RBS sees profit halved by £802 million Covid-19 provision
Royal Bank of Scotland saw profit halved by £802 million coronavirus provision, prompting it to bin its digital banking unit Bó.
Royal Bank of Scotland (RBS) saw its profit halved in its first quarter (Q1) results due to the lender allocating £802 million to cover a spike in bad loans as a result of the Covid-19 crisis.
However, it is worth noting that despite RBS reporting a significant decline in quarterly profit, the lender did manage to beat analysts’ forecasts due to a 9% rise in income from its investment banking unit NatWest Markets due to increased market volatility.
Despite a disappointing set of Q1 results, the fact that RBS actually exceeded analysts expectations helped the bank’s shares climb 6% higher on Friday – outperforming the broader market, with the FTSE 100 down 1%.
RBS is trading at 117p a share as of 13:45 (GMT).
RBS scraps digital bank offering amid challenging market conditions
Due to RBS having to put aside its multi-million coronavirus provision, the bank’s CEO Alison Rose said that the lender remains committed to reducing its investment banking footprint and will scrap its digital bank unit, Bó, which acquired 11,000 customers since launching in November last year.
Moving forward, RBS said that Bó’s technology will be merged with another of the bank’s digital brands, Mettle.
Bó was launched as a means of attracting younger customers and competing against digital banking rivals like Monzo and Starling. Despite scrapping the digital bank brand, RBS said it has learned a lot from the project.
‘Bó hasn’t failed,’ Rose said. ‘We’ve made a decision which is a prudent decision at this point ... we will apply a disciplined view in terms of our approach to innovations, testing and learning.’
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