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UK bank RBS sees Brexit, competition hit profit
LONDON, April 26, 2019 (BSS/AFP) – Britain’s state-rescued Royal Bank of
Scotland said Friday that first-quarter net profits sank 12.5 percent, hit by
fierce competition in the home loans market and ongoing Brexit uncertainty.
Profit after tax slid to o707 million ($912 million, 818 million euros) in
the first three months of 2019, down from o808 million a year earlier, RBS
said in a statement issued one day after chief executive Ross McEwan’s
resignation was announced.
RBS said its performance was dented by a “continued competitive mortgage
market,” while lingering Brexit uncertainty persuaded many businesses to rein
in spending.
RBS warned that Brexit would make its performance “challenging” in the
coming months.
On a more upbeat note, operating profit before tax totalled o1.01 billion.
That was down from o1.2 billion a year earlier — but beat an average analyst
forecast provided by the bank of o900 million.
“While we retain the outlook guidance… we recognise that the ongoing
impact of Brexit uncertainty on the economy, and associated delay in business
borrowing decisions, is likely to make income growth more challenging in the
near term,” RBS said.
Chairman Howard Davies had already warned Thursday at the lender’s annual
general meeting that worries over Britain’s EU departure would weigh on both
economic growth and the bank’s performance.
RBS also said Thursday that McEwan will step down after having steered it
to a strong financial position over the last five-and-a-half years.
“This is a solid set of results set against a highly uncertain and
competitive backdrop,” McEwan said on Friday.
“We continue to support our customers through this Brexit uncertainty
while investing and innovating in digital services to meet rapidly changing
customer needs.”
The Edinburgh-based lender is still 62.4-percent government-owned after
its bailout at the height of the global financial crisis.
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The first-quarter earnings drop comes after RBS had revealed in February
that it enjoyed its second successive year of profit in 2018.
New Zealander McEwan has been at the helm since 2013 and helped guide the
financial services giant to a steady recovery through a drastic restructuring
after the dramatic bailout during the 2008 financial meltdown.
The 61-year-old has a 12-month notice period and will remain in the
position until a successor has been appointed.
The group was saved at the height of the financial crisis with o45.5
billion of taxpayers’ cash in what was the world’s biggest banking bailout.
McEwan has overseen a massive overhaul of operations, slashing the
lender’s investment banking activities and axing tens of thousands of jobs.
In total, RBS has suffered net losses of about o60 billion since the state
rescue.
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