The Royal Bank of Scotland (RBS) (LON:RBS) has reported its H1 2016 earnings, its first figures since the Brexit referendum back in June. The results showed widening losses and revenues that could not get back on track, despite a relatively lean quarter of personnel moves and cuts.
RBS (LON:RBS) has been in the midst of a similar predicament as other lenders in the UK, i.e. how to combat falling profit margins and revenues with the mounting cost of labor. For its part, RBS has embarked on a retail cost cutting strategy, that’s also seen the loss of thousands of jobs.
Over the past five months alone, RBS has shed upwards of 5% of its UK workforce, with an additional 900 jobs slated for oblivion in the coming months – these cuts will be relegated to the commercial, retail, and private banking sector, of which technology and back office roles will be the target of layoffs. Its UK business as the lender still boasts an overall workforce that is over 60,000 strong in the country, despite the large cuts.
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In terms of earnings specifics, RBS (LON:RBS) reported an H1 2016 revenue of $8.02 billion (£6.1 billion), down from $9.6 billion (£7.6 billion) in the year prior, which correlated to a loss of -19.2% YoY. H1 2016 was characterized by soaring litigation provisions and a litany of restructuring costs – this included a $1.7 billion (£1.32 billion) provision to cover litigation-and-conduct costs, as well as an undisclosed amount to settle a lawsuit over disclosure allegations.
Additionally, RBS posted a $2.7 billion (£2.05 billion) net loss for H1 2016, which should do little to calm investors Friday. At the time of writing, shares of RBS (LON:RBS) were down over -5.0% on the news.
According to RBS’s Chief Financial Officer (CEO) Ewen Stevenson in a recent statement to CNBC on the performance, “We’ve always been pretty upfront that we are in a sort of transitional period over 2015 and 2016. I think what you saw with today’s results was very consistent with that.”
“A billion pounds of pre-tax operating profit for the core business and then on top of that, a whole series of restructuring costs and provisions for legacy litigation and conduct issues that we’ve been pretty upfront about, that we continue to clean up,” he added.