The bank said bad debts jumped to £7.5bn as retail and corporate businesses wiped out strong gains in investment banking. Within the results, there was also a £3.8bn profit from buying back the bank’s own debt. That gave the bank a pre-tax profit of £15m for the first half of the year.
Gross lending for the bank stood at £7.2bn and net lending stood at £4.1bn. Loan loss charges grew 409% to £7.52bn from £1.48bn. New loans to UK homeowners and businesses totaled £36bn in the first half of the year. UK mortgage balances including Ulster Bank as at 30 June totaled £80.8bn, up from £74.2bn last year.
Arrears from the NatWest and RBS UK mortgage book have risen to 1.8% at 30 June 2009 from 1.16% last June. The average LTV for new business was 65% in the first half of 2009 compared to 67% for 2008.
RBS attributed the performance in mortgages to “good volumes of new business delivered primarily through organic channels as well as very good customer retention.”
The lender added that loans and advances to customers increased by 6% with particularly strong growth in mortgage lending” which rose by 10%. Gross mortgage lending market share for the group increased to 10.5%, up from 6.5% last year. The bank says it is on track to grow net mortgage lending by £9bn as planned.
RBS did not confirm that the period would be the peak for write-offs, with Hester declining to make such a call in uncertain economic times.
Stephen Hester, chief executive of RBS, said that first-half results were poor and warned that overall results may not substantially improve until 2011.
He said: “I am optimistic for RBS’s future. We can restore the bank to standalone strength and viability. But there will be no miracle cures. Our task is no less than one of the largest bank restructurings ever done, in the face of strong economic headwinds.”
