LONDON – Royal Bank of Scotland says its net loss widened in the first quarter as the taxpayer-owned bank made its final 1.2 billion-pound ($1.7 billion) payment to the U.K. Treasury as part of a deal to give the government first crack at any profits.
The bank, which is 73-per cent taxpayer-owned, on Friday reported a net loss of 968 million pounds, compared with 459 million pounds in the first quarter of 2015. Excluding the payment to the government, RBS posted a profit of 225 million pounds.
Operating profit increased more than 10-fold to 421 million pounds as the bank cut operating expenses and reduced restructuring costs.
“Today’s results show the strength and resilience of the bank we are fast becoming,” CEO Ross McEwan said. “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.”
Once the world’s largest bank, RBS was bailed out during the 2008 financial crisis and has been posting annual losses ever since.
The report comes a day after RBS warned of a greater-than-expected cost from plans to spin-off its Williams & Glyn arm. The bank also revealed it may not meet its deadline to separate the 316-branch Williams & Glyn business by the end of 2017.
The disposal is mandated by EU rules on state aid that governed the bailout, but it is proving more complex than previously thought.
“The process which has been described as akin to unscrambling an omelette is proving to be a significant distraction at a time when banks are cutting costs and closing branches on an ongoing basis,” said Michael Hewson, the chief market analyst at CMC Markets. “Aside from splitting out the branches, how do you decide what customers and business to push under the Williams and Glyn’s brand and which ones not to?”