By Max Colchester
LONDON-- Royal Bank of Scotland Group PLC reported a surge in
net profit in the first quarter of the year, with results boosted
by a series of one-off gains and a big fall in impairments at its
struggling Irish division.
The 80% government-owned bank said net profit for the three
months to March 31 rose to GBP1.2 billion ($2.02 billion) compared
with a profit of GBP393 million a year earlier.
Total revenue dipped to GBP5.05 billion, compared with GBP5.16
billion in the same quarter a year earlier, as the bank's markets
division continues to contract. Analysts had expected the bank to
report a net loss of GBP200 million on revenues of GBP4.7
billion.
The British bank's results were boosted by not having to
provision for a number of misconduct issues that have haunted the
lender since the financial crisis and a 65% fall in impairments
across its loan book. The bank said that costs were slightly lower
than a year ago as it shed some 6,300 jobs mostly in its U.K.
retail and markets division.
However, RBS warned that costs would likely rise considerably
when the bank launches a major restructuring plan in the second
half of the year. Ulster Bank, RBS's Irish division, recorded its
first quarterly operating profit since 2009.
The results offer a breather in what has been a tough year for
the bank. RBS is undergoing an overhaul as its new management look
to take out GBP5 billion in costs over the next few years and
refocus on its U.K. retail and corporate operations. The bank also
continues to labor under increasing political interference. The
U.K. government recently said it would not vote in favor of a
proposal to allow the bank to pay bonuses of up to double fixed
pay.
The stronger results meant the bank's Common Equity Tier 1
ratio, a key indicator of the bank's health, was 9.4%, compared
with 8.6% at the end of 2013.
However, a raft of legacy issues continue to hang over the bank.
"We still have a lot of work to do and plenty of issues from the
past to reckon with," said RBS CEO Ross McEwan.
Write to Max Colchester at max.colchester@wsj.com
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