Part-nationalised lender Royal Bank of Scotland (RBS) is to repay the final tranche of the £163bn in emergency loans during the financial crisis and will resume paying dividends on its preference shares.
RBS reported a pre-tax operating loss of £1.4bn in the first three months of the year, most of which was due to changes in the valuation of the bank’s debt.
Group operating profit was higher at £1.184bn, compared with a loss of £144m in the previous quarter and a profit of £1.133bn in the first quarter of 2011.
Core operating profit rose 46% from the previous quarter to £1.667bn, with Retail & Commercial businesses delivering £903m, down 13%, while the Markets arm recovered to a profit of £824m, compared with a loss of £109m in the prior quarter.
Non-core losses were £483m, compared with £1.282bn in the prior quarter. The bank’s capital position remains robust, with a core tier one ratio - a key measurement of a bank's balance sheet strength - of 10.8% and a tier one leverage ratio of 16.3 times.
Next week RBS will repay the final tranche of notes issued under the government's Credit Guarantee Scheme (CGS). Over the last three years RBS will have repaid £75bn of funding under the CGS and the Special Liquidity Scheme.
RBS has also set aside an extra £125m to cover claims for PPI mis-selling. It means the bank will have set aside a total of £1.2bn for payment protection insurance compensation.
Earlier in the week Lloyds Banking Group set aside an extra £375m, while Barclays made an extra £300m provision last week.
RBS has also announced that it will resume paying dividends on preference shares, which were suspended for two years under state aid rules.
Chef executive Stephen Hester (pictured) said: “The improving strength of the group's balance sheet and funding has enabled RBS to take actions consistent with a return to standalone strength.”
Additional reporting by ShareCast
Caring for children and elderly relatives
Similar to June 2007
Square Mile’s series of informal interviews
Fine reduced to £60,000
Two roles created