First quarter net profits sank at Britain’s state-rescued Royal Bank of Scotland (Daniel LEAL-OLIVAS)

London (AFP) – Britain’s state-rescued Royal Bank of Scotland said Friday that first-quarter net profits sank 12.5 percent, hit by fierce competition in the home loans market and ongoing Brexit uncertainty.

Profit after tax slid to £707 million ($912 million, 818 million euros) in the first three months of 2019, down from £808 million a year earlier, RBS said in a statement issued one day after chief executive Ross McEwan’s resignation was announced.

RBS said its performance was dented by a “continued competitive mortgage market,” while lingering Brexit uncertainty persuaded many businesses to rein in spending.

RBS warned that Brexit would make its performance “challenging” in the coming months.

On a more upbeat note, operating profit before tax totalled £1.01 billion. That was down from £1.2 billion a year earlier — but beat an average analyst forecast provided by the bank of £900 million.

“While we retain the outlook guidance… we recognise that the ongoing impact of Brexit uncertainty on the economy, and associated delay in business borrowing decisions, is likely to make income growth more challenging in the near term,” RBS said.

Chairman Howard Davies had already warned Thursday at the lender’s annual general meeting that worries over Britain’s EU departure would weigh on both economic growth and the bank’s performance.

RBS also said Thursday that McEwan will step down after having steered it to a strong financial position over the last five-and-a-half years.

“This is a solid set of results set against a highly uncertain and competitive backdrop,” McEwan said on Friday.

“We continue to support our customers through this Brexit uncertainty while investing and innovating in digital services to meet rapidly changing customer needs.”

The Edinburgh-based lender is still 62.4-percent government-owned after its bailout at the height of the global financial crisis.

The first-quarter earnings drop comes after RBS had revealed in February that it enjoyed its second successive year of profit in 2018.

New Zealander McEwan has been at the helm since 2013 and helped guide the financial services giant to a steady recovery through a drastic restructuring after the dramatic bailout during the 2008 financial meltdown.

The 61-year-old has a 12-month notice period and will remain in the position until a successor has been appointed.

The group was saved at the height of the financial crisis with £45.5 billion of taxpayers’ cash in what was the world’s biggest banking bailout.

McEwan has overseen a massive overhaul of operations, slashing the lender’s investment banking activities and axing tens of thousands of jobs. 

In total, RBS has suffered net losses of about £60 billion since the state rescue.

Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.