Royal Bank of Scotland boasts £752million annual profit – first time in black for 10 YEARS
ROYAL Bank of Scotland is back in profit after ten years. The taxpayer controlled bank has made a full year operating profit before tax of £2.2 billion and an attributable profit of £75m. Ten years after the Financial Crisis chief executive Ross McEwan called it, "a symbolic moment".
Royal Bank of Scotland has posted its first annual profit for a decade with the bailed-out bank announcing profits of £752m in 2017 after tax and costs, compared with a loss of £7bn in the previous year.
Chief executive Ross McEwan calls it, "a symbolic moment for this bank and a clear indication of the progress we continue to make in putting the past behind us, while at the same time investing to build a bank which delivers for both customers and shareholders."
However RBS could still have to dig deep to pay the massive fine from the US Department of Justice over the sale of financial products linked to risky mortgages, and have set aside an extra £492m for US litigation.
Mr McEwan said: "We have been constantly hit with the sins of the past with conduct and litigation issues and I've been heavily restructuring the business to bring it back to the UK".
Over the ten years since the 2008 Financial Crisis RBS has accumulated losses of over £58bn, including a massive £24.3bn loss in 2008.
Needless to say the bank may be back in profit but it is a long way from being the institution it once was.
Ross McEwan told BBC radio this morning that the bank had, "fallen from grace".
He said: "RBS was the largest bank in the world 10 years ago, with a balance sheet of £2.2trillion, and it spectacularly fell from grace.
"We've been restructuring the bank, but it's taken time and a lot of cost to come out of countries and businesses we didn't want to be in."
RBS is now visible in just 12 countries instead of its high of 38.
RBS has also pushed ahead with its cost-cutting drive and restructuring plan, having cut expenses by £810million last year, exceeding its £750million target.
Laith Khalaf, senior analyst at Hargreaves Lansdown, told the Guardian that it has been it’s been, "a tricky but momentous year for RBS, in which the bank has put to bed many of the legacy issues which have hampered performance since the financial crisis".
He said: "RBS has broken its ten year duck and managed to squeeze out a profit in 2017, thanks in large part to a big fall in litigation and conduct costs. This is a stay of execution rather than a pardon however, because the bank is still facing a multi-billion dollar penalty from the US Department of Justice, which is now going to impair profitability in 2018."
Mr Khalaf adds that, "the UK part of RBS is going great guns, and even the investment bank has held up reasonably well, considering a lot of the bad bank has been rolled into it.
"The bank’s capital position has improved again, though the prospect of a dividend still hinges on the final settlement with US authorities."
Royal Bank of Scotland looking forward to receiving my ‘Citizens Dividend Payment’ as a majority shareholder. How much will we receive? #RBS
— StevieC (@OMG_58) February 23, 2018
So the royal Bank of Scotland has made a profit, so wonder when my dividend payment will arrive #simpleviews
— Judith Byrne (@Dahju_Lentil) February 23, 2018
Royal Bank of Scotland has returned to profit for the first time in a decade.
— Simon Warren (@100Climbs) February 23, 2018
Looking forward to my dividend.������������������������������
After the profit announcement, Twitter users took to social media to demand payment on their share dividend.
The government owns a 71 per cent stake in RBS and British taxpayers are keen for that money to be returned to public coffers rather than used to pay the bonuses of top executives.
Simon Warren tweeted: "Royal Bank of Scotland has returned to profit for the first time in a decade. Looking forward to my dividend."