RBS doubles pre-tax profit as costs and impairments fall

2nd May 2014 07:13

- Pre-tax profit at 1.64bn pounds, double the previous year- Income falls two per cent- Capital ratios strengthenPart-nationalised banking group Royal Bank of Scotland (RBS) saw profits double in the first quarter, helped by a reduction in costs and lower impairment charges.Pre-tax profit surged to £1.64bn in the first three months of 2013, up from £826m the year before.This came despite a 2% fall in income to £5.05bn, owing mainly to a decline in the Markets division, reflecting its smaller balance sheet and reduced risk levels."Just over two months ago, I set out our plan for making RBS the most trusted bank in the UK. Today's results show that in steady state, RBS will be a bank that does a great job for customers while delivering good returns for our shareholders," said Chief Executive Ross McEwan.However, he said that the bank still has "a lot of work do and plenty of issues from the past to reckon with".Expenses fell 6% year-on-year to £3.19bn, with Markets down 15% and other banking businesses down 3%. The company said that benefits from certain "strategic cost reduction initiatives" will feed through in later quarters and it remains on track to deliver its target of £1bn of cost reductions this year. However, restructuring costs are likely to be "considerably higher" for the remainder of the year than the rate implied by the first quarter.Meanwhile, impairment losses totalled just £362m in the quarter, down from £1.03bn the previous year.The balance sheet was strengthened further with the common-equity tier-1 (CET1) capital ratio rising to 9.4% at March 31st, up from 8.6% at the end of 2013.The group said it is making "steady progress" towards achieving a CET1 ratio of 11% by the end of 2015 and 12% or above by the end of 2016.BC