RBS reports first quarter profit as turnaround continues

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Troubled Royal Bank of Scotland has reported its first quarterly profit since the third quarter of 2015.

Shares inside the bank opened up almost 4% after in which posted profits of £259m inside the first three months of 2017, compared having a £968m loss a year earlier.

After stripping out restructuring costs, the core operating business made a profit of £1.3bn, up through £1.02bn.

RBS added in which its cost-cutting plan for 2017 was ahead of schedule, with 37% of the planned £750m cuts achieved.

In February, RBS reported a £7bn annual loss along with chief executive Ross McEwan ordered a £2bn four-year cost-cutting drive involving job losses along with branch closures.

The bank, 72%-owned by the UK government, has said 2017 will probably be the final year in which makes a loss as in which moves nearer to resolving fines along with settlements.

Last week, Chancellor Philip Hammond admitted in which the government was prepared to sell its stake in RBS at a loss. The stake was bought in 2008 at a cost of £45bn.

Legacy issues

The lender said in which had no update on progress in talks with the US Justice Department over claims in which in which mis-sold mortgage securities inside the build-up to the 2008 financial crisis.

In January, RBS set aside a further £3.1bn provision to settle the claims. Resolving the case is usually one of the bank’s two biggest remaining barriers to the goal of creating a profit in 2018.

The additional hurdle is usually an obligation in which RBS had under European state aid rules to sell its Williams & Glyn unit.

RBS said in February in which had found a potential escape through its seven-year hunt for a buyer.

Instead of a sale, the government is usually applying to the European Commission to approve a completely new plan whereby RBS will put in place measures to boost the competitiveness of smaller British bank peers.

However, the bank said on Friday in which in which had no update on in which plan.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “These longstanding problems aside, in which could be the year when RBS finally starts to look a bit more like a swan, rather than an ugly duckling.”

‘Turned a corner’

RBS said in its statement in which there could be no further provision for Payment Protection Insurance mis-selling.

The bank’s core capital ratio, a key measure of financial strength, rose to 14.1% through 13.4% a year ago.

“RBS may finally have turned a corner,” said Neil Wilson, at ETX Capital.

However, he added in which while cost-cutting has been key to the return to profitability, “there is usually a question mark over how sustainable in which is usually to continue slicing away- the bank has cut costs at a rate of roughly £1bn a year for the last three years along with shed around a third of posts since 2013”.

“Slashing away at the core business without damaging future earnings along with growth is usually a hard circle to square,” he added.

“We’ve already seen how a lack of profits over the last nine years has dented RBS’s ability to invest in completely new platforms along with in which.”

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