The Royal Bank of Scotland (RBS) has today (25 July) announced in an interim statement it expects pre-tax profits of £2.65bn for H1 2014, the largest since its taxpayer bailout in 2008.
In an early release, RBS has posted a 93% increase in pre-tax profits since the same period in 2013 (£1.37bn). It will release the finalised results on 1 August.
RBS’ £2.6bn operating profit included £514m of restructuring costs (compared with £271m in H1 2013) and £250m of litigation and conduct costs. £150m was added to provisions for mis-sold PPI claims and £100m for interest rate swap redress provisions.
RBS also set aside a much lower than anticipated total for bad loans – down to £269m from £2.15bn.
As a result of the improved profit levels, RBS shares jumped 14% in early trading.
The bank stated the results are “expected to reflect better than anticipated operating performance, driven by more favourable credit conditions”.
Ross McEwan, chief executive of RBS, said the results are pleasing but warned there were still many challenges ahead.
McEwan said: “The results we are posting today show the steady progress we are making as we take the steps to be a much simpler, smaller and fairer bank. These results show that underneath all the noise and huge restructuring of recent years, RBS is a fundamentally stronger bank that can deliver good results for customers and shareholders.
“There is progress on all of our key priorities – capital is stronger, costs are lower and customer activity is gradually improving – although we have only just started with our programme to make it easier for customers to do more business with us.
“But let me sound a note of caution. We are actively managing down a slate of significant legacy issues. This includes significant conduct and litigation issues that will likely hit our profits going forward.
“I am pleased we have had two good quarters, but no one should get ahead of themselves here – there are bumps in the road ahead of us.”