RBS Royal Bank of Scotland Group PLC

By Adria Calatayud and Sabela Ojea

Royal Bank of Scotland Group PLC said Friday that operating pretax profit nearly halved in the first quarter as impairments against bad loans soared during the coronavirus pandemic, and warned of uncertainty over its outlook for the full year and medium term.

Operating pretax profit was 519 million pounds ($649.8 million) in the first three months of the year compared with GBP1.01 billion in the year-earlier period, the U.K. lender said. The bank was hit by increased impairment charges of GBP802 million due to the effects of the pandemic, compared with impairment losses of GBP86 million a year before.

Net profit fell to GBP288 million in the quarter from GBP707 million a year earlier.

RBS, which plans to rename itself as NatWest Group later this year, said total income for the quarter rose to GBP3.16 billion from GBP3.04 billion.

Analysts forecasted a quarterly operating pretax profit of GBP415 million and total income of GBP2.84 billion, according to a consensus compiled by the bank. RBS was expected to take an impairment charge of GBP515 million in the quarter, according to a consensus provided by the bank, with estimates ranging from GBP204 million to GBP888 million.

The bank's common equity Tier 1 ratio--a key measure of balance-sheet strength--stood at 16.6% at the end of the first quarter compared with 16.2% at the end of 2019.

RBS said its outlook for the rest of the year is now subject to significant uncertainty, with the current environment making achieving its cost-reduction target more challenging. The bank said it would be inappropriate to provide an update on medium-term outlook at this time in light of significant deterioration in economic outlook and unprecedented levels of uncertainty.

Write to Adria Calatayud at adria.calatayud@dowjones.com and to Sabela Ojea at sabela.ojea@wsj.com; @sabelaojeaguix

(END) Dow Jones Newswires

May 01, 2020 02:39 ET (06:39 GMT)

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