Core RBS operating profit rises sharply

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 ...

JH