The Royal Bank of Scotland (RBS) reported a net profit of £707 million ($912.2 million) for its first quarter on Friday, down 11% from the £792 million posted over the same period last year.
The figures exceeded expectations of £546 million according to a company-provided average of analyst forecasts. However, RBS shares fell 5% Friday morning as the bank warned of upcoming challenges due to continued Brexit uncertainty.
The news comes following the announcement Thursday that CEO Ross McEwan will step down in 2020. The bank has now launched a global hunt for his successor, with RBS executive Alison Rose tipped as favorite for the job.
Here are the key figures:
In the earnings statement, RBS said the "ongoing impact of Brexit uncertainty on the economy, and associated delay in business borrowing decisions, is likely to make income growth more challenging in the near term."
The bank has long warned of the possible impact of the U.K.'s departure from the European Union, along with a highly competitive mortgage market. In the third quarter of 2018, RBS set aside £100 million to deal with economic uncertainties, including the fallout from Brexit.
The figures come amid what is proving to be a difficult earnings season for the European banks, with fellow British giant Barclays reporting a 10% drop in profits Thursday.
Shareholders at the bank's annual general meeting (AGM) yesterday voted to back the bank's remuneration report, despite challenges from shareholder advocacy group ShareSoc over McEwan's 35% annual pension allowance, compared to 10% for the average employee.
RBS is still 62% owned by the taxpayer as a result of its £45.5 billion government bailout following the 2008 financial crisis. The bank said on Friday that it hopes the U.K. government will sell its entire stake by 2030.
The British Treasury took a £2.1 billion hit in selling 7.7% of its stake in June 2018. In August 2018, the bank announced it would pay its first dividend to shareholders since the crash.
RBS also revealed it is providing information to regulators concerning investigations into an alleged massive money laundering scheme involving Russian and Lithuanian entities between 2006 and 2013.
British private bank Coutts, part of RBS-owned Natwest group, and Dutch bank ABN Amro, part of which RBS acquired in 2007, are among those alleged to have processed transactions within the "Global Laundromat" scheme.
"RBS is investigating these reports, and in particular whether the relevant business unit of ABN Amro was part of the business acquired by RBS in 2007," the group's results revealed.