RBS first-quarter profit trebles

Fri May 2, 2014 6:35am EDT
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By Matt Scuffham and Steve Slater

LONDON (Reuters) - Royal Bank of Scotland (RBS) (RBS.L: Quote) trebled its profit in the first quarter, beating analysts' expectations and handing a boost to new Chief Executive Ross McEwan as he looks to turn around the government-controlled bank's fortunes.

The bank reported a net profit of 1.2 billion pounds ($2 billion), up from 400 million the year before, benefiting from improved cost controls and a reduction in losses from bad loans.

The performance marked only the sixth occasion RBS has reported a quarterly profit since Britain pumped 45 billion pounds into the bank during the 2008 financial crisis, leaving it with an 81 percent shareholding, and contrasted with an 8.7 billion pound full-year loss in 2013.

Analysts had forecast a profit of 200 million pounds, according to a poll of eight analysts provided by the bank.

"Today's results show ... RBS will be a bank that does a great job for customers while delivering good returns for our shareholders," said McEwan, who took over from predecessor Stephen Hester last October.

However, McEwan added that RBS still has "a lot of work to do and plenty of issues from the past to reckon with".

Its shares, which had fallen earlier this year to an eight- month low, jumped more than 12 percent to their highest since late February. But taxpayers are still sitting on a loss of 14 billion pounds on their holding, while banking and political sources say a return to full private ownership may take up to five years.

The results, which come a day after fellow bailed-out bank Lloyds (LLOY.L: Quote) also reported improved earnings, reflect the impact of RBS's decision last November to create an internal "bad bank", designed to fence off its riskiest assets and leaving the rest of the bank in a better position to lend.   Continued...

A sign is seen outside a Royal Bank of Scotland building in central London January 28, 2014. REUTERS/Paul Hackett