RBS creeps into the black

7th Aug 2009 07:03

Royal Bank of Scotland has turned last year's big half-year pre-tax loss into a small profit, although the part-nationalised bank saw bad debts rocket to £7.5bn.Profit before tax, excluding the write-down of goodwill and other intangible assets came in at £15m for the six months ended 30 June 2009 versus a £726m loss a year ago. Total income rose 25% to £17.8bn.But chief executive Stephen Hester called the results "poor" following a jump in losses attributable to shareholders to £1.04bn from £827m in 2008.Impairment surged to £7.52bn from £1.48bn last time. Over 70% of that arose in the non-core division, although there was a "significant" rise in credit costs in all core divisions as the recession rumbles on.RBS, 70% owned by the taxpayer, said about 70% of the impairments and write-downs incurred in the first half are attributable to assets covered by the Asset Protection Scheme.Hester warned there will be no "miracle cures" and that overall results may not substantially improve until 2011, although he remains upbeat about prospects."Let me be clear, I am optimistic for RBS's future," he said. "We can restore the bank to standalone strength and viability. We will thereby rebuild attractive, sustainable shareholder value and, I believe, allow Government support to be recouped in full."The mood is in sharp contrast to Lloyds Banking, which earlier this week said its bad debt level of £13.4bn was probably as bad as it'll get.Much of Hester's bonus depends on RBS' share price getting back above 70p, but there are also trigger points up to that level also based on the price performance of the shares. Separately, former finance chief at Bank of New York Mellon, Bruce Van Saun, has been named as the UK bank's new finance boss. He'll take over from Guy Whittaker on 1 October.