RBS 1Q Profit Hit by Virus Impact, But Ahead of Expectations -- Earnings Review

By Adria Calatayud

Royal Bank of Scotland Group PLC reported results for the first quarter on Friday. Here's what you need to know:

REVENUE: The U.K. lender's total income for the first quarter rose 4.1% on year to 3.16 billion pounds ($3.96 billion), beating analysts' expectations of GBP2.84 billion, according to a consensus compiled by the bank.

PROFIT: RBS, which plans to rename itself as NatWest Group later this year, reported a nearly halved quarterly operating pretax profit of GBP519 million. However, this was ahead of analysts' forecasts of GBP415 million, according to a consensus provided by the bank.

WHAT WE WATCHED:

--IMPAIRMENTS: RBS booked impairment losses of GBP802 million, as it set aside GBP628 million in preparation for a more uncertain economic outlook due to the coronavirus pandemic. This was sharply higher when compared with the bank's year-earlier impairment losses of GBP86 million and also exceeded consensus expectations of a GBP515 million hit.

--CAPITAL: The bank's common equity Tier 1 ratio--a key measure of balance-sheet strength--stood at 16.6% at the end of the first quarter, 40 basis points higher than at the end of 2019 and ahead of a consensus forecast of 16.4%. Richard Hunter, head of markets at investment service Interactive Investor, said RBS has one of the highest capital cushions in the sectors which, combined with a large liquidity buffer, gives comfort in underlying the bank's capital position.

Write to Adria Calatayud at [e-mail]

(END) Dow Jones Newswires

May 01, 2020 07:19 ET (11:19 GMT)

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