Save, make, understand money

Credit Cards & Loans

RBS slumps to quarterly loss after £900m PPI hit

Emma Lunn
Written By:
Emma Lunn

Royal Bank of Scotland (RBS) has posted a quarterly loss after being forced to put aside an extra £900m to cover a last-minute surge in payment protection insurance (PPI) complaints before the 29 August deadline.

The extra charge meant RBS slid to an operating loss of £8m for the three months to September, compared with a profit of £961m in the same quarter last year.

RBS’ investment banking arm, known as NatWest Markets, reported a £193m loss for the quarter as it felt the impact of a “deterioration in economic sentiment for the global economy and a fall in bond yields”.

However, the bank’s Q3 2019 statement claimed the bank was continuing to make good progress against its 2019 targets. It said costs were £193m down this year and net lending up 3.2 per cent on an annualised basis.

Katie Murray, RBS chief financial officer, said: “These results demonstrate our solid underlying performance in a tough operating environment. The core retail and commercial bank continues to perform well, and we are making good progress against our targets for the year.

“We have seen strong growth across the business and our sustained high levels of capital and liquidity mean we are well positioned to support our customers in these uncertain times.”

RBS warned last month that it faced a bill for further compensation for mis-sold PPI. It made an additional provision of between £600m and £900m – so the £900m charge was at the top end of expectations.

PPI was designed to cover loan repayments if borrowers fell ill or lost their job, but many policies were sold to people who did not want or need them. Consumers had until 29 August to make a complaint about mis-sold PPI under rules set down by the Financial Conduct Authority. Like other banks, RBS saw a surge in claims as the deadline approached.