RBS pledged to pay back billions in loans to British and American taxpayers after the state-rescued lender posted forecast-beating first quarter profits and its CEO said it was on the road to recovery.
CEO Stephen Hester confirmed the bank's aim of repaying the $163bn borrowed during the height of the global credit crisis in 2008. Around £75bn, borrowed as part of the UK government's credit guarantee programme, will be returned to the Treasury. A further £36.6bn will be paid back to the Bank of England and $84.6 to the US Federal Reserve.
The bank will also begin paying shareholder dividends now that an EU restriction expired last month. Around £350m will be paid to preferred shareholders, the bank said in Friday's statement, but Hester said it will be at least a year before the bank is able to pay dividends on its ordinary shares.
RBS blew past analysts' estimates with first quarter operating earnings of £1.18bn, a 4 percent rise from the same period last year and huge turn-around from the previous quarter's £144m loss. The bulk of the state-owned bank's bottom line came from the newly-restructured investment banking unit, which generated £824m, a near £1bn swing from the final three months of last year.
"We are happy with progress in the first quarter although the economic and regulatory backdrop remains tough," said Hester in a statement. "RBS continues, markedly, to regain strength and resilience."
Hester, who has described the RBS balance sheet as "the biggest time-bomb in the world" has relentlessly trimmed the size and scope of what was once Europe's second-biggest bank since taking over from former CEO Fred Goodwin, selling £700bn in assets and slashes 35,000 jobs. The bank's balance sheet was narrowed by a further £27bn last quarter to £950bn.
RBS shares rose more than 1.3 percent immediately after the opening bell in London to change hands at 24.87 pence. The stock has risen more than 22 percent so far but remains well shy of the 50.2 pence per share mark in which the UK government injected its £45.5bn stake.
Hester said Friday that he believes there is no desire to sell the government's 82 percent stake at current share prices, and he is not aware of anything imminent.