RBS share price falls as group posts profit drop

Shares Royal Bank of Scotland Group (LON:RBS) are in the doldrums again this Friday, as the bailed-out lender posted a drop in first-quarter profit. The results, which follow those of peer Barclays (LON:BARC) yesterday, come after the part government-owned bank revealed that its chief executive Ross McEwan was stepping down.

As of 08:42 BST, the RBS share price had given up 4.56 percent to 238.60p. The stock is underperforming the broader London market, with the benchmark FTSE 100 index currently standing 0.35 percent lower at 7,407.79 points.

RBS posts Q1 profit drop

RBS announced in a statement this morning that its operating profit before tax had dipped to £1.01 billion in the first three months of the year, compared with £1.2 billion in the prior-year period, primarily reflecting £265 million lower income, partially offset by lower operating expenses. The group’s attributable profit for the quarter meanwhile dipped to £707 million from £808 million a year ago.

Going forward, the bailed-out lender said that it recognised “that the ongoing impact of Brexit uncertainty on the economy, and associated delay in business borrowing decisions, is likely to make income growth more challenging in the near term”.

Analysts weigh in on lender

City A.M. quoted Ed Monk, associate director from Fidelity Personal Investing’s share dealing service, as commenting that while RBS CEO Ross McEwan can claim credit for navigating the bailed-out lender back to profitability last year, today’s results “shows the challenge of growing from here”.

“Ironically, it’s political factors holding back the RBS share price and preventing the government disposing of its 62-percent stake in the bank,” the analyst continued, adding that the RBS share price remained “about half the government’s buying price when it rescued the bank and will struggle to recover that ground while the twin political threats of a no-deal Brexit and full nationalisation under a Corbyn-led government remain”.