Published: Mon, August 06, 2018
Economy | By

RBS says profit down after United States settlement, picture…

RBS says profit down after United States settlement, picture…

Royal Bank of Scotland Group (LSE: RBS) will pay a dividend in 2018 for the first time since the financial crisis.

RBS plans to pay an interim dividend of two pence per share, though the timing of the payout is subject to the finalisation of its U.S. settlement.

For long-suffering investors, including United Kingdom taxpayers who still hold more than 62% of the stock, the token 2 pence per share interim payout, announced with half-year results on Friday, is the first tangible sign that RBS's massive restructuring and fix job is reaching its end. Operating profit before tax was £613m in Q2 compared with £1.2bn in the same period past year.

Marking a landmark moment, the dividend is worth £240m and means the Treasury will receive £149m, as RBS is still 62% owned by the United Kingdom government.

In May, RBS was fined Dollars 4.9 billion by the US Justice Department over its role in the subprime housing crisis but much of the cost had already been set aside, while the total was less than expected.

RBS chief executive Ross McEwan insisted the bank's turnaround "is nearly complete" adding: "We still have a lot more to do to achieve our ambition of being the best bank for customers in the United Kingdom and Republic of Ireland".

Royal Bank of Scotland reinstated its dividend despite posting a fall in first-half profit owing to penalty payments and weaker margins.

"Operating profits in the second quarter came in at £613m, some way behind the first quarter figures but well ahead of expectations", he said.

Announcing the bank's half-year results, RBS CEO Ross McEwan said the bank was now looking to return further excess capital to shareholders, including via special dividends or share buy backs, from 2019.

RBS shares jumped on the news, gaining around 2% in the first 30 minutes of trading in London.

Shares jumped on the announcement, gaining around 2.5% in early morning trade. They declined by 3.6% versus the same period of the previous year.

"Despite this positive progress, the shares have been weak of late and are beginning to look more interesting to us from a valuation perspective", he added, ascribing fair value to the shares of 285p.

The bank's conduct and litigation costs were also lower than some had expected due to an indemnity payment.

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