By Max Colchester
LONDON-- Royal Bank of Scotland Group PLC on Thursday reported a
rise in second-quarter net profit as the once global bank continued
its retreat to the U.K.
The bank, which is 78% owned by the British government, said net
profit came in at GBP293 million ($457.2 million), compared with
GBP230 million in the same period last year. Revenue fell to GBP4.3
billion from GBP4.9 billion.
In February this year RBS said it would accelerate its plan to
shrink, exiting a raft of countries and dismantling large parts of
its investment bank.
On Thursday the bank said that it was making good progress in
boiling down its bad bank, which it expects to run down by the end
of the year. RBS said it remained on track to sell down its
interest in U.S. retail lender Citizens and shrink its investment
bank.
RBS said that it plans to return excess capital to shareholders
through dividends and share buyback but not before the beginning of
2017.
Adjusted operating profit, which strips out restructuring and
other one-off costs, was GBP1.8 billion, down 7% on the year before
as income from the RBS's investment bank dropped away.
In June the U.K. Chancellor George Osborne announced that the
government would start selling down its holdings in RBS at a loss.
The government spent GBP45.5 billion bailing out RBS during the
financial crisis, in early June it valued its stake at GBP32
billion. The Treasury expects to raise at least GBP2 billion from
share sales by April next year, and to have sold at least three
quarters of the existing stake by 2020.
However, RBS still faces a series of fines, notably over
allegations that it misled investors over the quality of U.S.
mortgage backed securities it sold. On Thursday the bank put aside
another GBP459 million to cover a series of litigation and conduct
issues.
On Wednesday RBS said that it would cut its stake in U.S. retail
bank Citizens Financial Group Inc. RBS plans to sell up to $2.6
billion of stock, reducing its stake in Citizens to around 21%.
Write to Max Colchester at max.colchester@wsj.com
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