RBS has beaten analysts’ expectations in its first quarter results, returning to profit in Q1.
The bank’s adjusted operating profit was £1.4bn compared to an analyst consensus of £942m, while its attributable profit minus one-off items was £259m, a turnaround from the £968m loss in Q1 2016, when the bank paid £1,193m to the UK government as a special preference dividend.
The UK retail arm and investment banking division, NatWest Markets, both reported strong performance.
Laith Khalaf, senior analyst at Hargreaves Lansdown, says while the UK retail bank is “chugging along quite nicely” a fine from the US could be costly for RBS.
“It’s too early to pop the champagne corks though, because the US Department of Justice is likely to play the role of party pooper at some point, by landing RBS with a massive fine. The ongoing saga of the Williams & Glyn separation is still rumbling on too, and whatever the conclusion, it could end up costing RBS more money. These longstanding problems aside, this could be the year when RBS finally starts to look a bit more like a swan, rather than an ugly duckling.”
He adds: “Three quarters of the bank is still owned by the Government though, and with the share price currently languishing at around half that paid during the bailout, it looks like the taxpayer is going to have to take a bath on this one. Unloading a 75 per cent stake in a business is never going to be easy, and that’s particularly the case when everybody knows you have to do it.”
The share price was up 1.7 per cent at 257.5 in early morning trading.