Royal Bank of Scotland Group PLC said it will pay out £1.7 billion in first-half dividends to shareholders as it posted a year-over-year jump in second-quarter profit, boosted by lower litigation and conduct costs and higher noninterest income.
The British lender reported second-quarter profit attributable to ordinary shareholders of £1.33 billion, up from £96 million a year earlier. EPS for the quarter was 11.0 pence, compared to 0.8 penny in the second quarter of 2018.
Net interest income fell year over year to £1.97 billion from £2.18 billion, while noninterest income rose to £2.11 billion from £1.22 billion. The net interest margin came in at 1.78%, compared to 2.01% a year earlier.
Litigation and conduct costs amounted to £55 million in the period, down from £782 million a year ago, while strategic costs increased over the same period to £434 million from £141 million. Operating expenses totaled £2.16 billion, down year over year from £2.72 billion.
The bank booked impairment losses of £237 million in the quarter, compared to £63 million a year earlier.
Return on tangible equity stood at 15.8% in the second quarter, up from 1.1% in the year-ago period. Given current market conditions, the contraction of the yield curve and continued political and economic uncertainty, RBS said it was very unlikely that it will reach its target return on tangible equity of more than 12% in 2020, but noted that it could achieve the target in the medium term.
For the first half, the group's attributable profit jumped year over year to £2.04 billion from £888 million. EPS for the period rose to 16.8 pence from 7.4 pence a year ago.
RBS declared an interim ordinary dividend of 2 pence per share and a special dividend of 12 pence per share for the first half, with both dividends to be paid Sept. 20 to shareholders on the register at the Aug. 16 business close.
The bank's common equity Tier 1 ratio stood at 16.0% at June-end, compared to 16.2% at the end of March and a year earlier. Its CRR leverage ratio was 5.2% at the end of June, unchanged from March-end and down from 5.4% a year ago.