LONDON, May 3 (Reuters) - State-backed Royal Bank of
Scotland reported its first quarterly profit in 18
months on Friday and said it expected to complete its
restructuring during 2014, potentially enabling the government
to start selling shares.
RBS, which is 82 percent-owned by the taxpayer, made a
pretax profit of 826 million pounds ($1.3 billion), compared
with a loss of 1.5 billion pounds in the same period last year.
Analysts had forecast a profit of 800 million pounds.
Chief Executive Stephen Hester has overseen the shedding of
around 900 billion pounds in assets and is focusing on lending
to British households and small businesses.
"We expect to substantially complete the bank's
restructuring phase during 2014. We are seeing the start of a
pick-up in loan demand and have a strong surplus of funds ready
and available to support economic recovery," he said.
However, Hester still has major hurdles to overcome.
Britain's financial regulator said in March that UK banks must
raise 25 billion pounds of extra capital by the end of the year
to absorb any future losses on loans.
Although the regulator has not yet given specific guidance
to individual banks, analysts expect the biggest shortfall to be
RBS said its capital position had improved during the period
and its core tier one ratio - a bank's main benchmark of health
- had risen by 50 basis points to 10.8 percent. It expects to
have a core capital ratio of 9 percent at the end of 2013 on the
basis of full implementation of tougher Basel III capital rules.
Britain's regulator wants major lenders to achieve a core
tier one ratio of at least 7 percent.
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