Royal Bank of Scotland profits triple
LONDON — Royal Bank of Scotland's first-quarter profit more than tripled as the one-time global powerhouse benefited from efforts to transform itself into a smaller institution focused on Britain.
The bank said on Friday that net income rose to about $2 billion from $663 million in the year-earlier quarter, a better than expected result. RBS lost $14.7 billion in the fourth quarter last year.
Citizens Bank — the Pittsburgh region's second-largest retail bank, with 132 branches — is part of RBS Citizens Financial Group in Providence, R.I., which is Royal Bank of Scotland's banking franchise in the United States.
Britain's government saved RBS in 2008 with a $76 billion bailout after its move to become the world's largest bank through a colossal spree of debt-fueled acquisitions. The rescue left taxpayers with an 81 percent stake.
CEO Ross McEwan, who took over as chief executive officer in October, said RBS is focused squarely on earning the “trust of our customers.”
McEwan is setting up an internal bad bank, combining divisions and scaling back the investment bank since the lender reported its biggest annual loss since the financial crisis in 2013. His efforts and those of his predecessor, Stephen Hester, to revive profit have been hampered by loan losses and the spiraling cost of redress for customers wrongly sold interest-rate swaps and payment-protection insurance.
“They are a good set of numbers,” said Vivek Raja, an analyst at Oriel Securities Ltd. in London with a “sell” rating on the stock. “The key thing is impairments, which really are better than expected across both the bad bank and the core bank — and the outlook is quite positive.”
RBS is being helped as the country's economy starts to grow and the housing market booms, helping to drive down bad debts.
RBS is preparing to sell shares in its Citizens Financial Group Inc. division in an initial public offering during the fourth quarter, though RBS would look “seriously” look at offers for the business, McEwan told reporters in a call on Friday.