Royal Bank of Scotland has reported a profit of £792m for the first three months of the year, up from £259m for the same quarter last year. The rise is partly thanks to a fall in restructuring costs, and a drop in conduct and litigation costs.
Running costs at the bank, which is 72% state-owned, are also falling as it continues its plan to shrink in size. The quarterly profit follows on from RBS’s first annual profit in 10 years, reported in February.
The profit figure was well above estimates. RBS did not set aside any more money to cover costs for payment protection insurance (PPI) mis-selling claims.
The bank still has the threat of a major fine for mis-selling mortgages in the US in the run-up to the credit crisis hanging over it.
The fine could come any time this year, and estimates of its size vary wildly, between $1bn-$9bn.
The bank has already made provisions for the fine of £3bn. Once this is out of the way RBS is expected to return to paying dividends.
The bank’s chief executive, Ross McEwan, said: “This is a good set of results, showing the progress we are making, despite a more competitive market. Our income is up, costs are down and our capital has strengthened again.”
RBS’s “buffer” of capital – a key measure of any bank’s strength – is 16.4%, well above its target of 13% and a level which should mean it can withstand any fine from the US Department of Justice for mortgage mis-selling.
RBS has been under the spotlight in recent months over the conduct of its specialist recovery division, the Global Restructuring Group (GRG), which operated between 2005 and 2013.
The GRG was marketed as an expert service that could save a business, but according to an official report, it mistreated thousands of small firms.
Richard Hunter, head of markets at Interactive Investor, said: “RBS continues to move away from its previous existence as something of a financial basket case, although the journey is far from over.
“There remain three major hurdles to be cleared in the form of settlement of the US legacy issues once and for all, the removal of the UK government stake and the resumption of the dividend.”