RBS has posted a £448 million attributable profit for the third quarter, up from £392 million in the same period last year.
The bank’s net interest margin fell 8 basis points to 1.93%.
The bank took a further £200 million PPI hit in the quarter as it’s experiencing higher claims volumes than expected. To date PPI claims have cost the bank £5.3 billion in total.
RBS also took a £100 million charge to reflect the ‘more uncertain economic outlook’.
Shares fell 5% in early morning trading.
Laith Khalaf, Senior Analyst, Hargreaves Lansdown: “The latest results from RBS are a bit of a curate’s egg. The headline numbers are ahead of expectations, but this is largely a matter of one-off items toppling onto the right side of the scales. The core business is looking pretty stagnant, at best, and the bank’s interest margin is heading in the wrong direction, despite rising rates.
“PPI claimants have also shown they’re not done gaining redress from the banking system quite yet, and RBS had to set aside another £200 million to meet its obligations. The banks now have less than a year before the PPI claims window closes, but could face more charges as activity ramps up ahead of that deadline.
“The switch to digital banking is helping RBS to cut costs, though this is coming at the expense of jobs and branches. However this reflects the way today’s customers now wish to conduct their banking activities, and the fact that 43% of sales in the UK high street bank are now coming through the digital channel is testament to that.
“Meanwhile RBS has taken a Brexit blow of £100 million, an impairment of its assets to reflect what it believes is greater economic uncertainty. This serves as a reminder that the bank’s fortunes are very heavily influenced by the domestic economy, and by extension, so is its share price.”
Leave a Comment