RBS Makes First Full-Year Profit in Decade Despite 4Q Loss

By Adam Clark

Royal Bank of Scotland Group PLC (RBS.LN) said Friday that it made its first full-year profit in ten years in 2017, despite a fourth-quarter loss.

The majority state-owned bank posted a fourth-quarter operating loss of 583 million pounds ($812.5 million) compared with a GBP4.06 billion loss in the same period in 2016.

This left RBS with a 2017 operating profit of GBP2.24 billion, swinging from a GBP4.08 billion loss the prior year. On a net basis, RBS made a GBP752 million profit compared with a GBP6.96 billion loss in 2016.

The main driver of the improved results was a sharp reduction in litigation and conduct costs, falling to GBP1.29 billion in 2017 from GBP5.87 billion in 2016.

However, RBS said it has yet to resolve a settlement with the U.S. Department of Justice over alleged historic mis-selling of mortgage-backed securities. RBS said resolution of the case is a "key milestone" to enabling it to resume making distributions to shareholders.

Chief Executive Ross McEwan said: "With many of our legacy issues behind us, the investment case for this bank is much clearer and the prospect of returning any excess capital to shareholders is getting closer."

The U.K. government continues to hold a 71% stake in RBS after a taxpayer-funded rescue in 2008.

RBS's total income for the fourth-quarter was GBP3.06 billion, and GBP13.13 billon for 2017 as a whole. This compares with income of GBP3.22 billion for the year-earlier quarter, and GBP12.59 billion for 2016 as a whole.

Analysts expected fourth-quarter income of GBP2.92 billion, according to a FactSet consensus of four estimates. Total income for 2017 was projected at GBP12.96 billion by a FactSet poll of 17 analysts.

RBS said accelerated restructuring means it intends to increase investment and innovation spending. The bank said it expects to incur cumulative restructuring charges of around GBP2.5 billion across 2018 and 2019, up from previous guidance of around GBP1.0 billion.

Write to Adam Clark at [e-mail]; @AdamDowJones

(END) Dow Jones Newswires

February 23, 2018 03:01 ET (08:01 GMT)

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