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Royal Bank of Scotland has reported profits of £1.62bn for 2018, more than double the £752m it made a year earlier.
RBS chief Ross McEwan called the results “a good performance in the face of economic and political uncertainty”. Mr McEwan said the UK economy faced “a heightened level of uncertainty related to ongoing Brexit negotiations”. He told the BBC that Brexit could have a bigger impact on the economy than the Bank of England has suggested.
Mr McEwan said: “Larger corporations are pausing on their investments. And this cannot be good for the economy long-term because those large corporations then employ smaller businesses and individuals. If this goes on for a long period of time we’re going to see the economy slowing down more than the Bank of England suggested. We have a very small period of time left until the end of March and it’s time that our politicians got to the conclusion so that we can get some certainty going forward.” He said that 2018 saw benign economic conditions continue, with low defaults by customers on their loans.
But the bank’s statement noted the potential impact of “ongoing political uncertainties and geopolitical tensions” which could affect its customers, and, as a result, defaults were expected to increase this year.
Asked how the bank is preparing for a no deal Brexit, Mr McEwan told the BBC: “For those businesses that are a bit concerned they may have to pre-buy a number of raw materials for their production, we’ve put aside £3bn for what we call a Growth Fund”. RBS said NatWest had lent or approved £1.9bn to UK businesses to deal with Brexit (out of a possible £3bn). This could be to stockpile, find new suppliers or to secure trade financing. The bank was rescued by the government in 2008 in the aftermath of the financial crisis at a cost of £45bn and it still owns 62% of the company.
In October, RBS paid its first dividend to shareholders since its bailout. In its latest results, the bank announced a final dividend of 3.5p per share, and also a 7.5p special dividend, which means the Treasury is set to receive £977m. While the government is still RBS’s main shareholder, it also has about 190,000 private investors. The government has been selling off blocks of shares it owns in the bank, and aims to have sold all of its stake by 2024.But it realises a loss every time it does this as it paid 502p a share and they have not yet returned to that level. RBS shares are currently trading at about 240p.