RBS profits over £10bn

by Richard Kilner

Story link: RBS profits over £10bn

Subprime-related losses have not prevented the Royal Bank of Scotland recording profits of £10.3bn.

Year-on-year profits rose by 9%, as was widely expected.

However, the bank, Britain’s second largest, has revealed that its combined writedowns relating to the recent financial crisis has hit £2.5bn.

RBS itself lost £1.6bn in writedowns, with the remainder lost by the Dutch Bank ABN Amro, which it acquired last year.

The bank’s losses through bad debts fell slightly, down 1% to £1.87bn. According to RBS, the moderate decline occurred because of a new, more cautious approach.

The operating profits of UK business banking rose by more than a tenth, and almost reached the £2bn mark.

This contrasts with the Citizens banking business, which has seen profits fall and bad debts rise, largely due to its exposure to the weakening US economy.

Sir Fred Goodwin, the firm’s chief executive, has said that this year is difficult to predict, but that the bank does enjoy good momentum following its acquisition of ABN Amro.

The Dutch bank was subject to bids from RBS and Barclays, and some have claimed that the successful RBS offer may have paid over the odds, raising concerns over its capital position.

However, investor dividends have been risen by 10%, and RBS has stated that its capital remains on target.