Royal Bank of Scotland Group PLC swung to a net profit for the first half of 2017, as a series of one-off costs melted away.
The 71% state-owned bank said Friday that revenue came in at GBP6.91 billion, compared with GBP6.06 billion ($7.96 billion) the year before, on the back of stronger mortgage lending. The bank made a net profit of GBP939 million, versus a GBP2.05 billion loss in the first half of 2016, when the bank paid the government over GBP1 billion to regain the right to pay dividends. This was its first half-year profit in three years.
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The U.K. bank said restructuring costs continued to rise in the first six months of 2017, as it pursues a multiyear turnaround to shed businesses and refocus on the U.K.
Litigation costs came in at GBP400 million, as the bank paid to settle disputes with U.S. authorities and a class action by shareholders.
The results come as the bank targets returning to full-year profitability in 2018, a decade after its taxpayer bailout.
In recent months, the bank has made strides to clean up some of the legacy issues hanging over it. In July, RBS agreed to pay $5.5 billion to the U.S. Federal Housing Finance Agency to settle a probe into its sale of toxic mortgage-backed securities in the run up to the financial crisis. The bank also reached a preliminary agreement with the European Commission to spend over $1 billion to boost competition in the U.K. The agreement came after RBS was found in breach of European competition rules following its bailout.
Three major hurdles remain before the bank returns cash to shareholders: RBS needs to convincingly pass a balance sheet stress test; it needs to settle criminal and civil investigations with the U.S. Justice Department over its role in packaging subprime mortgages and it needs to make a profit. The bank says it still hasn't had any update from the Justice Department on when a settlement might come.
The bank also said Friday that it would repurpose its Dutch banking license so that its investment bank could service customers on the continent after Brexit. The bank expects less than 150 roles to move overseas.
Write to Max Colchester at firstname.lastname@example.org
(END) Dow Jones Newswires
August 04, 2017 03:11 ET (07:11 GMT)