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RBS sees profits more than halve, as coronavirus grips economy

An £800m hit on impaired loans, due to the economic impact of Covid-19, has made a huge dent in RBS’s profits for the first quarter.

The results for Q1 published today (May 1) show that a suddenly worse economic outlook prompted RBS to make large increases in allowances against loans becoming impaired, towards the end of March.

 

The bank has now made provisions against impairments of £4.2bn – a £500m increase on a year ago.

 

Despite these provisions and the £800m loss on currently impaired loans, the bank was still able to post a pre-tax operating profit of £519m. However this would have been £1.3bn without the impairment charge.

 

Aside from impairments, the bank said it would be closing its digital bank Bó after it attracted just 11,000 customers since its launch in November.

 

In terms of financial support for customers, RBS said that as at 23 April, it had extended repayment holidays to more than 190,000 mortgage customers and approved £1.4bn of loans for 8,000 businesses, under the Coronavirus Business Interruption Loan Scheme (CBILS).

 

The bank has also facilitated £3.1bn of Covid-19 corporate financing facilities (CCFF) issuances by the Bank of England, on behalf of its customers.

 

Chief executive Alison Rose emphasised pride in the group’s efforts to support customers and clients, adding: “Although the outlook remains extremely uncertain, we approach the crisis from a position of strength, with confidence in our balance sheet and focus on our strategic priorities.”

 

Across the bank, the results show that more 60,000 colleagues, including those working in call centres, are now set up to work from home. Some 90 percent of the branch network remains open, alongside telephone, internet and mobile app channels.

 

Premium Credit Strategy members can see a more granular analysis of the credit risk impact on RBS’ consumer and commercial loans, of the pandemic, on our Features section

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