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RBS swings to loss on ?900m PPI provision
24th Oct 2019 07:33
(Sharecast News) - Royal Bank of Scotland said on Thursday that it swung to a third-quarter loss after making a £900m provision for payment protection insurance.
In the three months to 30 September, the bank made an operating loss before tax of £8m versus a £961m profit in the same period a year ago. It had said in September that the provision for PPI claims would be between £600m and £900m.
RBS said it has made provisions totalling £6.2bn to date for PPI claims.
The bank also said it had been hit by a "particularly challenging" quarter in NatWest Markets, with total income for the division down £419m to £150m compared with the third quarter of last year. Core income fell 44% to £184m compared with Q3 due to "challenging market conditions", mostly affecting rates income and most significantly during August, RBS said.
RBS's net interest margin fell to 1.97% during the quarter from 2.02% in Q2 and its Common Equity Tier One capital ratio came in at 15.7% from 16% in the previous quarter.
Neil Wilson, chief market analyst at Markets.com, said the numbers are "horrible".
"There is kitchen sinking that goes on when a new CEO comes in, and then there are just plain horrible quarters. One feels for Alison Rose, the new boss of RBS, that the Q3 numbers from the bank and erstwhile global financial institution fall into the latter category.
"In large part the last-minute surge of PPI claims can be blamed as it's taken a further £900m provision to settle claims. The good news at long last RBS and its ilk can draw a line under that particular sorry saga after the deadline for claims has now passed. NatWest Markets meanwhile seems to have suffered a particularly challenging third quarter, with income down nearly three-quarters."
In the three months to 30 September, the bank made an operating loss before tax of £8m versus a £961m profit in the same period a year ago. It had said in September that the provision for PPI claims would be between £600m and £900m.
RBS said it has made provisions totalling £6.2bn to date for PPI claims.
The bank also said it had been hit by a "particularly challenging" quarter in NatWest Markets, with total income for the division down £419m to £150m compared with the third quarter of last year. Core income fell 44% to £184m compared with Q3 due to "challenging market conditions", mostly affecting rates income and most significantly during August, RBS said.
RBS's net interest margin fell to 1.97% during the quarter from 2.02% in Q2 and its Common Equity Tier One capital ratio came in at 15.7% from 16% in the previous quarter.
Neil Wilson, chief market analyst at Markets.com, said the numbers are "horrible".
"There is kitchen sinking that goes on when a new CEO comes in, and then there are just plain horrible quarters. One feels for Alison Rose, the new boss of RBS, that the Q3 numbers from the bank and erstwhile global financial institution fall into the latter category.
"In large part the last-minute surge of PPI claims can be blamed as it's taken a further £900m provision to settle claims. The good news at long last RBS and its ilk can draw a line under that particular sorry saga after the deadline for claims has now passed. NatWest Markets meanwhile seems to have suffered a particularly challenging third quarter, with income down nearly three-quarters."