United States settlement looms over RBS results

  • United States settlement looms over RBS results

United States settlement looms over RBS results

RBS's chief financial officer Ewen Stevenson said the bank's 2018 results would "in part depend on DoJ - we'll control what we can control". The stock has climbed 27 percent in the last 12 months.

The bank saw gross mortgage lending of £31bn in 2017, up from £29.8bn in 2016.

RBS, which was bailed out by the British government during the 2008 financial crisis, posted a 752 million pound ($1.1 billion) profit for 2017, a major turnaround from the almost 7 billion pound loss reported the year before.

Between 2008 and 2016, RBS posted consecutive losses amounting to £58.4bn, with a £7bn loss posted in 2016. The company had revenue of $4.06 billion during the quarter, compared to the consensus estimate of $3.97 billion. RBS has also been criticized by United Kingdom officials (pdf) for its treatment of struggling smaller businesses. The financial services provider reported $0.08 earnings per share (EPS) for the quarter.

Ross McEwan, CEO of RBS, said: "We have achieved profitability through delivering on the strategic plan that was set out in 2014".

Among the products will be improvements to Cora, an artificial intelligence (AI) chatbot that RBS built in conjunction with IBM.

However, McEwan hailed the bank's restructuring into a "simpler, safer and more customer-focused bank".

"The bank's capital position has improved again, though the prospect of a dividend still hinges on the final settlement with U.S. authorities".

"And with many of our legacy issues behind us, the investment case for this bank is much clearer and the prospect of returning any excess capital to shareholders is getting closer".

The bank recorded a net profit of £752 million ($1.05 billion) for 2017, surpassing analyst forecasts for a figure of £592 million. "Two very big shadows still loom over RBS".

Another issue still hanging over the bank is a multi-billion dollar case with the U.S. Department of Justice over RBS's sales of toxic mortgage-backed securities. "The other is the large taxpayer stake, which has to be sold off at some point".

The company also faces restructuring charges of £2.5bn over the next two years, against previous guidance for just £1bn.

RBS reported £764m provision in Q4 2017 for litigation costs, which included £442m placed towards USA mortgage suits, and £175m towards United Kingdom payment protection insurance mis-selling.

The bank is hoping to rebuild its reputation after a series of scandals, including the revelation that it deliberately mistreated thousands of struggling small business customers that came to it for financial assistance in the wake of the banking crisis.