UK-backed RBS posts €2.3bn third quarter profit
UK taxpayer-backed Royal Bank of Scotland reported a return to profit in the third quarter as it slashed its bad debts and offset a plunge in income at its under-pressure investment arm.
RBS, which is 83pc state-owned, posted pre-tax profits of £2bn (€2.3bn) in the three months to September 30, compared to a £678m loss in the previous quarter and a £1.6bn loss the previous year.
Stock market turbulence, driven by increased global recession fears, saw income at investment arm Global Banking and Markets (GBM) fall 29pc to £1.1bn in the period, RBS said.
However retail banking revenues held at £4.1bn and bad debt charges were cut to £1,5bn, down £728m on the previous quarter, which was hit by Irish land values.
Stephen Hester, RBS chief executive, said the results "highlight the external pressures facing banks, and economies more broadly, which are making the road to recovery longer and bumpier than hoped for".
Shares in the bank were up nearly 3pc after the update.
RBS said it has now reached the halfway point of its five-year recovery plan adopted in 2009 and has met or exceeded all targets to date.
But Mr Hester warned there would be further cost cutting, including an undisclosed number of job losses, as the bank expected to implement the proposals put forward by the Independent Commission on Banking (ICB), which include ringfencing its retail operations from its investment arm.
The regulatory changes, combined with the weak outlook for economic growth, will lead to increased focus on its retail division and will require further cost savings, Mr Hester warned.