RBS issues stark warning over Brexit despite doubling of profits

The Royal Bank of Scotland has warned that a ‘cooling off’ in the economy relating to Brexit will soon be felt by the company, even as it posted strong figures for 2018.

Royal Bank of Scotland boss Ross McEwan. Picture: TSPL
Royal Bank of Scotland boss Ross McEwan. Picture: TSPL

The banking giant, which is still around two-thirds owned by the Government, saw bottom line profits more than double from £752 million last year to £1.62 billion, a 116% increase.

Full year pre-tax operating profit rose 50% to £3.4 billion.

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Royal Bank of Scotland profits rise as lender issues special dividend

The Treasury will also pocket £977 million as RBS coughed up its second dividend since its £45 billion bailout a decade ago.

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Chief executive Ross McEwan said: “This is a good performance in the face of economic and political uncertainty, with bottom line profits more than double what we achieved the previous year.

“We are also announcing an intention to pay back more capital to shareholders and almost £1 billion is set to be returned to UK taxpayers for 2018.

“With strong capital and liquidity levels, we are well positioned to support the UK economy.”

Mr McEwan warned that “political uncertainty around Brexit has gone on far too long”, adding that the bank’s corporate clients are pausing investment and this will have an impact on income over the next two years.

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His comments chime with official data showing that Brexit is damaging the economy.

“The economy is cooling off and we are starting to feel it,” the chief executive added.

In October, RBS set aside £100 million to reflect the “more uncertain economic outlook” in Britain ahead of March 29. It has also set up operations in Amsterdam and Frankfurt to serve EU clients.

While overseeing the bank’s turnaround, Mr McEwan has embarked on a swingeing bank closure programme but confirmed that no further branch closures are planned in 2019 or 2020.

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Mr McEwan’s total pay package rose from £3.5 million to £3.6 million in 2018.

The bank also confirmed that it will dish out £335 million in bonuses to staff.