We don’t support this browser anymore.
This means our website may not look and work as you would expect. Read more about browsers and how to update them here.

Skip to main content
  • Register
  • Help
  • Contact us

Royal Bank of Scotland - Profits jump but loan growth struggles

Nicholas Hyett | 27 April 2018 | A A A
Royal Bank of Scotland - Profits jump but loan growth struggles

No recommendation

No news or research item is a personal recommendation to deal. All investments can fall as well as rise in value so you could get back less than you invest.

NatWest Group plc Ord GBP1

Sell: 260.10 | Buy: 260.30 | Change -1.50 (-0.57%)
Chart View factsheet

Market closed | Prices delayed by at least 15 minutes | Switch to live prices

First quarter underlying profits hit £792m, up 206% on the same period last year, as income rose 2.8% and costs excluding conduct charges fell 2.1%.

However, income growth was driven by an 18% increase in the more volatile fee and trading income, offsetting a small decline in net interest income.

The shares fell 1.5% in early trading.

View the latest share price and how to deal

Our View

HL View to follow.

Register for updates on Royal Bank of Scotland

First Quarter Results

Total loans to customers fell slightly and Net Interest Margin (the difference between what the bank pays to borrow and charges when it lends) was broadly flat. RBS has seen significant competitive pressure in the mortgage market, which has negatively impacted lending rates and mortgage volumes.

Operating costs, excluding conduct and litigation costs, were £39m lower as the bank becomes increasingly digital. Branch visits declined 7% versus last year, and the group saw a 21% increase in customers regularly using its banking app. The group now makes 55% of its personal unsecured loans through digital channels. The combination of lower costs and higher income mean the bank's cost to income ratio improved to 60.5%.

Bad loans increased to £78m, but remain relatively low.

RBS' CET1 ratio (a standard measure of a bank's capital) improved 0.5 percentage points to 16.4%.

Find out more about Royal Bank of Scotland shares including how to invest

Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by Thomson Reuters. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.

This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Non-independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing. Please see our full non-independent research for more information.

More share research