The City of London business district is seen through windows of the Royal Bank of Scotland (RBS) headquarters in London, Britain in this September 10, 2015 file photo. REUTERS/Toby Melville/Files
LONDON: Royal Bank of Scotland (RBS) reported a sharp rise in losses in the first quarter on Friday and cautioned on the timing of a return to dividend payouts as lower income, restructuring costs and sluggish asset sales underscored the challenges still facing the lender.
The Edinburgh-based bank, which was rescued with a £46bil(RM262.6bil) state bailout during the 2007-09 financial crisis, has still not made an annual profit since 2007.
In the latest quarter the bank reported a net loss of £968mil (RM5.53bil), up from £459mil (RM2.62bil) in the same period last year and slightly higher than the £957mil (RM5.46bil) forecast on average by analysts, according to the bank.
Income dropped 13% to £3.06bil (RM17.47bil).
The shares were down 2.9% at 237 pence by 0837 GMT.
Results were also hit by a £1.2bil (RM6.85bil) payment to end the British government’s prior claim on any dividends, a £238mil (RM1.36bil) restructuring bill and a £226mil (RM1.36bil) impairment charge in its shipping loan portfolio.
That bill includes the mounting costs of separating its Williams & Glyn business, which the bank said it could fail to sell off before the end-2017 deadline imposed by EU regulators as a condition for approving the bank’s receipt of state aid in 2008.
“This is the most complex project I have seen in banking anywhere in the world,” chief executive Ross McEwan told reporters on a call after the results release.
Analysts are sceptical of the bank’s ability to deliver on its promise to divest the business by the 2017 deadline.
“With the excess capital now being tied to ... the W&G surgery where we have no option but to trust management’s view on complications, we have decided to get out,” analysts at Bernstein said in a note to clients.
RBS did not record any major provisions for repaying customers mis-sold payment protection insurance (PPI) but it warned that it expected to shell out more than £1bil (RM5.71bil) in restructuring charges this year.
This would come on top of hefty penalties from the US authorities for mis-selling mortgage securities.
Total income at RBS’s UK retail bank fell 3% in the first three months of the year to £1.28bil (RM7.30bil), reflecting the continued pressure on margins and lower fees, while its corporate and investment bank unit saw income plunge by 36%, due in part to volatility in global markets.
The bank’s common equity Tier 1 capital solvency ratio, a measure of its resilience against financial market shocks, fell to 14.6% of risk-adjusted assets from 15.5% at end-2015, after buying out the government’s right to an enhanced dividend.
RBS is still 73% owned by the British government. The latest quarter’s results bring the total sum lost by the bank since the bailout to around £52bil (RM296.78bil). - Reuters
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