that RBS has "much, much more to do" to restore our customers' trust.
By Samuel Agini; [email protected]; @samuelagini
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