The Royal bank of Scotland (LON:RBS) has reported a £259 million profit for the first quarter of 2017, the bank’s first quarterly profit since 2015.
The bank, which is 73 percent owned by the taxpayer, was bailed out with £45 billion during the financial crisis in 2008.
The banks have taken multimillion-pound provisions for previous misselling scandals, the bank’s legal charges for the quarter amount to £54 million.
“This bank has a very strong core with great potential, and we believe that by going further on cost reduction and faster on digital transformation – we will deliver a simpler, safer and even more customer-focused bank, with a compelling investment case.” said Ross McEwan, the RBS chief executive.
Unlike Lloyds (LON:LLOY), where the stake owned by the taxpayer has fallen from 43 to just two percent, Phillip Hammond admitted last week that the government were unlikely to get back the £45 billion it used to buy up shares in the bank.
The remaining shares would be sold below the 50.2p average price that was paid for them.
RBS still has several legal issues the bank needs to deal with, such as the Russian money laundering scandal.
“Allegedly certain European banks, including RBS and 16 other UK-based financial institutions, and certain US banks, were involved in processing certain transactions associated with this scheme,” the bank said in a statement.
RBS’s profit, however, does show promise for the troubled bank.
RBS may finally have turned a corner,” said Neil Wilson, at ETX Capital. “There is a question mark over how sustainable it is to continue slicing away- the bank has cut costs at a rate of roughly £1bn a year for the last three years and shed around a third of posts since 2013.
“Slashing away at the core business without damaging future earnings and growth is a hard circle to square. We’ve already seen how a lack of profits over the last nine years has dented RBS’s ability to invest in new platforms and IT.”