Profits at Royal Bank of Scotland almost doubled in the first half of 2014, but the bank is warning expected costs from conduct and litigation issues are likely to hit future results.
The bank has brought forward an interim results statement this morning, and will release its full interim results next week. It states the lender advanced £9.8bn to mortgage customers in the first half of 2014, giving it a 9.9 per cent share of the market.
Pre-tax profits for the bank for the six months to June are expected to hit £2.65bn, up 93 per cent from £1.34bn in the same period last year.
RBS has set aside a further £150m for redress relating to missold payment protection insurance, and £100m for interest rate swap redress. It has not aside a total of £3.25bn for PPI compensation, and £1.85bn for swaps redress.
Over the six months, RBS’s total income fell by 6 per cent to £9.97bn, largely as a result of its corporate and institutional banking unit shrinking by 10 per cent. £2.1bn of its income came from fees and commission.
The bank made a gain of £191m from the sale of its remaining holding in Direct Line in Q1.
Shares in the bank were up 14 per cent in early morning trading.
RBS chief executive Ross McEwan says the results show “steady progress” but adds “no one at this bank is complacent about the challenges ahead.”
He says: “These results show underneath all the noise and huge restructuring of recent years, RBS is a fundamentally stronger bank that can deliver good results for customers and shareholders.
“But let me sound a note of caution. We are actively managing down a slate of significant legacy issues. This includes significant conduct and litigation issues that will likely hit our profits going forward. I am pleased we have had two good quarters, but no one should get ahead of themselves here – there are bumps in the road ahead of us.”
The bank remains 81 per cent owned by the taxpayer.