Yahoo Finance RBS to be renamed NatWest as profits almost double
Royal Bank of Scotland (RBS.L) nearly doubled annual profits for the second year in a row on Friday, as new chief executive Alison Rose announced a sweeping new strategy and plans to rename the bank.
RBS reported a 27% rise in pre-tax operating profit for 2019 to £4.2bn ($5.48bn), and a 93% rise in profit attributable to shareholders to £3.1bn. Both measures were well ahead of what analysts had been forecasting.
The strong profit growth shows continued momentum at the state-owned lender. RBS turned its first profit in a decade in 2017, before doubling profits in 2018. The bank remains 62% owned by the UK government after being bailed out at the height of the financial crisis.
Total income rose almost 6% in 2019 to £14.2bn, which was also ahead of forecasts.
RBS bounced back from a poor third quarter to post a profit of £1.4bn in the final three months of the year, ahead of expectations. The bank had suffered an unexpected loss in the third quarter, after a spike in PPI claims and a slump at its trading division, Natwest Markets.
RBS on Friday proposed a final dividend of 3p per share and a special dividend of 8p per share, taking the total return to shareholder over the last 12 months to £2.7bn.
A ‘purpose-led’ bank
“These results are a reminder of the strong foundations we have built,” Rose said in a statement. “Our profits are up, our capital position remains strong and this year we will have returned a further £2.7bn to our shareholders.”
“But our performance doesn’t yet match the potential that exists in this bank. We can deliver so much more.”
Rose announced a sweeping new strategy for the bank alongside the results, aimed at building a “purpose-led” institution.
RBS will aim to support the creation of 50,000 new businesses by 2023, focusing on female and ethnic minority-background entrepreneurs based outside of London. The bank will also aim to help 2 million people start saving by 2023.
Read more: New RBS boss Alison Rose to plot fresh path for the bank
Rose, who became CEO in November, also wants the bank to take a leading role tackling climate change. The bank pledged to become climate neutral by 2025 and to “at least halve” the climate impact of its lending, as well as increase funding for sustainability initiatives to £20bn.
RBS will also stop lending to oil and gas majors and companies that earn more than 15% of cash from coal, unless all have a transition plan in-line with the 2015 Paris Agreement. Mortgage lending will also be tied to goals around the sustainability of properties.
Re-named NatWest Group
Executive pay at the bank will be tied to these goals to avoid them becoming soft targets.
“The way people live their lives has changed,” Rose said. “And their expectations of companies are changing too; looking for us to deliver not only financial performance but a positive contribution to society; benefitting customers and communities as well as shareholders. The future of this bank depends on us successfully delivering on both.”
As part of the strategy rethink, RBS will also ditch its name and rebrand as NatWest Group. The company has been transitioning away from the RBS brand for several years in a bid to distance itself from the bank’s financial crisis legacy.
“Customers will see no change to products or services as a result of this change and will continue to be served through the brands they recognise today,” chairman Howard Davies said in a statement.
RBS also announced a shake-up of at its new digital banks, which were launched last year to compete with startup rivals. Mark Bailie, the CEO of consumer bank Bo, is leaving with immediate effect, just three months after the bank’s launch. Marieke Flament, who runs RBS’s startup small business bank Mettle, will takeover and run both digital banking businesses.
RBS results come a day after rival Barclays posted better-than-expected full-year results. Those numbers were overshadowed by news Barclays CEO Jes Staley was being investigated over his relationship with disgraced former financier Jeffrey Epstein.
