Royal Bank of Scotland rebounds into profit

4th November 2011, Comments 0 comments

State-rescued Royal Bank of Scotland said on Friday it had rebounded into profit during the third quarter when falling bad debts offset plunging income at its investment division.

Profit after tax hit £1.226 billion ($1.96 billion, 1.42 billion euros) in the three months to September 30, compared with a net loss of £1.146 in the same part of 2010, RBS said in a results statement.

Bad debt charges were cut to £1.536 billion from £1.953 billion.

RBS wrote off another £142 million in the value of Greek government sovereign bonds but stressed it faced little exposure to the eurozone's other periphery nations, such as Ireland and Portugal.

"RBS's third quarter results show the improved strength and resilience we have built up since 2008," chief executive Stephen Hester said in the earnings release.

"They also highlight the external pressures facing banks, and economies more broadly, which are making the road to recovery longer and bumpier than hoped for."

The British government owns 83 percent of RBS following a huge state bail-out that was triggered by the 2008 global financial crisis.

The bank added on Friday that pre-tax profits stood at £2.0 billion in the third quarter, which compared with a loss of £1.6 billion last time around. Revenues sank 18 percent to £6.358 billion.

Income at the bank's investment division, Global Banking and Markets, dived 29 percent to £1.1 billion on market turbulence and heightened recession fears.

The group has axed thousands of jobs since October 2008 when it was rescued by the British taxpayer.

The bank added on Friday that it was mulling more cost-cutting initiatives amid difficult trading conditions and the struggling economy.

"Given the economic outlook and difficult trading environment, we are actively working on further cost initiatives across the group," RBS said in its statement.

The group's share price rose 4.4 percent at 23.46 pence on London's FTSE 100 index, which added 0.52 percent in value.

"The bank remains a work in progress, but is making some headway amidst turbulent conditions," said Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers.

The Edinburgh-based lender was ravaged by the 2008 global credit crunch and the takeover of Dutch giant ABN Amro at the top of the market in 2007.

© 2011 AFP

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