RBS Pre-Tax First Quarter Profit Hits £1.6bn

The taxpayer-backed Royal Bank of Scotland has seen a large rise in its first quarter profit, sending its share price up by more than 12%.

After the initial stock price surge, trades eased to high single digits and remained a key driver of the FTSE 100 on Friday.

RBS said its pre-tax profit reached £1.64bn in the first three months of 2014, up 98% from £826m in 2013.

It said operating profit for the quarter was £1.5bn, up from £747m last year.

But the company, which is 81% owned by the UK taxpayer, said certain problems still require rectification.

Chief executive Ross McEwan said: "Just over two months ago, I set out our plan for making RBS the most trusted bank in the UK.

"Today's results show that in steady state, RBS will be a bank that does a great job for customers while delivering good returns for our shareholders.

"But we still have a lot of work to do and plenty of issues from the past to reckon with."

The profit boost came from no new write-offs for action over mis-selling payment protection insurance or toxic assets.

It also continued to reduce its costs.

However, it said: "The ongoing conduct and regulatory investigations and litigation continue to create challenges and uncertainties for RBS, as for other banks.

"The timing and amounts of any further settlements or redress remain uncertain."

RBS said it had seen a small rise in lending volumes during the first three months of the year, both in UK retail and business banking.

The trading update is RBS' first since the group announced that it had suffered a £8.2bn loss in 2013, amid plans to cut costs by £5bn within three years.

It also said that as part of a plan to reduce IT glitches that have affected customers, it was separating computer systems between its RBS, NatWest and Ulster banks.

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