Back in black

RBS on course for first year of profit since bail-out with US fine now likely to be delayed

ROYAL Bank of Scotland is on course for its first full-year profit since its £45bn state bailout at the height of the financial crisis after posting a third successive quarter of profits.

The high street lender, which mainly trades as Natwest in England and Wales, posted £392m in profits for the third quarter ending Sept 30 and £1.33bn for the year to date.

It would be a watershed moment for the taxpayer-controlled bank if it returned to the black this year and would increase pressure on the Government to sell part of its 72pc stake.

RBS has consistently warned that it does not expect to return to full-year profit until 2018 as it awaits a hefty fine in the US for its role in selling subprime mortgages before the financial crisis, expected to come in at around £6bn or higher. But with the US’S Department of Justice (DOJ) reportedly in disarray, the chances of the fine landing this year are receding.

When asked if RBS expected the fine, or at least to make provision for it, this year, Ross Mcewan, the chief executive, said: “There’s a chance we won’t.” He said there had been no opening offer from the DOJ. He added: “We do remain optimistic of reaching a final settlement this financial year.”

The good quarterly results come after a week of further controversy for RBS. The bank agreed on Thursday to pay more than $44m (£33.5m) to settle a separate dispute with the DOJ in a criminal investigation into traders of mortgage-backed securities. Earlier this week RBS was criticised by the Financial Conduct Authority for mistreating small business customers who were moved into its restructuring arm GRG in the years after the financial crisis. Mr Mcewan said he was satisfied that the bank now had “a very good complaints process to go through”.

Mr Mcewan insisted RBS was “the biggest backer of business in the UK” after year-on-year increases in lending to companies. Commenting on the health of the UK economy, he said he was “pleasantly surprised” by its resilience but kept a “watch on underlying conditions”.

He said RBS was prepared for an interest rate rise by the Bank of England if it came as expected next week but advised caution: “It will be the first in over 10 years and we have to be very sensitive to that.”

Mr Mcewan also joined calls for the UK’S rapid expansion of unsecured lending to “slow down”.

“I’ve been cautious on this for some time, which is why we’ve stepped back a little bit,” he said.

He added he had not been approached to helm Australia’s Commonwealth Bank, after reports linked him to the vacant chief executive role.