Royal Bank of Scotland Group, Britain’s biggest government-owned lender, swung into profit for the first time since 2007 as it cut bad-loan provisions and writedowns on credit market investments.
Net income was 9 million pounds ($14 million) in the first six months of the year, compared with a loss of 1.04 billion pounds a year earlier, the Edinburgh-based bank said in a statement. That beat the 47 million pound loss that was the median estimate of six analysts in a Bloomberg survey.
“RBS wasn’t just the UK’s worst bank, they were the world’s worst bank,” said Ralph Silva, a strategist at London- based Silva Research Network, which provides research to financial companies. “So any return to profitability should be applauded.”
RBS joins rivals including Europe’s biggest bank, HSBC Holdings, Lloyds Banking Group, Deutsche Bank, Germany’s biggest lender, and BNP Paribas in reporting falling bad-loan provisions. RBS last reported a profit at the end of 2007, after which it needed 45.5 billion pounds of taxpayer-supplied capital during 2008 and 2009, in the world’s biggest bank bailout.
The bank set aside 2.36 billion pounds less for souring loans in the first half of 2010, a 31 per cent decline compared with a year earlier. RBS was also helped by falling trading losses on investments including asset-backed products, “credit exotics” and assets covered by monoline insurers, which were cut by about or 97 per cent over the same period, it said.
