RBS posts 1st annual profit in 10 years

london — State-rescued Royal Bank of Scotland on Friday announced its first annual post-tax profit since 2007, or the eve of the global financial crisis, following a huge drop in litigation costs.

RBS, saved a decade ago by the UK government in the world’s biggest banking bailout, posted a net profit of £752 million ($1.05 billion, €853 million) in 2017 following nine straight annual losses, the Edinburgh-based lender said in a statement.

“I am pleased to report to shareholders that... for the first time in 10 years we have delivered a bottom-line profit,” chief executive Ross McEwan said in the earnings release.

“We still have more to do on cost reduction, however this reflects the progress we have made in making the bank more efficient,” he added.

The return to profit comes after RBS suffered a net loss of £7.0 billion in 2016 on massive litigation and restructuring costs. The bank had been hit by litigation and conduct costs of almost £5.9 billion in 2016, largely over its role in the 2008 US subprime housing crisis. Its litigation bill for 2017 was vastly reduced to around £1.3 billion, although with the bank facing a further massive fine ahead of its return to the private sector, its share price was sent sliding on Friday.

“Two very big shadows still loom over RBS,” Laith Khalaf, senior analyst at stockbroker Hargreaves Lansdown, said following the results update.

“One is the impending fine from the US Department of Justice, which is going to take a big slice out of the bank’s 2018 profits. The other is the large taxpayer stake, which has to be sold off at some point.” —