You are here: Home - News -

RBS mortgage lending rises 29% as bank posts £7bn loss

by:
  • 24/02/2017
  • 0
RBS mortgage lending rises 29% as bank posts £7bn loss
RBS grew its mortgage lending by 29% to £29.8bn in 2016, against the backdrop of a £7bn loss, as the bank’s financial situation worsened, its annual results revealed.

The growth in mortgage lending gave the bank a 12% share of the market in 2016.

The leap in lending, looks set to push RBS up the league table of the UK’s largest lenders from fourth to third, leap frogging Santander which reported a drop in gross lending by 6% to £24.6bn. Nationwide, yet to report its annual figures, sits between RBS and the top spot, dominated by Lloyds Banking Group. Lloyds saw a lending drop from £39bn to £38bn according to its annual results published this week. Barclays has chosen to keep its cards close to its chest, reporting only its gross lending to owner-occupied borrowers which chief executive Jes Staley said reached almost £19bn. In 2015, Barclays advanced £18.8bn across owner-occupied and buy to let mortgages.

RBS said its focus on service rather than price had proved it can grow in areas of the business such as the mortgage division.

The deepening losses rose from £2bn in 2015 to reach £7bn as at 31 December 2016. The bank said losses were driven up by litigation and conduct costs of £5.8bn for investigations into residential mortgage-backed securities (RMBS), provisions for additional PPI redress, a review into its treatment of SMEs and a provision in Ulster Bank RoI, for an industry-wide examination of tracker mortgages.

In a statement, chief executive Ross McEwan said: “The financial impact of these issues is a difficult but necessary step in working through the bank’s legacy issues.”

“…what happens to a bank when things go wrong…”

He added: “These costs are a stark reminder of what happens to a bank when things go wrong and you lose focus on the customer, as this bank did before the financial crisis. The more progress we have made on clearing these past issues, enables us to sharpen our focus on the core go forward bank.”

Last week, RBS announced it no longer had to sell Williams & Glyn to meet its obligations to the European Commission over the state bail out package it received in 2008. Instead, the Treasury is proposing a set of measures which will force the bank to support greater competition in the SME banking sector.

“The past is not completely behind us..”

“The past is not completely behind us, with our dealings on Residential Mortgage Backed Securities (RMBS) and Williams & Glyn, our residual European Commission state aid obligations, two significant issues that we still need to resolve,” McEwan said.

“The recent proposal by HM Treasury on an alternative way to increase competition to allow us to meet our state aid commitments would deliver an outcome more quickly, and with more certainty than undertaking a complex sale. We have been able to provide for both of these in our accounts, though there may still be substantial additional provisions on RMBS.”

In 2016, RBS’ restructuring costs were £2.1bn for 2016, compared with £2.9bn in 2015, and included a £750m provision for the new plan to meet its state aid obligations in respect of Williams & Glyn. The restructuring provision includes £146m of termination costs associated with the decision to discontinue the programme to create a cloned banking platform.

To post a profit by 2018, the bank’s target year, McEwan said more needs to be done to reduce costs further. He has pledged that the next three years will not be the same as the past three. He sees opportunities to lower operating costs by simplifying its businesses and transforming its digital offering. “We no longer have global aspirations,” he explained.

 

 

 

There are 0 Comment(s)

Comments are closed.

You may also be interested in

Business Skills

In this section, we offer short ‘how to’ guides on harder to crack areas of business. From social media, to regulation or niche product areas, we cover it all.

Profiles

Our journalists interview key industry entrepreneurs, strategists and commentators for day-to-day market insight and a strategic view of where the industry is heading. We offer lessons for success and explore the opportunities for your business

Success in Practice

Here, we share case studies fleshing out best practice to help you decide what could work for your business. Take a look at how others approached complex tasks like launching a new mortgage lender, advising on a new product area or deciding to specialise in another. Learn from others mistakes and triumphs.

Marketwatch

Each week, we ask top mortgage and property commentators with a unique perspective to examine a key news headline, market move or regulatory or political issue.

Poll

Vote in our weekly poll here. It’s your chance to tell us what you think and be heard on the top news stories of the week. Review our archive to find out what your industry really thinks and all our coverage of the results.

Top Comments

Be part of the conversation on Mortgage Solutions. We want to hear from you. We have a tool called Disqus to tell us which stories get the most comments each week. Every Friday, the team picks the most thoughtful or opinionated contributions from our readers to enjoy again. Don’t forget to share your favourite stories from the site on social media to keep the conversation going.
Read previous post:
Measuring tape on a slate background
Poll: Are lender metrics the best judge of broker business quality?

The IMLA White Paper out this week asked if lenders are too focused on broker performance metrics. Vote now in...

Close