LONDON – The Royal Bank of Scotland swung to a profit in the first quarter as the taxpayer-owned bank cut costs and increased lending.
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RBS, bailed out by the British government during the 2008 financial crisis, posted net income of 259 million pounds ($334 million) after a loss of 968 million pounds a year earlier. Restructuring costs more than doubled to 577 million pounds, swelled by a 235 million-pound charge for selling off property.
"Whilst it remains too early to hang out the bunting, there are at least some signs of recovery at the beleaguered bank," said Richard Hunter, head of research at Wilson King Investment Management.
RBS shares rose 2 percent to 257.85 pence in early trading.
CEO Ross McEwan had previously announced plans to cut costs by 2 billion pounds over the next four years, which could lead to job losses. McEwan said Friday that shifting toward computer and mobile services will deliver an "even more customer-focused bank, with a compelling investment case."
The results come just days after U.K. Treasury chief Philip Hammond suggested the government was prepared to sell its stake in the bank, even at a loss.
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The government acquired its 79 percent stake in RBS for 45 billion pounds in 2008, the equivalent of 5.02 pounds a share. The shares are now trading for less than half that price.
"Our policy remains to return the bank to private hands as soon as we can achieve fair value for the shares, recognizing that fair value could well be below what the previous government paid for them," Hammond said last week. "We have to live in the real world and make decisions on the future of our holding in RBS in the best interests of taxpayers."
But any sale would likely have to await the settlement of legacy issues, such as a U.S. investigation into the sale of mortgage backed securities. The European Commission is also reviewing a U.K. government proposal that would allow RBS to keep branches it was ordered to sell to resolve competition concerns after receiving state aid.
During a conference call with reporters, McEwan was asked whether RBS owes taxpayers an apology for the loss on their investment.
"The price that was paid was the price of the day. It was the right thing to do to save the bank," he said, adding that he didn't think it was "a matter of an apology, we just have to go back to why it happened."