Royal Bank of Scotland today reported a first-quarter pre-tax loss of £968 million – more than double last year’s figure of £459m.
The loss reflects the impact of its £1.2 billion payment last month to the Treasury to buy out a crucial part of its £45bn bailout.
The payment ended a dividend access share (DAS) agreement with the UK government that was put in place in 2009 and prevented it paying dividends to any shareholders before the Treasury.
Yesterday, Edinburgh-based RBS warned of a greater-than-expected hit from plans to spin off its Williams & Glyn arm.
The group, which is 73 per cent owned by the taxpayer, also said there was a “significant risk” that it would not meet the deadline to separate the business by the end of next year.
It is now looking at other ways to spin off Williams & Glyn, adding that the “overall financial impact on RBS is now likely to be significantly greater than previously estimated” due to complexities of separating the business.
RBS chief executive Ross McEwan today declined to say what other options RBS was considering if it could not meet the end-2017 deadline.
“I’m not going to go into this today,” he said. “Once we have investigated the alteratives, we will let the market know.”
He added: “As we go on, we find more and more things that push back the timeframes we are working to. Technology is the biggest piece we have to complete.”
When asked what would happen if the deadline for spinning off Williams & Glyn was missed, McEwen said: “If we don’t get there, we would have to have a conversation with HM Treasury, who have the relationship with the European Commission.”
Income fell from £3.5bn to £3bn following the sale of its Citizens business in the US and the decision to dramatically scale back its overseas and investment banking offering.
The bank said: “RBS remains on track with its plan to build a strong, simple, fair bank for customers and shareholders.”
Restructuring costs came in at £238m, with the group expecting this figure to grow to £1bn for the year.
McEwan said the streamlining of the bank continued, and that now 90 per cent of its income came from the UK and Republic of Ireland.
While he would not be drawn on whether RBS would make a bottom-line profit for 2016 as a whole, he said the strength of the business was “good”, evidenced by underlying quarterly profits running at a little under £1bn.
He added: “Today’s results show the strength and resilience of the bank we are fast becoming. This bank has great brands and great market positions and, piece by piece, we are building a solidly performing, profitable bank doing great things for customers and returning value for shareholders.
“One quarter in, capital remains strong, costs continue to fall, our customer scores are improving and we’re seeing growth in the businesses and the markets we like.”
McEwan said that the number of people using the bank for branch transactions had dropped radically, down 43 per cent since 2010 – a period during which digital transactions have leapt 400 per cent.
RBS’s lending to small businesses grew 15 per cent in the first quarter.
On the possible impact of a vote to leave the European Union in the 23 June referendum, McEwan said: “We’re not seeing a lot of behavioural change in the marketplace at this time [on the part of ordinary customers]. But a number of large corporates are just holding back on investment decisions for the next six to eight weeks. We have heard a little bit about that.”
When asked about the prospect for the resumption of dividend payments, chief financial officer Ewen Stevenson said: “We continue to caution on capital distribution. We will get there as soon as we can.”