RBS warns of 'uncertain economic outlook'

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Royal Bank of Scotland has said it is setting aside £100m to deal with “the more uncertain economic outlook”.

RBS is among the first big banks to make such a provision in the run-up to the UK’s exit from the EU.

Chief executive Ross McEwan told journalists during a conference call: “We have to be prepared for our customers no matter what happens.”

The move came as the bank reported a 14% rise in third-quarter profits to £448m, from £392m a year earlier.

The bank also allocated a further £200m in the July-to-September period to cover costs for the mis-selling of payment protection insurance (PPI).

RBS is still 62% publicly owned after being bailed out by the government at the height of the financial crisis.

It paid its first post-crisis dividend to shareholders earlier this month.

Also earlier this month, Mr McEwan told the BBC a no-deal Brexit could tip the UK economy into recession.

He said a “bad Brexit” could result in “zero or negative” economic growth, which would hit RBS’s share price.

Investment on hold

The £100m impairment provision reflects concern at RBS that some of its customers may have difficulty in future repaying loans to the bank.

Mr McEwan told journalists that there was now “a more optimistic tone” coming from Prime Minister Theresa May in the Brexit negotiations, judging from the way she had spoken to him and other business figures on a call last week.

However, he added: “We are seeing large companies pause their investments until they get certainty.”

RBS also disclosed that it had received approval from Dutch regulators to serve EU clients out of Amsterdam after the UK leaves the EU.

‘Good performance’

The fresh PPI provision reflected “greater than predicted complaints volumes”, RBS said.

The bank has now set aside a total of £5.3bn to deal with the mis-selling.

In the bank’s statement, Mr McEwan described the results as “a good performance, set against a highly competitive market and an uncertain economic outlook”.

He added: “We are growing lending in our target markets and are in a strong position to support the economy. We’re aware there is much more work to do and are fully focused on improving for our customers.”

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