Royal Bank of Scotland reports rise in 2nd quarter profits

Staff Writer
Columbus CEO

LONDON (AP) — Second-quarter profit at taxpayer-owned Royal Bank of Scotland rose 27 percent, it announced Thursday, but warned the cost of past scandals may continue to weigh on earnings.

Net income for the period advanced to 293 million pounds ($458 million) from 230 million pounds a year earlier as the value of RBS's stake in U.S.-based Citizens Bank increased.

Bailed out by the British government at the height of the financial crisis in 2008, RBS is struggling to put the excesses of the past behind it, including an ill-fated global expansion drive that briefly made it the world's largest bank. The government in June said that it plans to sell part of its 80 percent stake in coming months.

Chairman Philip Hampton said Thursday that the RBS of today is very different from the bank of 2009.

"It has a greater focus on the quality of earnings and the control of risks," he said.

But the process of cleaning up past mistakes continues.

RBS reported a charge of 459 million pounds for conduct and litigation costs during the second quarter, most of it related to mortgage-backed securities in the U.S. Restructuring costs increased to 1.05 billion pounds as RBS streamlines its corporate and investment banking business and prepares to sell its Williams & Glyn unit.

Chief Executive Ross McEwan warned of further charges for past scandals.

"I'll not rest until these charges are behind us," he said.

Further job cuts are also possible as RBS accelerates its restructuring, the bank said.

Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said "a number of clouds remain" for RBS.

"Not least of which are the costs arising from litigation and conduct fines, the continuing unwelcome government stake and a sharp hike in restructuring costs given the accelerated program the bank is undertaking," he said.