British state-backed lender Royal Bank of Scotland said its profits halved in the first quarter, as it set aside £802 million ($1.01 billion) against a likely spike in bad loans due to the coronavirus pandemic.
RBS on Friday posted pre-tax profits of £519 million for the period, down from £1 billion the previous year, just ahead of the £415 million average of analyst forecasts compiled by the bank.
"Although the outlook remains extremely uncertain, we approach the crisis from a position of strength, with confidence in our balance sheet and focus on our strategic priorities," Chief Executive Alison Rose said.
The lender beat expectations thanks partly to a 9% gain in core income from increased trading in volatile markets at its previously loss-making investment bank NatWest Markets, helping cushion a fall in its retail business.
Despite the boost, RBS said it was still committed to shrinking the unit, where it is currently making around 130 redundancies.
RBS reiterated its strategic priorities set out by CEO Alison Rose in February, but said it would wind down Bó, the digital bank only launched last November, as a customer facing brand.
The bank said Bó's technology would be merged with another of its digital brands, Mettle. The venture had a sluggish start and failed to impress investors.
RBS said the gloomier economic outlook meant that its loan loss rate would be "meaningfully higher" than previously expected and its risk weighted assets would be higher.
The bank said it had provided £1.5 billion of loans under a government-backed coronavirus relief scheme for businesses — the most of any bank — and 190,000 mortgage repayment holidays to struggling customers.
RBS remains 62% owned by taxpayers following its £45 billion state bailout in the 2008 financial crisis.
RBS Chairman Howard Davies said to investors on the bank's webcast investor meeting on Wednesday that the lender's sharp share price fall since the virus outbreak had made any state stock sales soon unlikely.