Is RBS finally recovering as a banking powerhouse?
By Joe Harker
Taxpayer-owned bank RBS has made a half-year profit for the first time in three years. Ross McEwan, CEO of RBS, has said that the bank is now "completely different" to when it was bailed out in 2008.
The bank has posted six month profits of £939 million, whereas they lost £2 billion over the same period in the last year. RBS is still more than 70 per cent owned by the taxpayer after being bailed out, though the share price is around 261p per share, significantly lower than the average sum of 502p that the government paid back in 2008.
RBS CEO Ross McEwan said: "We're doing what we said we would at our full-year results in February - growing income, reducing cost and improving returns for shareholders, while also starting to deliver a better service for customers.
"We see the first six months of this year as proof of the investment case for this bank: our path to sustainable profitability is becoming clearer and closer and we have resolved some of the most significant issues this bank faced."
RBS is also making contingency plans for Brexit, as it intends to establish a European office in Amsterdam. This would see around 150 jobs moved to the Dutch capital and ensure that the bank has a presence in the European Union after the Brexit negotiations are completed. RBS are in talks with the Dutch Central Bank to use their licences to conduct business in Europe.
The Daily Express reports that RBS is facing a problem with litigation costs, having to spend several billion since the bailout and recently agreeing a £4.2 billion settlement in the US. Neil Wilson, senior market analyst at ETX Capital, said: "RBS swung back to a pretty healthy profit in the first half. Cost-cutting is doing the job, while fewer conduct charges is helping a lot.
"A looming fine for mis-selling mortgage-backed securities in the US casts a long shadow but the omens are looking a lot more promising for a return to private ownership. Based on these figures, the return to genuine sustained profitability in 2018 appears a lot more realistic."
Will RBS make it a profitable year for the first time since 2007, or does the taxpayer owned bank still have a long way to go?