Updated March 3 at 5:03pm

RBS soars after reporting 1Q profit increase

Royal Bank of Scotland Group PLC, Britain’s largest state-owned lender, jumped by the most in more than two years in London after reporting a threefold gain in quarterly profit. More

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RBS soars after reporting 1Q profit increase

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LONDON – Royal Bank of Scotland Group PLC, Britain’s largest state-owned lender, jumped by the most in more than two years in London after reporting a threefold gain in quarterly profit.

The lender said first quarter-profit tripled to 1.2 billion pounds ($2 billion), beating the 200 million-pound ($338 million) average estimate of eight analysts surveyed by the bank, after impairments fell and its Ulster Bank unit had its first profit since the financial crisis. The stock climbed 8.2 percent to 331.7 pence ($5.59), the biggest increase since January 2012.

Ross McEwan, who took over as CEO in October, is setting up an internal bad bank, combining divisions and scaling back the investment bank after the lender reported its biggest annual loss since the financial crisis in 2013. His efforts and those of his predecessor, Stephen Hester, to revive profit have been hampered by loan losses and the spiraling cost of redress for customers wrongly sold interest-rate swaps and payment-protection insurance.

“They are a good set of numbers,” Vivek Raja, analyst at Oriel Securities Ltd. in London with a sell rating on the stock, said by telephone. “The key thing is impairments, which really are better than expected across both the bad bank and the core bank - and the outlook is quite positive.”

Both RBS and Lloyds Lloyds Banking Group PLC, Britain’s largest mortgage lender, are being helped as the country’s economy starts to grow and the housing market booms, helping to drive down bad debts. Lloyds yesterday posted a 22 percent gain in first-quarter profit. Barclays PLC, the country’s second-largest bank by assets, is slated to report results next week.

Impairments beat

At RBS, provisions for souring loans shrank to 362 million pounds ($611 million) in the first quarter from 1.03 billion pounds ($1.7 billion) in the year-earlier period. Impairments were 500 million pounds ($844 million) lower than the estimate of Jason Napier, an analyst at Deutsche Bank AG in London.

Royal Bank of Scotland Group PLC, RBS, Citizens Bank, Ross McEwan, Stephen Hester, RBS bad bank, Citizens Financial Group, Ulster Bank, Nathan Bostock,
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