Royal Bank of Scotland Warns on Cost Targets Despite Rising Profit
15 February 2019 - 6:56PM
Dow Jones News
By Adam Clark
Royal Bank of Scotland Group PLC (RBS.LN) said Friday that its
2018 profit rose sharply and it will pay a special dividend but
warned that Brexit uncertainty is putting its medium-term cost
targets at risk.
For the fourth quarter, RBS made a pretax profit of 572 million
pounds ($733.5 million) and a net profit of GBP286 million.
The quarterly performance contributed to an annual pretax profit
of GBP3.36 billion and a net profit of GBP1.62 billion. Analysts
had forecast an annual net profit of GBP1.42 billion, according to
company-compiled consensus.
Total income for the year came to GBP13.40 billion, largely in
line with analyst forecasts. The lender's net interest margin, the
difference between the money it earns on lending and pays out on
deposits, stood at 1.98%, down 15 basis points from the prior
year.
RBS said it expects an increase in impairments in 2019 and will
cut its operating costs by GBP300 million. However, the lender said
its 2020 target of a cost-to-income ratio of less than 50% is
"increasingly challenging" amid ongoing economic certainty and
costs associated with Brexit. RBS ended 2018 with a cost-to-income
ratio of 71.7%.
The bank declared a final dividend of 3.5 pence a share, and a
special dividend of 7.5 pence a share. RBS's common equity Tier 1
capital ratio --a measure of a bank's financial strength-- stood at
16.2% at the end of 2018.
Write to Adam Clark at adam.clark@dowjones.com
(END) Dow Jones Newswires
February 15, 2019 02:41 ET (07:41 GMT)
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