RBS warns on income growth as first-quarter profit falls

26th Apr 2019 07:07

(Sharecast News) - Royal Bank of Scotland warned that uncertainty over Brexit would weigh on income growth as falling revenue drove a 16% drop in the bank's first-quarter profit. Operating profit before tax for the three months to the end of March dropped to £1.01bn from £1.21bn a year earlier as total income fell to £3.04bn from £3.30bn, RBS said in a trading update.Profit came in ahead of expectations but revenue fell well short. Analysts had expected operating profit to drop to £900m and for income to be £3.26bn. The bank's shares fell more than 5%.A day after the resignation of Chief Executive Ross McEwan, RBS said declining income was the main cause of its profit fall. The bank reduced operating costs by £73m to £1.94bn.RBS said: "While we retain the outlook guidance we provided in the 2018 annual results document, we recognise that the ongoing impact of Brexit uncertainty on the economy, and associated delay in business borrowing decisions, is likely to make income growth more challenging in the near term."The bank is looking for a new boss after McEwan announced his resignation on 25 April after more than five years as CEO. He will stay in the job before handing over to his eventual replacement.The bank's Natwest markets business was the main drag on performance in the first quarter. Income at the division fell 41% to £256m comprising a £35m reduction in the core business, an £83m decrease in so-called legacy income and a £63m deterioration in own credit adjustments. RBS said excluding NatWest markets and notable items group income was stable.RBS warned about the effects of Brexit on business borrowing as Goldman Sachs said Brexit's impact on the UK's economy had intensified. Businesses have hired workers instead of investing in their businesses in what Goldman described as a "misallocation of resources".RBS shares were down 5.3% to 236.8p at 08:16 BST.