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RBS to return £1bn to taxpayer as profit soars

The bank intends to pay a special dividend after annual profit more than doubled to £1.6 billion

RBS to return £1bn to taxpayer as profit soars

The Treasury will net almost £1 billion after full-year profits Royal Bank of Scotland almost doubled. 

The bank, which is 62% owned by the taxpayer, reported a pretax profit of £1.6 billion in 2018, a big jump on the £752 million it returned in the previous year.

The bank accompanied this with news it intends to pay a special dividend on top of its ordinary payout, meaning the Treasury's coffers will be boosted by £977 million. 

The total payment of 13p per share is 60% higher than forecasts. 

The government took a stake in RBS at the height of the credit crisis in 2008. It sold a 7.7% stake in the bank last June and aims to dispose of the remainder by 2023. 

Commenting on last year's performance, chief executive Ross McEwan (pictured) said in a statement: '2018 was a year of strong progress on our strategy - we settled our remaining major legacy issues, paid our first dividend in ten years and delivered another full year bottom line profit.' 

However, McEwan admitted Brexit uncertainty is making things challenging. 'While we remain comfortable with our 2020 target of a return on tangible equity of more than 12%, we recognise our 2020 target of a cost:income ratio of less than 50% is increasingly challenging for the business to achieve, with the risk being to the downside.

'This reflects the ongoing economic and political uncertainty and the additional ongoing costs associated with ring-fencing and Brexit.' 

While the bank did not take any additional Brexit-related impairments after taking a £100 million hit in the third quarter, it warned the political uncertainties could result in an increase in bad loans this year.  

 

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