The Royal Bank of Scotland saw its sales slump by 99.8% in the third quarter to a mere £2m, down from £1.1bn in the same months of 2014. The bailed out bank reported on Friday (30 October) that net income fell by 16%.
The costs of chief executive Ross McEwan's restructuring plans, necessary after problems the bank encountered during the financial crisis, have taken its toll on RBS's balance sheet. The bank also added that it expects high costs of compensation and settlement for past misconduct to be around for a while. In the three months to 30 September, it already reserved £900m in settlement and fine spending
"We expect restructuring costs to remain high as we continue to implement our core bank transformation and disposal losses to be elevated within the overall guidance on disposal losses, although the timing and quantum of these losses are subject to market conditions," the bank said in a statement.
"Whilst legacy issues continue to be addressed, material further and incremental costs and provisions in respect of conduct and litigation related matters are expected, and could be substantially greater than the aggregate provisions RBS has recognised."
One of McEwan's disposal targets was RBS's stake in the US bank Citizens Finance, which added £1.15bn to attributed profit. The bank started selling its stake on Thursday (29 October). Without the gain from the Citizens stake, the bank would have booked a loss of £134m in the quarter.
According to the BBC, sources have said the partially nationalised bank is not expected to pay out dividends to investors until 2017. Although the UK government still owns around 73% of the bank, it recently took significant steps in converting shares to make its stake more appealing for the public to buy.
The results come shortly after campaign group Move your money declared RBS the worst bank because of its branch closure record. It has closed some 385 local banks over the last years.
"The time for waiting is over! BUY," Investec analyst said in regards to RBS shares. The investment adviser said that the store closure numbers are actually a good thing. "RBS is to be
congratulated on its excellent cost progress. As noted by the Move your Money
campaign, it achieved 1 in every 3 UK branch closure in 2014-15. 385 branches shut with more to come."