Royal Bank of Scotland (RBS) posted pre-tax profit of £961 million in its third quarter (Q3) 2018, up from £871 million in Q3 last year, with £2.8 billion for the year-to-date.
‘This is a good performance, set against a highly competitive market and an uncertain economic outlook,’ RBS CEO Ross McEwan said.
‘We are growing lending in our target markets and are in a strong position to support the economy.’
However, the lender’s Q3 net interest margin fell to 1.93% from 2.12% last year due to competitive pressure and a higher liquidity balance.
The metric measures the amount the bank is making in percentage terms in turning around the business costs it faces in borrowing money from the Bank of England (BoE), with the lender not benefiting as much as it would like from the 0.25% rate rise to 0.75% the BoE made earlier in the year.
The 1.93% figure was substantially lower than the 3.24% posted by rival Barclays (LON:BARC) earlier in the earnings season.
RBS braces for Brexit
Despite a posting strong profits, the lender saw its operating costs increase, with RBS setting aside a £100 million impairment charge to create a buffer for Brexit and other economic uncertainties.
Earlier this year, RBS announced that it would move around 150 employees to a new operation in the Netherlands to let the lender continue working with its customers in Europe post-Brexit. In its recent set of results that it had gained approval from Dutch authorities to establish its European headquarters in Amsterdam.
RBS also announced that it is allocating a further £200 million for payment protection insurance (PPI) claims, as well as a further £60 million impairment charge for its Irish business regarding a reduction of non-performing loans on its books.
‘We’re aware there is much more work to do and are fully focused on improving for our customers,’ McEwan added.