August 2 (Reuters) – Royal Bank of Scotland (RBS.L) on Friday announced a 1.7 billion pound ($2.06 billion) dividend, but warned a tough economic environment ahead of Brexit will mean it is likely to miss its profitability and cost targets for next year.FILE PHOTO: The logo of RBS (Royal Bank of Scotland) bank is seen reflected in the windows of a branch of the bank in the City of London financial district in London September 4, 2017. REUTERS/Toby Melville/File Photo
The state-backed lender posted stronger-than-expected half-year pretax profits of 2.7 billion pounds, above forecasts of 2.3 billion pounds according to a company-provided average of analyst forecasts.
The figure was up 48% on 1.8 billion pounds the previous year, largely lifted by a 700 million pound boost from selling its stake in Saudi bank Alawwal.
Without this one-off boost, pretax profits came in at 2 billion pounds, just ahead of consensus forecasts for 1.9 billion pounds.
But the bank said a tough outlook would make it “very unlikely” to meet its target of achieving a 12% plus return on tangible equity.
RBS added it would struggle to reduce its cost to income ratio to below 50% by 2020, although said this remained its medium term goal.
The lender followed up on its first full-year dividend in a decade with an interim dividend of 2 pence per share and a special dividend of 12 pence.
The British government, which still owns 62% of the lender following a financial crisis bailout, will receive a billion pounds of that.
RBS gave no update on its search for a new CEO to replace outgoing head Ross McEwan.
McEwan, 62, said in April he planned to retire within the next year, but the hunt to replace him has gathered urgency after National Australia Bank said last month that he would become their next chief executive.
RBS business banking boss Alison Rose is widely seen as the leading internal candidate for the job. External contenders approached about the role have included HSBC UK chief Ian Stuart and Whitbread CEO Alison Brittain according to recent press reports.
Reporting by Iain Withers and Lawrence White; Editing by Rachel Armstrong
LONDON,
BY REUTERS
