5th Aug 2016 06:16
LONDON (Alliance News) - Royal Bank of Scotland Group PLC on Friday said it swung to an operating loss in the first half of 2016 and said it may take longer to hit it returns targets given current challenging economic conditions.
The FTSE 100 constituent, which is 73%-owned by the UK government, said it made an operating loss of GBP274.0 million in the half to the end of June, swung from a GBP261.0 million profit a year prior.
RBS's loss for the half, attributable to ordinary shareholders after its final dividend access payment, was GBP2.05 billion, compared to a GBP179.0 million loss a year before. This includes the dividend access payment, which amounted to GBP1.19 billion, plus GBP1.31 billion in litigation and conduct costs.
RBS said its adjusted operating profit for the half, which removes one-off costs along with litigation and conduct charges, was GBP1.16 billion, down from GBP2.89 billion a year before. Adjusted operating profit for the bank's Personal & Business Banking, Commercial & Private Banking and Corporate & Institutional Banking franchises fell 15% in the half and the profit was further hit by increased volatility losses.
RBS said its common equity tier 1 ratio was 14.5% at the end of June, still ahead of its 13.0% target. The CET1 ratio is a key measure of bank profitability and the ability of the lender to pay dividends.
The bank said the outcome of the EU referendum in the UK has created "considerable uncertainty in our core market". It said that within the current low interest rate environment and amid low economic growth conditions, hitting its cost-to-income ratio and return targets by 2019 will likely prove "more challenging".
By Sam Unsted; [email protected]; @SamUAtAlliance
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