Core RBS operating profit rises sharply

published 4 May 2012

Nationalised lender Royal Bank of Scotland (RBS) is to repay the final tranche of notes issued under the government's Credit Guarantee Scheme (CGS) next week, after posting a profit of more than a billion pounds in the first quarter of 2012.

Excluding own credit adjustments, pre-tax profit totalled £1,052m. Own credit adjustments, which reflect the increasing price of debt issued by RBS and therefore the assumed cost of buying it back, warranted a pre-tax charge of £2,456m, leaving a statutory pre-tax loss of £1,404m and an attributable loss of £1,524m.

Group operating profit was higher at £1,184m, compared with a loss of £144m in the previous quarter and a profit of £1,133m in the first quarter of 2011.

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Core RBS operating profit rose 46% from the previous quarter to £1,667m, with Retail & Commercial businesses delivering £903m, down 13%, while the Markets arm recovered to a profit of £824m, compared with a loss of £109m in the prior quarter. Non-Core losses were £483m, compared with £1,282m in the prior quarter.

The group said that next week it will repay the final tranche of notes issued under the government's CGS; over the last three years RBS will have repaid £75 billion of funding under the CGS and the Special Liquidity Scheme.

The capital position remains robust, with a Core Tier 1 ratio - a key measurement of a bank's balance sheet strength - of 10.8% and a Tier 1 leverage ratio of 16.3x.

More to follow ...