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RBS profits up 9 per cent

Royal Bank of Scotland has reported an increase in group operating profits by 9 per cent to £10,282 billion.

Profit before tax increased to £9.9bn in 2007, including the recent purchase of ABN Amro, up from £9.2bn in 2006.

It was hit by a writedown of £1.16bn as a result of the US sub-prime mortgage crisis.

Average mortgage lending was up 5 per cent at RBS. It says that mortgage activity was focused on branch channels, where net lending was 14 per cent higher than in the previous year.

RBS says it also took advantage of improved margins in the intermediary segment in the latter part of the year to improve volumes.

It says that mortgage arrears remained very low with the average loan-to-value ratio of retail’s mortgages was 46 per cent overall and 63 per cent on new mortgages written in 2007, and this improved as the year progressed.

Group chief executive Sir Fred Goodwin says: ‘It is tempting to think of the task before us in 2008 only in terms of the integration of ABN AMRO, and delivery of the substantial cost and revenue synergies. To do so, however, would overlook the real opportunities for the enlarged Group.

“Whilst the future seems as difficult as ever to predict, it is clear that we
enter 2008 with real momentum behind our organic growth, and with our product
range, distribution capabilities and customer franchises materially enhanced.
Coupled with our greater presence in the world’s largest and fastest growing
economies, there is much to be done, but a confidence that it will be, to the
benefit of our shareholders, our customers and our staff.’

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