26th Oct 2018 08:04
LONDON (Alliance News) - Royal Bank of Scotland Group PLC on Friday reported an increase in third quarter profit, despite its year-to-date earnings lagging, as its investment bank was granted a re-purposed banking licence by Dutch regulators.
The FTSE 100-listed government majority owned bank's pretax profit in the three months ended September increased around 10% to GBP961 million from GBP871 million the year before.
RBS third quarter total income increased 15% to GBP3.64 billion from GBP3.16 billion year-on-year, with net-interest income decreasing to GBP2.15 billion from GBP2.30 billion.
The lender attributed the income increase to indemnity insurance recoveries of GBP272 million and lower disposal losses compared to the same period last year.
The bank's third quarter operating expenses increased 14% to GBP2.44 billion from GBP2.14 billion the year before, with litigation & conduct costs amounting to GBP782 million in the period, a large increase from GBP125 million in charges in the third quarter of 2017.
RBS CET1 ratio at the end of September was 16.7%, up from 16.1% at June 30. The increase in the quarter reflects a reduction in risk-weighted assets and the bank's increased profit.
The bank's net interest margin in the third quarter was 1.93% versus 2.01% in the quarter before.
The bank's return on tangible equity for the period was 5.4% from 1.1% in the previous quarter.
RBS also announced that NatWest Markets has received approval from Dutch regulator - DNB - to re-purpose its existing banking licence, allowing the investment bank to be "operationally ready to serve its European Economic Area customers" after the UK's departure from the European Union.
RBS total assets at September 30 was GBP719.9 billion, down from GBP748.3 billion at June 30.
Within divisions in the third quarter, RBS UK Personal & Business Banking total income for the third quarter was GBP1.56 billion, down from GBP1.76 billion posted the year before. The division's operating profit decreased 38% to GBP535 million from GBP860 million.
In Commercial Banking, total income decreased 15% to GBP789 million from GBP928 million. The division's operating profit decreased 27% to GBP243 million from GBP334 million.
NatWest Markets total income multiplied to GBP569 million from GBP20 million the year before. The division posted an operating profit of GBP87 million from a GBP4353 million loss for the same period in 2017.
For the nine months ended September, RBS pretax profit decreased to GBP2.79 billion from GBP2.82 billion the year before.
RBS total income for the first three quarters increased 2.6% to GBP10.34 billion from GBP10.08 billion year-on-year, with net interest income decreasing 4.4% to GBP6.48 billion from GBP6.78 billion.
The bank retained its outlook guidance set out in its 2017 annual results.
At the time RBS said it intends to "accelerate the transformation of the bank which necessitates increased investment and innovation spend together with additional restructuring costs".
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