RBS sets aside £100m to cover 'economic uncertainty' as UK prepares to leave EU

Profits rose but bank is wary of uncertain economic climate

The bank has closed several branches in recent months (PA)

Royal Bank of Scotland has set aside £100m to deal with greater economic uncertainty, the first major UK bank to make such a provision linked to Brexit.

Chief executive Ross McEwan said the lender was taking into account the possibility of more negative outcomes from the Brexit negotiations, under new accounting standards that require banks to be better prepared for possible future losses.

“There’s a lot more uncertainty in the marketplace until we get an agreement, and that’s what this is reflecting,” he said.

The group also said it had taken a £60m impairment charge in its Irish business in relation to non-performing loans.

The lender reported a 10 per cent increase in profits in the third quarter, up to £961m from £871m in the same period of 2017. In the year so far, the bank said profit is £2.8bn.

Mr McEwan said: “This is a good performance, set against a highly competitive market and an uncertain economic outlook.

“We are growing lending in our target markets and are in a strong position to support the economy. We’re aware there is much more work to do and are fully focused on improving for our customers.”

RBS recently paid its first dividend in 10 years, after reaching a legal settlement with the US over its role in misselling mortgage-backed securities in the run-up to the 2008 financial crisis.

The settlement allowed the UK government to resume selling off its stake in the bank, which it has held since it bailed out RBS during the crisis.

Shares in the group dropped almost 5 per cent in early trading.

Additional reporting by agencies