RBS posts £15m profit but warn of 'bad debt'

Friday 7th August 2009

The part-tax payer owned bank, Royal Bank of Scotland (RBS) has recorded a pre-tax profit of £15 million in the first two quarters of 2009.

The state-rescued bank, which is 70 per cent owned by the taxpayer, said the results for the first six months of this year were "poor", with a £1 billion loss after paying tax and dividends to the government.

RBS, which was given a £20 billion bail-out by the government, reported a £24 billion full year loss earlier this year; the biggest in British corporate history.

RBS group chief executive, Stephen Hester, said today: "This was a momentous half year for RBS. We gave a full and clear account of our vulnerabilities to the 'credit crunch'. We set out comprehensive restructuring plans, now with clear performance targets. And implementation is well under way, though uncertainties remain.

"Our first half results, as we had clearly warned, are poor with a net attributable loss of £1,042 million. However, they highlight well our core business potential, the hard work of our people in difficult times, the strength of our customer franchises and the vulnerabilities and economic headwinds we grapple with."

Today's results showed the bank had written off £7.5 billion of bad debt, with the investment banking division making a £5 billion profit.

Mr Hester, who took over from disgraced former chief executive Sir Fred Goodwin last October, added: "While the banking crisis has many roots, its economic foundations lie in a long era of easy money. As a bank with deep exposures in economies which are structurally indebted, we were more exposed to the crisis than many."

Over the next two years the bank will be cutting 9,000 jobs.

Share prices plunged 13 per cent this morning after the bank's interim results were announced.

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