RBS swings to profit in first quarter

Royal Bank of Scotland (RBS) saw its bottom line improve substantially in the first three months of 2013 as the preceding quarter was hit by a number of one-off costs.

Royal Bank of Scotland (RBS) saw its bottom line improve substantially in the first three months of 2013 as the preceding quarter was hit by a number of one-off costs.

The group reported an operating profit before tax of £826m in the first three months of the year, compared with a loss of £2,227m in the fourth quarter of 2012.

The last three months of 2012 were affected by several exceptional costs, including a negative own credit adjustment, compensation to pay for mis-sold Payment Protection Insurance and interest-rate hedging products, regulatory fines, write-down of goodwill and other intangible assets as well as integration and restructuring costs.

In the first quarter of 2012, the firm made a loss of £1,514m, dragged down by substantial own credit adjustments other costs.

Total income during the quarter ended March 31st 2013 came in at £5,850m, up from £5,760m in the fourth quarter but down from £7,131m a year earlier.

This year-on-year fall was mainly due to a reduction in Markets income reflecting RBS's "de-risking" activity as well as the impact of less attractive market conditions in the Rates business. Insurance net premium income also declined year-on-year owing to the "non-consolidation" of Direct Line which floated on the stock market in October.

"These results show pleasing progress in delivering a strong and valuable RBS for all our stakeholders," said Chief Executive Officer Stephen Hester.

"We are seeing the start of a pick-up in loan demand and have a strong surplus of funds ready and available to fully support economic recovery. Across the group we are working hard to improve what we do for customers and to better position the bank for future growth."

The firm expects to make continued good progress on all "safety and soundness" measures in 2013, including a full loaded Basell III core tier-one capital ratio of around 9.0% by the end of the year. This improved by 50 basis points to 8.2% in the first quarter.

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