RBS smashes analysts' forecasts with second quarter results

Royal Bank of Scotland saw profits decline in the second quarter, as a result of lower income at its corporate and institutional banking unit after it was downsized and higher restructuring costs, but nevertheless beat analysts' estimates by a wide margin.

The group also highlighted "good" progress on meeting its full-year cost targets and its strengthened capital position.

For the three months ending 30 June adjusted operating profits decreased 7% to £1.8bn from the second quarter of 2014 - but beat consensus forecasts by 48% - and rose by 11% from the first three months of the year.

Second quarter attributable profits came in at £293m, versus consensus of a £300m loss.

In the second quarter the Personal & Business Banking and Commercial & Private units put in a strong performance, RBS said, while litigation and conduct costs fell to £459m from £856m over the prior three months.

However, this was offset by an increase in restructuring costs to reach £1.05bn, up from £453m in the same quarter of 2015.

For the first six months of the year adjusted operating profits rose 2% to reached £3,5bn in comparison to the prior year period.

The lender's capital position, as measured by its common equity Tier 1 ratio improved by 80 basis points in the second quarter to reach 12.3%.

RBS was still on track to achieve its £800m cost reduction target, management said in a statement.

As of 08:57 shares in RBS were standing 1.87% higher from Wednesday's close at 359.5p.