RBS Swings to Better Than Expected Quarterly Profit

By Margot Patrick 

LONDON-- Royal Bank of Scotland Group PLC posted a bigger than expected net profit in the first quarter and said it is still on track for a full-year profit next year.

RBS has posted nine years of consecutive losses since being bailed out by the U.K. government in the financial crisis, with only a few profitable quarters along the way.

Net profit in the first three months of 2017 was GBP259 million ($334.24 million), compared with a GBP968 million net loss in first-quarter 2016 and much higher than analyst expectations of around GBP50 million.

The bank's core operations, stripping out units and assets it is shedding, made GBP1.33 billion in pretax profit, up 30% on the first quarter of 2016, mainly because of better conditions for client trading in its shrunken markets business.

The U.K. government owns 70% of RBS after bailouts of the bank in 2008 and 2009. Chancellor Philip Hammond said last week the government may have to sell the shares for less than the GBP45.5 billion it invested. The bank's entire market capitalization is currently around GBP30 billion.

The full-year net loss for 2016 was GBP6.96 billion. Chief Executive Ross McEwan had previously said the bank should be profitable by 2018.

One big hump to get over is a settlement with U.S. authorities over its role in the sale of toxic mortgage-backed securities before the financial crisis. RBS said Friday it is still in discussions.

Write to Margot Patrick at [e-mail]

(END) Dow Jones Newswires

April 28, 2017 02:45 ET (06:45 GMT)

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