Royal Bank of Scotland said it made a pretax profit of 1 billion pounds ($1.7 billion) in the second quarter, far better than analysts had expected, due to a turnaround in losses from bad loans, prompting it to release its earnings a week early.
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RBS, which is 81 percent owned by the British government, said the profit was mainly because of an economic upturn that allowed it to write back losses that had been booked on bad loans, giving it a net release of 93 million pounds.
That compared with 1.1 billion pounds of impairments in the second quarter of last year and expectations from analysts that it would book impairments of about 500 million pounds.
The bank made an operating profit of 1.3 billion pounds in the second quarter, up from 174 million pounds a year ago. Its 1.01 billion pound pretax profit was in contrast to expectations that it would post a small loss, based on analyst forecasts compiled by the company.
RBS said it was obliged to release headline numbers early because they were far better than market expectations. It will release full results on Aug. 1.
Chief Executive Ross McEwan said the results showed the steady progress being made to make RBS "a much simpler, smaller and fairer bank".
"These results show that underneath all the noise and huge restructuring of recent years, RBS is a fundamentally stronger bank that can deliver good results for customers and shareholders," McEwan said.
The bank increased the amount it set aside to compensate customers for mis-selling payment protection insurance and interest rate swaps by 250 million pounds.
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