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The Royal Bank of Scotland will pay a significantly larger dividend than expected after announcing a strong end until 2018, but warned that the impact of Brexit would make it unlikely the achievement of some of its long-term goals .
The taxpayer – backed bank proposed a combination of final and special dividends that would bring the total payment for the year to 13 pence per share, 60% more than forecast.
Profit before tax for the year increased by 50% to £ 3.4 billion, against a consensus forecast of £ 3.2 billion set by the company. Lower costs led to an increase, while total revenue increased by only 2% to £ 13.4 billion.
Managing Director Ross McEwan said the bank had "performed well in the face of economic and political uncertainty," but the bank had taken a more pessimistic tone on future prospects.
The bank suffered further Brexit-related losses after hitting £ 100m in the third quarter, but warned that bad debts would likely increase in 2019 due to "political uncertainties and ongoing geopolitical tensions. ". He also said that additional costs related to the Brexit and cantonment legislation would make "increasingly difficult" to reach its 2020 target of reducing the cost / income ratio from 71.7% to 50%. %.
The bank's common equity ratio, which is a critical measure of its strong balance sheet, declined due to the expected dividend payout, but remained well above its long-term target of 16.2. %. Last week, RBS obtained shareholder permission to use part of its excess capital to buy back part of the government's shares.
The government sold 7.7% of the bank last June and pledged to sell the rest of its stake by 2023. The Treasury announced that it was not expecting not to make a profit on sales, but it must prove to the government Audit Office that any sale represents value for money. RBS shares have fallen more than 10% since the last sale, despite improving its financial results.
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