Litigation and conduct costs were lower at £459 million compared with £856 million in Q1 2015, while restructuring costs rose to £1,050 million from £453 million in Q1 2015 as the pace of restructuring accelerated. “The market should be understandably pleased at a small first half profit when analysts had expected a small loss”, said Sandy Chen, analyst at Cenkos.
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He sa id: “I don’t like seeing losses and I’ll not rest until these charges are behind us”.
Adjusted operating profit, which strips out restructuring and other one-off costs, was £ 1.8 billion, down 7% on the year before as income from the RBS’s investment bank dropped away.
The UK government, which still owns about 80% of the bank after rescuing it with a GBP45 billion bailout during the global financial crisis of 2007-09, wants to begin selling down its stake in the current fiscal year.
The group is still working through compensation payments to those affected and talking to regulators, although Mr McEwan said the financial impact to the group was “limited”.
Despite the uncertainty surrounding the scale of future penalties, Hampton said: “This is an appropriate backdrop to the sale of shares by the UK government, which will be a significant moment for this bank”.
Although there is “no job number” for headcount reductions, Chief Executive Officer Ross McEwan said on a conference call Thursday that staff losses would come “particularly in our corporate and institutional bank, which is becoming a much smaller part of our business”.
He said management were working to ensure RBS is a bank “the country can again be really proud of”.
These would stop the bank making any returns to shareholders through dividends or share buybacks until at least the first quarter of 2017 – later than the City had been expecting. “Judging the ultimate scale of conduct costs remains extremely challenging”, said Hampton.
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Royal Bank of Scotland Group Plc (LON:RBS) has this morning released its second-quarter results.
