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Treasury nets £977m as RBS profits more than double to £1.6bn | Business News

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Royal Bank of Scotland (RBS) says the Treasury will net almost £1bn in dividends after annual profits more than doubled.

The bank, which remains 62% owned by the taxpayer following its bailout at the height of the financial crisis, reported a pre-tax profit of £1.6bn for 2018 – up from £752m in the previous 12 months.

It announced it was paying a special dividend on top of the ordinary award which, when measured against the Treasury’s stake, meant £977m would return to the public purse.

RBS is hoping the process of returning to private hands can be stepped up but its shares, at 240p a share, remain well below the 502p paid back in 2008 by the-then Labour government.

RBS chief executive Ross McEwan
Image:
RBS chief executive Ross McEwan

It was able to resume dividends last summer – for the first time since its rescue – after agreeing with US authorities a penalty of £3.7bn for the mis-selling of pre-crisis mortgage-backed securities.

The bank reported further progress in its financial recovery during 2018 and said it was stepping up efforts to bolster customer service through a £1bn investment this year.

RBS also used its results to warn that economic challenges, including from Brexit, risked knocking its cost-cutting targets and raising its exposure to potential loan defaults.

However, it did not raise its provision for Brexit-related costs above the £100m already accounted for.

The bank’s chief executive said its performance was achieved against the backdrop of the economic slowdown and continued fog shrouding the outcome of Brexit.

Ross McEwan said: “This is a good performance in the face of economic and political uncertainty, with bottom line profits more than double what we achieved the previous year.

“We are also announcing an intention to pay back more capital to shareholders and almost £1bn is set to be returned to UK taxpayers for 2018.

“With strong capital and liquidity levels, we are well positioned to support the UK economy. Our total lending to business and commercial customers reached over £100bn at the end of 2018.”

The bank’s annual report also confirmed a story by Sky News last weekend that it awarded £335m in bonuses to staff for the year – a fall on the £342m handed out in 2017.

Mr McEwan’s pay package rose to £3.6m from £3.5m.

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