RBS admitted it had abandoned plans to create a new IT system to separate the 300 branches it must sell off to comply with European Union rules associated with its £45bn taxpayer bailout.
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RBS’ net interest margin – under much closer focus given the low interest rate environment – was 2.18 per cent for the first six months, slightly up from 2.14 per cent a year ago.
Ross McEwan said RBS had spent the past two years dealing with problems at the bank, which received a £45.5bn bail-out during the financial crisis. Smaller players like Shawbrook and Aldermore, with exposure to UK SMEs, are thought to be more affected by the weakening UK economy that the Bank of England and others expect to see.
The £2 billion loss for RBS is a huge increase on the £179 million figure for the same time past year, and came as the bank shouldered heavy restructuring costs and set aside more compensation for customers mis-sold payment protection insurance.
“It will squeeze us on the net interest margin, but will it help us lend more?”
He added: “The core thing for me is that we’ve got a very strong bank here that can take these shocks”. The 52 week high share price is 350.4 GBX while the 52 week low for the share price is 148.4 GBX. Throw in new losses from the tortuous Williams & Glyn disposal, and RBS looks hobbled for years to come. Gary Greenwood, an analyst at Shore Capital, said the results were “worse than expected”. Work has continued to explore alternative means to achieve separation and divestment and RBS has had positive discussions with a number of interested parties concerning an alternative transaction related to substantially all of the business previously described as Williams & Glyn. Hitting return targets will now be “more challenging”, the bank said. These were offset by a reduction in net impairment releases and a provision in relation to the industry-wide tracker mortgage examination.
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The banking giant, which is still 73%-owned by taxpayers, said the disappointing results were attributable to a £1.3bn expense related to conduct and litigation costs. Before it can make payout, it must dispose of Williams & Glyn, complete the bulk of its restructuring, reach a settlement in the United States mortgage probe and pass Bank of England stress tests later this year.
