RBS in the red as mega-fines for PPI mis-selling and forex-rigging wipe out profit

RBS could be on-track to pay a dividend if its turnaround continues, its chief executive said yesterday, as the bank’s underlying profitability improved in the first quarter of 2015.

 

But it made another loss, this time of £446m, as it struggles through its restructuring, and set aside another £856m to cover legal costs and fines.

 

The quarterly loss comes after a £5.8bn loss over 2014.

 

Revenues fell 14 per cent to £4.3bn, while operating expenses climbed 20 per cent to £4.1bn.

 

Of those costs, £453m were incurred in restructuring the business.

 

The bank’s provisions for misconduct included an extra £100m for payment protection insurance (PPI) mis-selling compensation, and an additional £334m for foreign exchange benchmark manipulation. RBS expects to settle the forex cases with US regulators in the second quarter.

 

RBS’ chief Ross McEwan said 2015 “is going to be another tough year”.

 

“There are still many conduct costs on the horizon. I am looking forward to the day we can look to the future, rather than to legacy issues,” he said.

 

However, the bank’s adjusted underlying profits climbed 16 per cent on the year to £1.6bn. Bosses hope to use that growth to hit the 13 per cent capital buffer as planned next year.

 

“Our commitment is to return capital to shareholders above that target,” said McEwan. “It is an important part of our normalisation story to be seen paying dividends to shareholders.”

 

But investors were unimpressed with the losses, sending shares down 3.15 per cent on the day.