RBS posts first annual profit in a decade but remains prisoner of the past

Royal Bank of Scotland has today announced its first annual profit since it was bailed out by the UK taxpayer at a cost of £45 billion ten years ago.

Despite a pending multi-billion fine due over RBS’s role in the American subprime mortgage scandal which preceded the 2008 financial crisis, chief executive Ross McEwan said today that the bank’s profit of £752 million for 2017 - compared with a £6.95 billion loss the year before - represented “a really symbolic moment” for the Edinburgh-based lender.

However, with the massive US Department of Justice fine pending, the meagre profit appeared not to impress investors as RBS shares dropped 4 per cent this morning.

Mr McEwan told reporters the bank could give “no update” on how negotiations with US authorities were going, only that RBS hoped to settle in 2018.

Announcing the results, the still 73 per cent state-owned bank also said it still expects incur cost amounting to an extra £1.5 billion in restructuring, innovation and digital over the next two years, as it continues to retreat from pre-crisis status as the world’s biggest bank.

Ian Gordon, banks’ analyst at Investec, said the news made the bank’s target of 2020 as the date for its return to full private ownership as “even less plausible today, even if one happened to believe in it already (which I didn’t).”

Mr McEwan added: “Our financial strength is much clearer … We still have more to do in cost reduction, however this reflects progress we have made in making the bank more efficient,” he said.