Royal Bank of Scotland moved into profit, from a £2 billion loss, but has committed to continue major restructuring through to 2019.
Attributable profit was £939 million in the half year ended 30 June, a significant rise from the £2 billion loss in the same period in 2016. Operating profit before tax was £1.9 billion.
The bank, which is still over 70% government owned said that it made progress dealing with legacy issues during the period. A settlement was reached with the Federal Housing Finance Agency which cost £151 million, out of the £396 million litigation and conduct costs.
Over the period it finally reached a settlement with the last remaining shareholder action group, which spared its former chief executive Fred Goodwin from having to appear in court, over a 2008 rights issue. The £25 million charge over the period took the total amount paid to investors to over £800 million.
Restructuring costs increased by £160 million to £790 million in the first half. 2017 is expected to be the last peak year of one off costs for the bank.
Chief executive Ross McEwan (pictured) said the results showed ‘the bank that we have been building is starting to produce the results’.
He added: ‘First off we got rid of a number of legacy issues that have been plaguing this organisation, so we can focus on the future.
‘This bank has great potential and we believe that by going further on cost reduction and faster on digital transformation we will deliver a simpler, safer and even more customer –focused bank, with a compelling shareholder investment case.’
He said that there is one more ‘outstanding piece of conduct’ the bank has to get through over the year and once that is over the bank will continue to grow.
In addition, the bank has announced that it has created a technology and innovation committee which chairman Howard Davies said ‘demonstrates the importance the Board places on overseeing and monitoring RBS's strategic direction in relation to technology and innovation, ensuring we are meeting our customer needs in a digital-led environment’.
Coutts and Adam & Company, which form the private banking division of RBS reported a 60.8% year-on-year increase in profit to £82 million.
Assets under management rose to £17.9 billion, up 22.6% compared to the same period in 2016. A 5.6% reduction in front office headcount helped reduce operating expenses to £218 million, 14.8% lower than H1 2016.
Coutts CEO Peter Flavel commented: 'As assets under management continue to grow, I am further encouraged by our clients seeing us as more than just a bank - turning to us for all of their financial needs.
'Our funds have achieved top quartile returns across one, three and five year time frames, combined client balances have increased by 8% from £51.8bn at H1 2016 to £55.7bn, and our online, cost effective, self select investment solution Coutts Invest continues to go from strength to strength
'I look forward to building on these successes as we become the leading UK private bank and wealth manager.'