Reported operating profits are back in the black at RBS, the first time in a decade. That's largely thanks to a huge fall in conduct charges.
Underlying operating profits are up 31% to £4.8bn. However, performance slipped slightly in the fourth quarter, with total income below both Q3 and the same period last year and an operating loss of £583m as conduct costs spiked.
The major US Department of Justice fine remains unresolved.
The shares fell 4.3% in early trading.
Deep in RBS there's a decent bank trying to get out.
Stripping the bank back to a few core businesses has proven time consuming and expensive. But the end is finally in sight.
The troublesome capital resolution 'bad-bank' has been wrapped up, freeing reserves and bolstering the bank's capitalisation.
Costs are coming down, and loans to customers continue to grow. Record low interest rates and a competitive mortgage market are hampering net interest margins (the difference between what the bank pays out on deposits and charges on loans), but also means bad debts have stayed low.
After 9 years of losses the bank proved profitable in 2017 (unexpectedly), but that's not as good as it might sound. The bank had been expected to put its historic misdemeanours to bed this year, but has proven unable to do so.
The bank still faces a potentially huge fine from the US Department of Justice for mis-selling US residential mortgage backed security (RMBS). Exactly how big the final bill will be remains to be seen, but we'd hoped to get some indication in 2017.
The other elephant in the room is the government's 70% shareholding. When the bank's over the short term hurdles that will have to be unwound, and it's difficult to see how that can be achieved without holding back the share price.
Getting RBS back on the right path is a marathon task. The bank has run the first half surprisingly well, but there's still no guarantee it won't 'hit the wall'. As the group said at the half year stage, "the timing of dividends or buybacks remains uncertain."
Full Year Results
Total income rose by 4.3% in 2017 to £13.1bn.
This reflects a 5.7% increase in interest earning assets to £422bn, partially offset by a slight decline in net interest margin (the difference between what the bank pays on deposits and charges on loans) to 2.13%.
NatWest Markets was the only one of the major division to post an operating loss for the full year, although at £1.2bn this was still an improvement on the previous year.
Operating costs fell by 35.8% to £10.4bn. Although lower conduct costs accounted for the majority of this fall the group also reduced staff costs by 9%.
Together these drove a significant improvement in RBS' underlying cost to income ratio, which fell 7.8 percentage points to 58.2%.
The groups CET1 ratio, a measure of banking capitalisation, rose 0.25 percentage points to 15.9%.
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