Profits leap boosts RBS - Yorkshire Evening Post

Profits leap boosts RBS - Yorkshire Evening Post:

Profits leap boosts RBS

NATWEST parent Royal Bank of Scotland today revealed write-downs of £1.5bn from the US sub-prime mortgage crisis, but said profits were set to beat expectations.

The Edinburgh-based group, which is the UK's second biggest bank, employs hundreds of staff in Leeds through brands such as Direct Line and Privilege insurance.

The group's write-downs were far better than feared, with analysts reportedly expecting RBS alone to take a hit of up £2bn, excluding potential losses at its recently acquired ABN Amro business.

RBS has been under pressure to reveal the extent of its liabilities to the credit crunch and default-hit US high-risk home loan market.

The group's shares have suffered recently amid fears of substantial losses across the sector.

Today it said it hoped full-year operating profits would come in "well ahead" of market forecasts, despite suffering write-downs of £1.2bn and a further £300m at ABN.

RBS was able to offset £250m of losses amid the credit turmoil by using its own cash reserves instead of turning to more expensive wholesale credit markets

It also revealed today that second-half deposits had soared amid Northern Rock's high-profile problems as savers quit the troubled bank.

Challenge

Sir Fred Goodwin, group chief executive, said: "Rarely have the diversity and quality of the group's business platform been more important in enabling us to deliver consistently strong performance.

"Although some of our businesses have been affected by the challenging market conditions, the group's underlying earnings trajectory has remained comparatively unaffected."

He said the integration of ABN AMRO was "off to a promising start", adding that the company now anticipated better financial returns than envisaged.

He added: "More importantly, the increased exposure to many high growth economies that ABN AMRO brings us seems more attractive and relevant than ever."