Royal Bank of Scotland posts first profit in a decade

The bank’s symbolic return to profit after its £45.5 billion bailout during the height of the financial crisis will be overshadowed by this last large, looming fine for crisis-era misconduct. (Reuters)
Updated 23 February 2018
0

Royal Bank of Scotland posts first profit in a decade

LONDON: Royal Bank of Scotland Group reported its first full-year profit since 2007 on Friday, but the symbolic moment was bitter-sweet for the bank which had hoped to get a multi billion-dollar misconduct charge out of the way instead.
The bank’s £752 million profit beat a company-provided average of analyst forecasts for a £592 million loss. But many had included in their estimates hefty provisions for a settlement with the US Department of Justice for misselling by RBS of toxic mortgage backed securities.
Some analysts put the charge as high as $12 billion. RBS had hoped to settle the case in 2017. If it had, this would have resulted in the bank’s 10th consecutive annual loss. Since 2008, RBS has booked £58 billion in losses.
The bank did not provide an update on the timing of the settlement, its last large remaining legacy issue.
Chief Executive Ross McEwan said in a statement this was out of the bank’s control but the bank could nonetheless begin to think about resuming payments of dividends or buying back its shares.
“With many of our legacy issues behind us, the investment case for this bank is much clearer and the prospect of returning any excess capital to shareholders is getting closer,” he said.
But for market watchers, the bank’s symbolic return to profit after its £45.5 billion bailout during the height of the financial crisis will be overshadowed by this last large, looming fine for crisis-era misconduct.
The issue weighs on RBS’s share price and complicates the government’s plan to sell down its 71 percent stake in the bank.
RBS took £764 million of provisions in the fourth quarter for conduct issues like its missale of payment protection insurance, which came in at £175 million.
Restructuring costs were £531 million for the quarter and £1.6 billion for the entire year.
Overall, the bank continued to drive down costs — a strategic aim that has seen it shed billions of pounds from the bank in recent years.
In 2017, it beat its overall cost reduction target of £750 million, taking out £810 million overall.


Turkey sees lower growth, double-digit inflation in next years

Updated 20 September 2018
0

Turkey sees lower growth, double-digit inflation in next years

  • The economy, which grew by 7.4 percent in 2017, would expand by just 3.8 percent in 2018 and then 2.3 percent in 2019
  • For 2020 and 2021, the forecasts were more optimistic, with growth seen at 3.5 percent

ISTANBUL: Turkey, which was last month buffeted by its worst currency crisis in recent years, on Thursday forecast sharply lower growth coupled with persistently high inflation in its new medium-term economic program.
The economy, which grew by 7.4 percent in 2017, would expand by just 3.8 percent in 2018 and then 2.3 percent in 2019, according to figures unveiled at a presentation in Istanbul by Finance Minister Berat Albayrak.
Inflation, meanwhile, would balloon to 20.8 percent at the end of 2018, moderating only slightly to 15.9 percent in 2019, the figures showed.
For 2020 and 2021, the forecasts were more optimistic, with growth seen at 3.5 percent and 5.0 percent, respectively, while inflation is seen moderating finally to a single digit 9.8 percent in 2020 and then a year later to 6.0 percent.
Albayrak, who is a son-in-law of President Recep Tayyip Erdogan, said what he termed the “New Economic Programme” would be based on the three principes of “balancing, discipline, and change.”
“Our aim is to write a new success story,” he said.
Greater economic prosperity has been one of the pillars of Erdogan’s popularity in his over 15 years in power, with the country seeing impressive growth rates in consecutive years.
However economists have warned that the all-out push for growth has led to a potentially dangerous overheating, with inflation rampant, the currency account deficit widening and doubts over the health of the banking system.
These fault lines were exposed in August when a diplomatic spat with the United States caused a crash in the value of the lira, sparking fears of a full-blown economic crisis.
Albayrak said that in 2019 projects whose tender had not been carried out would be “suspended” and vowed Turkey would create two million new job opportunities by 2021.
“We will realize a program to totally fight against inflation,” Albayrak said, highlighting food inflation which has particularly worried Turks.
Markets greeted his assessments as realistic but the lira was trading lightly lower against the dollar at 6.2, a loss of 0.8 percent in value on the day.