RBS 2018 Results: lender boosts dividend, Brexit threatens cost hikes

Royal Bank of Scotland (RBS) has increased the size of its dividend to shareholders after more than doubling its profit in 2018, but Brexit continues to be concern for the UK lender and the wider economy.

‘In 2018 the bank delivered a good financial performance, despite an uncertain economic outlook and a highly competitive environment,’ RBS Chairman Howard Davies said.

‘Paying a dividend for the first time in a decade showed continued progress in building a stronger, safer bank that is capable of delivering improving returns for shareholders.’

RBS results: key figures

The lender more than doubled its operating profit before tax to £3.4 billion in 2018, up from £2.2 billion a year prior, making it the bank’s second consecutive year in the black, with the news fuelling speculation that the UK government will look to sell-down its stake in RBS in the near future.

‘2018 was a year of strong progress on our strategy - we settled our remaining major legacy issues, paid our first dividend in ten years and delivered another full year bottom line profit,’ RBS CEO Ross McEwan said.

‘However, while our financial performance is more assured, we know that a significant gap remains to achieving our ambition to be the best bank for customers. We are fully focused on closing this gap.’

RBS share price climbs 3% this week in anticipation of strong 2018 results

The lender’s share price climbed 1.1% on Friday after announcing an impressive set of full-year results, with its stock likely to edge higher had it not been for its CEO warning that the bank could see a rise in bad loans as businesses will likely struggle due to economic uncertainty around Brexit.

‘The area where we have seen a slowdown is in the large corporates,’ McEwan told reporters. ‘They are pausing investment and waiting to see what the outcome on Brexit will be.’

Over the course of this week, RBS has seen its share price climb more than 3% as investors grew excited as forecasters rightly predicted a strong end to 2018 for the UK lender.

RBS increases its dividend pay-out to shareholders

The lender told investors, of which the UK government is a majority shareholder, that it would increased it annual dividend to 3.5p a share, along with an additional special pay-out of 7.5p a share.

The increase in its dividend after a tough decade for the bank, which had to be bailed out by the UK government to the tune of £45.5 billion after the 2008 financial crisis and was served with a $4.9 billion fine from the US Department of Justice over mis-selling mortgages.