By James Salmon
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Royal Bank of Scotland blamed an accounting quirk after slumping to a £1.4bn loss for the first three months of the year, but hailed great progress in its long road to recovery.
The state-backed bank preferred to focus on operating profits, which swelled to £1.2bn from a £144m loss a year ago.
But its figures were tarnished by a charge on its own debts of £2.46bn, which resulted from it being deemed more able to pay back investors.
Step in the right direction: Stephen Hester says RBS making ‘excellent progress’
The bank confirmed it was about to complete an important step in its rehabilitation by paying off the final slice of the £163bn in UK and US taxpayer-backed emergency loans borrowed at the height of the crisis.
But RBS played down the prospect of an imminent sell-off of the taxpayer’s 82 per cent stake, worth less than half the £45.5bn paid for it
Boss Stephen Hester also glossed over speculation about talks to sell a stake to Middle East investors, saying: ‘As far as I’m aware there is no desire to sell at the current share price.’
The chief executive said the bank had ‘another 18 months of heavy lifting’ as it continues to use profits to pay for the clean-up cost of dealing with its toxic assets and loans.
Asked to put a timeframe on RBS being sold back to the private sector at a profit for taxpayers, he said: ‘I have learnt to my pain that sometimes ones hopes and fears do not come out as one wants.’
Hester said ‘excellent progress continues in removing mistakes of the past’, with the bank wiping a further £100bn off its balance sheet â€" referred to as the ‘biggest timebomb in corporate history’ by the RBS boss.
Bad loans fell by almost a third since last year and over a fifth since the final three months of last year to £1.31bn. But the bank (up 2.77 per cent to 25.23p) said the rate customers were repaying debts â€" often used as a gauge of confidence â€" had slowed sharply since the end of last year.
Operating profits at the retail bank dipped almost 8 per cent from last year to £477m, which the bank blamed on flagging demand from consumers.
Once again, Hester jumped to the defence of the bank’s lending record. RBS was slammed for being the only bank to miss lending targets for small and medium-sized businesses, under the Government’s Project Merlin.
He said: ‘We’d like to find more people to lend to and we’ve got the money to do it.’
The bank also confirmed it had added £125m to the pot set aside to pay compensation to customers mis-sold payment protection insurance.
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