Shares of the Royal Bank of Scotland (LON:RBS) rose today as the lender reported a third quarter of successful profits.
RBS posted operating profits for the third quarter of 2017 as £871 million – beating the same period last year by six percent.
Raising income and cutting costs to beat analysts expectations for this quarter, RBS has warned investors to not expect a full-year profit until next year. The bank is expecting a £6 billion fine from the US Department of Justice for its role in selling subprime mortgages during the financial crisis.
The Department of Justice criticised the bank for “fostering a culture of securities fraud”.
Chief Executive Ross McEwan said: “Our core bank continues to generate strong profits and we remain on track to hit our financial targets,”
“There are only a couple of banks outstanding now and we do believe that time will come… We remain optimistic on that,” he added.
The figures are positive for the state-owned bank, who have not managed to see three positive quarters since 2014.
Neil Wilson, a senior market analyst at ETX Capital, said the positive progress may not last if the bank’s legacy conduct issues derail its progress.
“Shares have risen 60 percent in the last year as RBS has begun to show profits, but if investors get a whiff that profits are not coming next year they may lose patience,” he said.
The lender is still under scrutiny from the Financial Conduct Authority. The UK watchdog is looking into concerns of how RBS treated small businesses in its Global Restructuring Group throughout the financial crisis.
McEwan hopes to settle the case with a 400 million pound compensation scheme.
The lender has managed to cut £708 million worth of costs so far just this year. It is hoping to reach £750 million by the New Year.
Shares were up 2.2 percent at 0746 GMT.