RBS Q1 Loss Widens

(RTTNews) - Royal Bank of Scotland Group PLC (RBS, RBS.L) reported that its loss attributable to Ordinary shareholders for the first-quarter widened to 968 million pounds from the prior year's 459 million pounds, with loss per share widening to 8.3 pence from 4.0 pence last year.

RBS made a payment of 4.2 billion pounds during March to The Royal Bank of Scotland Group Pension Fund, being an accelerated payment of existing committed future contributions. The impact of the 4.2 billion pounds accelerated payment was largely reflected in the year end financial statements; the incremental impact of the accelerated payment being made during March was to reduce the CET1 ratio by around 30 basis points.

Excluding the final Dividend Access Share dividend of 1.193 billion pounds, the Bank made an attributable profit of 225 million pounds notwithstanding IFRS volatility losses of 356 million pounds, restructuring costs of 238 million pounds and an impairment charge of 223 million pounds largely related to its shipping portfolio. An own credit adjustment gain of 256 million pounds was recorded in the first-quarter of 2016.

Operating profit was 421 million pounds compared with 37 million pounds in the previous year. Adjusted operating profit of 440 million pounds in Q1 2016 was down from 1.355 billion pounds in the prior year primarily due to Capital Resolution and the IFRS volatility charge.

Net interest income was 2.156 billion pounds, down 2% from 2.203 billion pounds in the first-quarter 2015 principally driven by a 45% reduction in Capital Resolution to 86 million pounds in line with the planned shrinkage of the balance sheet. Partially offsetting, Commercial Banking net interest income increased £54 million, or 11%, to 536 million pounds reflecting increased asset volumes.

Non-interest income was 908 million pounds, a reduction of 31%, compared with 1.316 billion pounds last year The reduction principally reflects a 234 million pounds fall in Capital Resolution due to planned asset disposals. Partially offsetting, strategic disposal losses were 135 million pounds in Q1 2015, largely in respect of International Private Banking.

RBS continues to deliver on its plan to build a strong, simple and fair bank for both customers and shareholders, and remains committed to delivering its 2016 targets.

Income was broadly stable compared with Q1 2015 across core Personal & Business Banking (PBB) and Commercial & Private Banking (CPB) franchises.

RBS remains committed to achieving all its priority targets for 2016. CET1 ratio remains ahead of its 13% target.

RBS said it remain on track to reduce RWAs by 19 billion pounds in Capital Resolution to around 30 billion pounds by the end of 2016.

RBS continues to plan to issue 2 billion pounds AT1 capital notes in 2016, subject to market conditions, which will provide further balance sheet resilience.

RBS expect PBB and CPB income to be broadly stable in 2016 compared with 2015 as strong planned balance sheet growth, particularly in mortgages but also in core commercial lending, is balanced by headwinds from low interest rates and the uncertain macroeconomic environment.

RBS said it remains on track to achieve an 800 million pounds cost reduction in 2016 after achieving a £189 million reduction in the first quarter.

Restructuring costs are expected to remain high in 2016, totalling over 1 billion pounds.