RBS sees profit challenge ahead amid Brexit uncertainty
Royal Bank of Scotland (RBS) has warned continued Brexit uncertainty is “likely” to make income growth more challenging for the bank.
The part-nationalised lender used its first quarter results, which showed a fall in profits, to say that while it was maintaining its outlook for 2019 it was particularly concerned about delays in business borrowing decisions.
A collapse in business investment because of Brexit fog has been cited as a major drag on the economy – now set to be extended until up to 31 October following the UK’s failure to secure domestic agreement on a withdrawal deal.
RBS reported a 16% decline in operating profit before tax to just above £1bn from £1.2bn in the same period last year.
Attributable profit before tax, which reflects one-off costs, came in at £707m. That was a fall of 12%.
The bank said that in addition to corporate caution on Brexit, it was also stung by stiffer competition in the mortgage market.
However, it pointed to £45m of cost savings in the period helping to offset those pressures and said it was on track to meet its target of £300m over the year.
Shares fell more than 4% in early trading.
RBS updated investors on its performance 24 hours after it was revealed that its chief executive since 2013, Ross McEwan, was to leave the bank within the next 12 months.
He said it was the right time to leave despite the lender remaining more than 62%-owned by the taxpayer following its £45bn bailout at the height of the financial crisis.
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Commenting on the financial figures, Mr McEwan said: “This is a solid set of results set against a highly uncertain and competitive backdrop.
“We continue to support our customers through this Brexit uncertainty while investing and innovating in digital services to meet rapidly changing customer needs.”
It is not the first time RBS has warned over Brexit fog and the potential affects on its business.
Back in October, the bank set aside £100m to reflect what it called then a “more uncertain economic outlook”.
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