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RBS 'on track' with £392m profit in third-quarter

RBS 'on track' with £392m profit in third-quarter

However, RBS warned that it faces rising misconduct costs and provisions in relation to the mis-selling of mortgage backed securities in the United States between 2008 and 2013.

The bank said that profit for the three months ended September 30 rose to 871 million pounds ($1.15 billion) from GBP255 million in the year-earlier period, while net interest income rose to GBP2.30 billion from GBP2.17 billion in 2016.

RBS has already set aside more than half of that figure as a provision for it.

Talking about how pleasantly surprised he was at the resilience of the United Kingdom economy, RBS chief executive Ross McEwan said today: "Our strategy to deliver a simpler, safer, customer-focused bank is working". Despite the threat of USA fines and the difficulties of Brexit, the shares have soared 25% this year as banks have rallied at the prospect of rising interest rates. "We remain optimistic on that", he told reporters.

'The fact the bank has said it expects to be profitable next year suggests RBS is bracing for a pretty imminent rap on the knuckles'.

It relates to claims that RBS mis-sold mortgage bonds leading up to the 2008 banking crisis.

He added that the bank is on track to hit its financial targets, which include a return to profit in 2018 after more than a decade of losses.

"RBS has zero tolerance for market misconduct", the bank said in a statement".

RBS reduced costs by £708m over the year to date, putting it on track to hit its target of £750m of cuts for the year.

Earlier this week, the financial regulator, the Financial Conduct Authority, said it might take "further action" over the way RBS mistreated some small business customers.

But analysts, warned this might not last if any of the bank's legacy conduct issues derail its progress.

Profit fell in RBS's investment banking unit Natwest Markets, in line with its USA and British peers that have reported weak trading revenues for the third quarter.

The report outlined numerous failings and the FCA said it was investigating further, raising the possibility of further official action over an issue McEwan had hoped to settle via a 400 million pound compensation scheme.



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