RBS to pay first dividend in a decade

Shares in RBS moved ahead in early trading exchanges yesterday after the UK banking giant declared its first dividend in a decade.

The payout came despite the majority taxpayer-owned lender reporting a drop in bottom-line profits after being hit by a major settlement with US authorities over legacy issues.

The high street bank declared £888 million in attributable bottom-line profits for the half year to June 30, down from £939m a year earlier.

The return was hit by £801m in litigation and conduct costs over the period, helping to cover a £3.7 billion settlement reached with the US Department of Justice (DoJ) earlier this year over claims it mis-sold mortgages in the run-up to the financial crisis.

Total income over the period dropped from £6.9bn to £6.7bn.

The DoJ settlement opened the doors to a first dividend in 10 years.

The interim dividend will be 2p per share, though the timing of the payout is subject to the finalisation of its US settlement.

“We are pleased with the progress we’ve made in the first half of 2018 and see these as a good set of results in a more uncertain and highly-competitive environment,” RBS chief executive Ross McEwan said.

“We are also pleased to announce an intention to pay our first dividend in 10 years, subject to a final settlement with the DoJ.

“Our sector is undergoing significant change and we are positioning ourselves well to compete.

“We still have a lot more to do to achieve our ambition of being the best bank for customers in the UK and Republic of Ireland.

“However, with our major legacy issues largely behind us, we are able to fully focus on closing this gap.”

RBS shares were one of the best performers on the FTSE 100 in morning trading, rising more than 2.6%.

The bank has been under pressure over ongoing branch closures, including in several communities across Tayside and Fife.

Mr McEwan said there may still be scope for further this year, after announcing it would shut 162 branches across England and Wales earlier this year.

That was on top of 259 separate closures announced last autumn.

“The only piece that we haven’t concluded is what was going to be the Williams and Glyn branch network and we’re just working through that at the moment ... and we’re looking to have that concluded by the year end,” Mr McEwan said.

The Williams and Glyn network was originally meant to be sold off as part of competition responsibilities linked to its £45bn government bailout during the financial crisis, but those plans were scrapped in favour of an alternative remedies fund meant to boost competition in the UK banking sector.

RBS shares closed up 7.70p at 257.80.

Picture: PA. RBS chief executive Ross McEwan.