26th Apr 2019 07:43
LONDON (Alliance News) - Royal Bank of Scotland Group PLC on Friday reported a decrease in first quarter profit on lower income and warned continued Brexit uncertainty could harm the lender's income growth.
The state-backed lender's operating pretax profit for the three months to March end decreased 17% to GBP1.01 billion from GBP1.21 billion the year before. RBS's profit attributable to shareholders slipped 13% to GBP707 million.
First quarter total income decreased 7.9% to GBP3.04 billion from GBP3.30 billion, with net-interest income decreasing 5.6% to GBP2.03 billion from GBP2.15 billion.
The bank's first quarter operating expenses decreased 3.5% to GBP1.94 billion from GBP2.01 billion the year before. RBS said it remains on track to meet its GBP300 million cost reduction target for 2019.
The lender's cost-to-income ratio edged up to 63.4% in the quarter compared to 60.5% the year prior.
RBS CET1 ratio at the end of March was 16.2%, down from 16.4% at the end of the first quarter a year ago. At the end of 2018, RBS's CET1 ratio stood at 16.2%.
The lender's risk-weighted assets are 5.9% lower year-on-year at GBP190.8 billion but represent a 1.1% increase from the start of the quarter.
The bank's net interest margin in the first quarter was 1.89% versus 2.04% in the first quarter of 2018. In the fourth quarter of 2018, RBS's NIM was 1.95%.
RBS total loans to customers is up slightly to GBP306.4 billion from GBP303.8 billion the year before and GBP305.1 billion at December 31.
The bank's return on tangible equity for the period was 8.3% from 9.4% in the year before.
Within divisions, RBS UK Personal & Business Banking total income in the first quarter decreased 3.9% to GBP1.30 billion. The unit's operating profit decreased 8.5% to GBP498 million.
The UK Personal & Business Banking division's gross new mortgage lending in the quarter was GBP7.6 billion, with a market flow share of about 13% and mortgage approval share of around 12%.
In Commercial Banking, total income decreased 6.9% to GBP1.08 billion. Operating profit decreased 21% to GBP437 million.
NatWest Markets total income decreased 41% to GBP256 million. The division posted an operating loss of GBP62 million, compared with a GBP97 million profit for the same period in 2018.
Going forward, RBS warned Brexit could continue to hurt the lender's income growth.
"While we retain the outlook guidance we provided in the 2018 annual results, we recognise that the ongoing impact of Brexit uncertainty on the economy, and associated delay in business borrowing decisions, is likely to make income growth more challenging in the near term," RBS said.
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