RBS goes back to black with £939m profit as it unveils plans to move to Amsterdam post-Brexit

Emma Haslett
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Royal Bank of Scotland Report Biggest Annual Loss For 2013
The lender said it can be profitable in 2018 (Source: Getty)

What a difference a year can make. Shares in RBS rose today after it said it had swung into profit its first half, up from a multi-billion pound loss in the first half of last year - as it revealed the location of its post-Brexit European headquarters.

The figures

Attributable profit rose to £939m in the six months to the end of June, up from a £2bn loss in the first half of last year. It was the second quarter of profits - having made a £259m profit in the three months to the end of March, it pushed that up to £680m in the three months to the end of June - against expectations of a £343m profit.

Litigation costs hit £396m in the first half, down from £1.3bn last year, although £342m of that charge came in the second quarter of the year, which included a £151m charge associated with a US settlement over mortgage mis-selling, and a a £25m charge over its 2008 rights issue.

Shares rose 3.4 per cent to 265p in early trading.

Why it's interesting

Could this finally be the year RBS reports an annual profit? The lender, which is still 71 per cent owned by the taxpayer, hasn't managed it since 2007 - but today it said it thinks it can do it in 2018.

It is still being hammered by legal costs, though: as well as that US mortgage mis-selling settlement, which totals $5.5bn (£4.2bn), it is also still contending with the scandal surrounding its treatment of small businesses, after it was accused of moving them into its Global Restructuring Group (GRG) while they were still solvent. As recently as June, one real estate group won the right to take its case to the Court of Appeal.

There's more: yesterday another real estate company, CGL Group, said it was planning to take its case over the mis-selling of interest rate swaps to the Supreme Court. If it wins, lawyers suggest it could unlock hundreds more claims against RBS.

Until it resolves that myriad legal problems, it's unlikely the bank will be returned to public hands.

Meanwhile, the lender revealed it had picked Amsterdam for its European headquarters, with chief financial officer Ewen Stevenson telling Bloomberg TV it was in "advanced discussions" to set up a "small European headquarters" there. However, "no more than about 150 people" will move.

What RBS said

We retain the 2017 full year financial guidance and medium term financial outlook we provided in the 2016 annual results document. In addition, and subject to providing substantially for remaining significant legacy issues in 2017, our expectation remains that we will be profitable in 2018.

Read more: Government RBS sale "was value for money" - despite taxpayers losing £1.9bn

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