Source: Yahoo Finance
Shares in RBS shot up this morning, after the bank posted first-half results so stonkingly good, it couldn't hold on to them for any longer. The figures, published a week early, showed pre-tax profits for the six months to the end of June will hit £2.65bn, double the £1.37bn it posted this time last year.
Operating profit, meanwhile, will more than triple, from £708m last year to £2.6bn now.
Rewind a year, and RBS was the dunce of the taxpayer-owned banks. While Lloyds was busying itself preparing for re-privatisation, RBS was sitting on the naughty step, grumbling that it wanted its own privatisation and complaining loudly about a slight drop in revenues.
But a year into chief executive Ross McEwan's tenure, things are much improved. McEwan got to work on cost-cutting pretty sharpish, but the results are already palpable: as he said, 'capital is stronger, costs are lower and customer activity is gradually improving'.
Credit impairment charges - charges for bad loans - will hit a mere £1bn by the end of RBS' financial year, said McEwan. All right, so that's a lot - but it's half what analysts were expecting. Impairment losses for the six months dropped from £2.1bn to £269m. Not bad.
But McEwan also sounded 'a note of caution'.
'We are actively managing down a slate of significant legacy issues. This includes significant conduct and litigation issues that will likely hit our profits going forward.' In other words: RBS may have settled its Libor and rate-rigging suits, but it still faces accusations of foreign exchange manipulation and the whole furore over small business and whether or not its distressed small business loans division is a 'profit centre'.
But note his use of the word 'legacy' (ie. 'it wasn't me, guv'). In 12 months, McEwan has brought about impressive changes. As Stephen Hester stepped down last June, he warned it could be 10 years before taxpayers are paid back the £45m they spent on the bank. Under McEwan's leadership, that could be quite a lot less.