RBS reports surprise second-quarter profit

Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said: “The bank has swung to an unexpected profit for the quarter, albeit a loss for the half year”.

RBS, based in Edinburgh, announced plans in February to dismantle its global investment bank and to shrink the number of countries where it operates as it shifts to being a British-focused retail and corporate bank.

Adjusted operating profit was £1,813 million, up 11% from Q1 2015 but down 7% from Q2 2014, principally driven by reduced income in Corporate & Institutional Banking (CIB) following the planned scaling back of the business.

The bank’s second quarter figures also suggested an improving picture, with attributable profits for the three months of £293 million – up 27% year-on-year.

Speaking to the BBC’s Simon Jack, Mr McEwan said the bank was dealing with “a lot of issues from the past”.

Chief executive Ross McEwan warned of more pain to come as the bank faces further fines for “conduct issues of the past”.

Net impairment releases for the period was 232 million pounds, compared to net impairment losses of 269 million pounds previous year.

The bank may cut two-thirds of jobs in the division, a person familiar with the plans said in March. Royal Bank of Scotland Group plc are listed in the Financials sector within UK Main Market.

The wider group continues to be embroiled in legal proceedings and regulatory and governmental investigations, including with respect to US mortgage-backed securities, foreign exchange trading and its treatment of UK SME customers, which all incur conduct related costs, including in relation to payment protection insurance and interest rate hedging products.

Profit excluding restructuring costs and conduct and litigation charges was £1.8 billion, down from £1.9 billion a year earlier.

The market was buoyed by the performance in the second quarter when analysts’ expectations of a loss proved ill-founded. That will fall by another £70 billion when the lender’s remaining stake in Citizens Financial is sold, probably by the end of this year.

Sir Philip Hampton, presiding over his last set of results after being chairman since the 2008 bailout, said the bank faced more hurdles because of the higher than expected fines imposed by regulators around the world.