(qlmbusinessnews.com via telegraph.co.uk – – Fri, 15th Feb 2019) London, Uk – –
Royal Bank of Scotland has reported its second successive year of profits and a higher than expected dividend, resulting in a near £1bn windfall for the taxpayer.
The lender, still 62% owned by the Government, said annual pre-tax profits more than doubled to £1.62bn, while pre-tax operating profit rose 50% to £3.4bn.
It marks the bank's second year in the black following a decade-long run of stinging losses, during a period marred by crisis-era legacy and conduct charges.
The Government will also pocket £977m as RBS paid only the second dividend since its £45bn bailout a decade ago.
The cash will be given to UK Government Investments, which manages the taxpayer's stake in the lender.
The bank on Friday paid out a 3.5p final dividend and a 7.5p special dividend, taking the total to 13p – 60pc higher than expected. It will return a total of £1.6bn to shareholders in the year.
Chief executive Ross McEwan said: “This is a good performance in the face of economic and political uncertainty, with bottom line profits more than double what we achieved the previous year.
“We are also announcing an intention to pay back more capital to shareholders and almost £1bn is set to be returned to UK taxpayers for 2018.
“With strong capital and liquidity levels, we are well positioned to support the UK economy. Our total lending to business and commercial customers reached over £100bn at the end of 2018.”
RBS begun paying dividends since August, when it reached a $4.9bn (£3.7bn) settlement with US authorities over claims that it mis-sold mortgages in the run-up to the financial crisis.
Friday's figures take into account conduct and litigation costs of £1.28bn.
The RBS annual report, published alongside the results, showed that Mr McEwan's total pay package rose by £100,000 to £3.6m last year. Bonuses to staff will total £335m.
Accounts show that RBS stripped out £278m in costs last year, and aims to slash another £300m this year.
The stellar figures will prompt the Government to consider when to recommence the next round of share sales.
Last week the lender gained shareholder approval that allows it to buy back up to £1.5bn worth of shares from the Treasury.
The move, which aims to speed up its privatisation and deploy excess capital, permits RBS to purchase up to 4.99% of the Government's stake in any one year.
RBS has been majority taxpayer owned since 2008, when it received a £45bn bailout at the height of the financial crisis.
The Treasury plans to sell its stake by 2024 but is expected to lose billions in the process.
The bank's shares have rallied since December and rose 1pc to 244p on Friday, but that remains less than half the bailout price of 502p a share.
By Associated Press