RBS returns to profit as Barclays’ results disappoint

BARCLAYS and RBS both reported bumps in profit for the opening months of the year yesterday, although shares in the two banks went in different directions.

Shares in Barclays closed down 5.2pc at 212.¼p despite its profits for the first quarter more than doubling, while shares in taxpayer-owned lender Royal Bank of Scotland rose by 4.7pc to 265.4p after it turned a quarterly profit for the first time since 2015.

The chief executives of both banks pointed to brighter days ahead, with RBS chief executive Ross McEwan in particular hoping this will be the lender’s “final year of substantive clean-up” as it moves on from its past.

For Barclays, the figures marked the first set of results since it emerged that its chief executive Jes Staley is being investigated for trying to unmask the identity of a whistleblower. He made no reference to the scandal in the bank’s results statement as he instead drew attention to “further good reason in this quarter’s performance to feel optimistic for our prospects”.

However, the UK bank did take a £884m write-down during the quarter on its African business, which it is in the process of trying to shed, and missed out on the bond boom enjoyed by its American rivals as it posted a 4pc drop in revenues in its trading division.

Mr Staley, who refused to comment on his own future during a results call, promised to hire an extra 1,000 staff in the UK this year as the bank edges to- wards the end of a wide-ranging restructuring programme that has seen it shift focus from a global outlook to a more transatlantic one.

The healthy start to the year at RBS, meanwhile, helped support chief executive Ross McEwan’s claim that the lender will finally return to an annual profit next year and marked a turnaround on a near £1bn loss posted in the first quarter of 2016.

In a nice surprise for its long-suffering investors, RBS beat the City’s expectations of a £50m profit forecast by posting a £259m gain for the quarter. The bank slumped to a £7bn loss last year, its ninth year of annual losses.

Its goal of turning a profit next year is reliant on RBS making progress with some of its biggest problems – namely a potential US fine for mis-selling residential mortgage-backed securities before the crisis and conforming to EU state aid commitments – as well as slicing £750m in costs, part of a wider aim to shave off £2bn by the end of 2020.

Chancellor Philip Hammond said just over a week ago that shares in the bank could be sold at a loss, noting that the Government needs to “live in the real world” when it comes to making a decision on its holding in the lender.

The Treasury has moved faster in cutting its holding in Lloyds Banking Group, with the Government yesterday reducing the taxpayer’s stake to less than 1pc as it hopes to exit its holding completely in a matter of weeks. The Government took a 43pc stake in Lloyds as part of its bail-out during the financial crisis.