Royal Bank of Scotland reported a surprise 27% jump in profit to £293m in the first half year of 2015. The bailed-out bank trumped market expectations of a loss bigger than £250m by reporting a surprise rise in profit compared to the first six months of 2014 despite a 12.2% fall in sales.
In a conference call, CEO Ross McEwan told reporters: "We're making good progress on our plan. Capital is up, costs are down and there's growing strength in our go-forward business."
Although the profit is an impressive result considering the fact that RBS doubled the charge of its restructure in the second quarter, the lender reported a £153m (€217.8bn, $238.9bn) loss attributable to shareholders. The bank, which has been plagued by high legal and conduct costs over the past few years, put aside £459m for future settlements with regulators.
Mike van Dulken, head of research at Accendo Markets, told investors: "Revenues may have dipped by 12.2% and adjusted profits by 7%, however, net profits up 27% to £293m compares very favourably with a consensus £260m loss.
"It also suggests successful restructuring and cost-cutting [accelerated since February] amid the titanic scaling back of operations from global investment bank towards home UK market seven years after its £45bn 78% bailout by the UK government."
The UK government bailed out the Edinburgh-based bank in 2008 during the financial crisis but has been selling off RBS shares since 2013. In 2015, the process of selling the government's stake sped up and it is expected to be entirely privatised again by 2019. The bank's share price has stayed under the price at which Osborne agreed to bailout the lender in 2008 and the government will lose billions of pounds with the sale of the bailed-out bank.