- Royal Bank of Scotland will pay shareholders a dividend for the first time since the financial crisis, the bank announced on Friday.
- Investors will receive an interim dividend of two pence ($0.026) per share, pending the final settlement of a fine from the US Department of Justice.
- RBS achieved an attributable profit of £888 million ($1.15 billion) in the first half of the year.
- RBS shares jumped on the news, gaining around 2% in the first 30 minutes of trading in London.
LONDON – Royal Bank of Scotland has announced plans to pay shareholders a dividend for the first time since the financial crisis as its business continues to return towards normality.
The bank, which was once the world’s biggest, said at the release of its financial results for the first half of 2018 that will pay an interim dividend of two pence ($0.026) per share, pending the final settlement of a fine from the US Department of Justice relating to the historical sale of mortgage-backed securities. That fine is expected to be in the region of $4.9 billion (£3.8 billion)
After being bailed out by the British government during the financial crisis, RBS has spent 10 years in partial government ownership and struggled to turn a profit. In February this year, it announced its first profits since the crisis.
The bank remained profitable over the first half of 2018, posting an attributable profit of £888 million ($1.15 billion) over the period between January and June. “We are pleased with the progress we’ve made in the first half of 2018 and see these as a good set of results in a more uncertain and highly competitive environment,” Ross McEwan, the bank’s CEO said in a statement.
“Our sector is undergoing significant change and we are positioning ourselves well to compete. We still have a lot more to do to achieve our ambition of being the best bank for customers in the UK and Republic of Ireland. However, with our major legacy issues largely behind us, we are able to fully focus on closing this gap.”
McEwan was brought in as CEO in October 2013 and has said he will leave the bank once the worst of its post-crisis legacy is fixed.
RBS is currently around 62% owned by the British taxpayer, down from more than 70% earlier in the year.
Shares jumped on the announcement, gaining around 2.5% in early morning trade. This reflects the increased attractiveness of the stock now that the bank is once again paying a dividend:
Earlier in the week, Barclays announced a 44% rise in second-quarter profits, buoyed by its investment bank, and Lloyds booked a 23% rise in first-half profits.