Royal Bank of Scotland first-half profits double to £2.65bn
CEO warns bumps ahead as bank deals with scandals of the past and toxic assets
Ross McEwan, chief executive officer of the Royal Bank of Scotland (RBS). The bank has nearly doubled pre-tax profits to £2.65 billion. Photo: Bloomberg
Royal Bank of Scotland nearly doubled pre-tax profits to £2.65 billion in the first half of the year, despite taking an extra £250 million hit for mis-selling financial products.
The state-backed lender published interim results a week early, saying it was because they were “significantly stronger” than market expectations.
Pre-tax profits for the first six months of 2014 were up from £1.37 billion the year before, RBS said.
But for the second quarter they were 38 per cent lower at £1.01 billion as the group took a hit from restructuring costs and provision for compensation for the mis-selling of payment protection insurance (PPI) and interest rate swaps.
Chief executive Ross McEwan said the results showed the underlying strength of the business, but warned there remained “bumps in the road ahead” as it continued to deal with scandals of the past and dispose of toxic assets.
Shares in the lender soared, opening 10 per cent higher. The bank, which is 80 per cent owned by the UK Treasury, said the better results came as economic improvements in the UK and Ireland had fed through to its bottom line while it was also running down bad assets more quickly.
Meanwhile in the quarter to the end of June it set aside an additional £150 million to cover PPI mis-selling, taking the total hit from the scandal to date to £3.25 billion.