Shares in Royal Bank of Scotland Group (LON:RBS) have fallen deep into the red this morning, as the bailed-out lender set aside an additional £100-million charge due to the ‘more uncertain economic outlook’. The move came as the lender, still part-owned by the UK government, updated investors on its third-quarter performance, posting a rise in operating profit.
As of 09:07 BST, RBS’ share price had given up 4.35 percent to 224.30p. The shares are underperforming the broader market selloff which has seen the benchmark FTSE 100 index currently stand 1.39 percent lower at 6,906.46 points.
RBS updates on performance
RBS announced in a statement this morning that that group’s operating profit before tax had climbed to £961 million in the third quarter of the year, from £871 million in the prior-year period. The lender’s income increased by £485 million, or 15.4%, compared with Q3 2017 principally reflecting indemnity insurance recoveries of £272 million and lower disposal losses. Attributable profit for the quarter came in at £448 million.
The bailed-out lender, however, said that it had taken an additional £100 million impairment charge reflecting the more uncertain economic outlook and a further net £60 million impairment charge over its Irish business.
“We have to be prepared for our customers no matter what happens,” RBS’ chief executive Ross McEwan told journalists during a conference call, as quoted by the BBC.
Analysts weigh in on update
City A.M. quoted Lee Wild, head of equity strategy at Interactive Investor, as commenting that while profit and revenue rises were welcome, shareholders were not impressed by RBS’ attributable profit missing expectations.
“Whether or not RBS made more money than many expected in the third quarter depends on which line on the income statement you look at, but whichever it is, weary investors have lost faith with RBS after these results,” he pointed out.