Britain's Royal Bank of Scotland delivered a 37 per cent profit rise yesterday with help from last year's takeover of rival NatWest and said it may raise targets for benefits from the merger.
Providing a strong finale to the UK bank results season, the figures showed profit before tax, goodwill and integration costs of £2.751 billion sterling for the six months to June 30th, up from £2.011 billion in the first half of 2000.
The figures - reported on a pro forma basis so that NatWest was included in last year's numbers - confirmed that Royal Bank's takeover of its larger rival to form the second-largest UK bank has reaped more cost and revenue benefits than forecast.
The results also relieved concern that the bank would suffer a jump in bad debts, partly due to its US exposure, auguring well for the $2.1 billion acquisition of Pittsburgh-based Mellon Financial Corp it announced last month.
Total provisions for bad and doubtful debts rose 19 per cent to £369 million, but largely as a result of growth in lending overall.
But there were lingering worries that Royal Bank's loan book could be more exposed if the economic climate worsened.
"They made a reasonably good case today, but I don't think it will dismiss investors' concerns if the economy takes another lurch downwards," said Mr Peter Toeman at Morgan Stanley.
The earnings gains matched estimates the bank provided last month. Those estimates had exceeded market forecasts by about 5 per cent, analysts said.
