RBS profits surge but bank looks to close more branches

ROYAL Bank of Scotland has reported a 70pc jump in quarterly profits, as the taxpayer-controlled lender continues to prepare the ground for a return to private ownership.

However, the bank gave no update on a looming multibillion-dollar fine from the US Department of Justice (DOJ) for past mis-selling of toxic mortgage products, which is the last major barrier to the Government starting to sell down its 71pc stake.

On a call with reporters, RBS boss Ross Mcewan hinted further branch closures could be on the way, particularly at the business banking subsidiary it once thought it would have to spin out but has now kept, Williams & Glyn.

“The branch network that was going to be Williams & Glyn hasn’t been altered in close to nine years – we do need to look at the size and shape of it,” he said.

RBS’S pre-tax profits for the first three months of the year hit £1.2bn, up 70pc on £713m the prior year and beating City expectations. Net profits more than tripled to £792m – a higher figure than the profits the bank generated in the whole of 2017.

A fall in writedowns on bad loans and restructuring costs helped boost the bottom line. But the bank’s net interest margin – a core measure of profitability showing the key difference between the interest it receives in loans and pays on deposits – eroded further by two basis points to 2.04pc.

Commenting on the timing of the DOJ fine, Mr Mcewan said: “Hopefully it will happen sooner rather than later.”

RBS’S stock, which has gained 5pc in the past year, still trades well below the average 502p a share that the Government paid to bail out the bank. The shares slipped 1.5pc to 268.4p.