CEO Alison Rose said:
“Every person, family and business has been affected by the current situation and normal business activity has been severely impacted.
“We are putting our purpose into action and I am proud of how we have responded, providing our customers, communities and colleagues with the support they need.
“Although the outlook remains extremely uncertain, we approach the crisis from a position of strength, with confidence in our balance sheet and focus on our strategic priorities.”
Q1 2020 financial performance
RBS reported an operating profit before tax of £519 million and an attributable profit of £288 million.
Total income, excluding notable items and own credit adjustments, decreased by 1.6% in comparison to Q1 2019. Across the retail and commercial businesses income decreased by 6.5% whilst NatWest Markets core income increased by 9.3%.
Bank net interest margin (NIM) of 1.89% was 4 basis points lower than Q4 2019 reflecting continued structural pressure in the mortgage business, as front book margins remain below back book, and the contraction of the yield curve.
Litigation and conduct costs include a £100 million PPI release offset by other charges.
Strategic costs of £131 million include a £39 million charge related to technology spend and a £34 million direct charge in NatWest Markets in respect of restructuring activity.
A cost reduction of £26 million was achieved in the quarter excluding operating lease depreciation. The Bank’s key focus is on supporting our customers and colleagues through this period of uncertainty, while preserving shareholder value, and we remain on track to deliver a £250 million cost reduction in 2020.
Net impairment losses of £802 million equate to 90 basis points of gross customer loans, compared with 11 basis points in Q1 2019. Q1 2020 includes a £628 million charge in respect of a more uncertain economic outlook, bringing our total multiple economic scenario (MES) overlay to £798 million.
Resilient balance sheet
CET1 ratio of 16.6%, 40 basis points higher than Q4 2019, which includes a c.75 basis point increase associated with the release of the foreseeable dividend and pension contribution capital deductions as previously announced. RWAs increased by £6.0 billion reflecting lending growth in the retail and commercial businesses and an increase in NatWest Markets.
The Liquidity Coverage Ratio remains healthy at 152%, representing £49.5 billion headroom above 100%.
Net lending increased by £13.1 billion in the quarter across the retail and commercial businesses driven by mortgage lending in UK Personal Banking and an £8.0 billion increase in Commercia Banking reflecting the utilisation of revolving credit facilities (RCFs) in response to Covid-19 uncertainty.
Customer deposits increased by £15.6 billion compared with Q4 2019 principally reflecting an £8.9 billion increase in Commercial Banking as customers sought to retain liquidity in response to Covid-19 uncertainty.
Take a look at how we’re supporting people, families & businesses during the Coronavirus outbreak. Download PDF here. *Data correct as of 1 May 2020
Conference call replay
Replays can be accessed two hours post event. Replay facilities will be available until Sunday 17 May 2020. To access a replay dial-in from the following telephone numbers and use the appropriate access code from the list below:
International dial: +44 (0) 333 300 9785
UK free call dial: 0808 238 0667
Ireland: 01 553 8777
Media Audio conference ID: 8107999
Q1 2020 Media call transcript