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RBS increases mortgage lending but posts £968m loss

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  • 29/04/2016
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RBS increases mortgage lending but posts £968m loss
Royal Bank of Scotland almost doubled its annual mortgage lending to £7bn in the first quarter but posted a significant loss of almost £1bn.

Its Q1 results showed that the loss of £968m more than doubled on the £459m loss recorded during the same quarter a year earlier. The bank attributed this to its final dividend payment of £1.2bn to the government in order to allow its shareholders to begin receiving dividends again.

Despite this, mortgage lending gained traction with gross buy-to-let lending totalling £1.5bn from £0.8bn a year earlier.

Market share of new mortgages at RBS was approximately 11.4%, which it said has helped to support mortgage balance growth of 13%.

RBS has also been forced to push back the sale of its banking brand Williams & Glyn further, due to “significant risk” cited in its trading statement. The lender said analysis had revealed that complexities of W&G’s customer and product mix meant it would be “challenging” to replicate a banking platform by the end of 2017, when RBS had originally intended to achieve the sale by.

Reports have circulated in recent months that Santander and Virgin Money have expressed an interest in purchasing the brand, which will take on RBS customers in England and Wales once a sale has been achieved. Williams & Glyn was originally expected to launch an Initial Public Offering at the end of this year.

RBS also reported lower total operating expenses of £2.4m in the first quarter, 33% lower than Q1 2015, which it said was reflective of lower litigation and conduct costs as well as lower restructuring costs.

Restructuring costs totalled £238m in the quarter, down 47% compared to a year earlier, while litigation and conduct costs of £31m compared with £856m in the first quarter of 2015. Higher costs had related to additional provisions for the sale of risky mortgage-backed securities prior to the financial crisis, legal fees for its involvement in foreign exchange rigging, as well as additional PPI provisions and other customer redress.

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