Britain’s largest state-owned lender Royal Bank of Scotland (RBS) on Friday reported a net loss of 968 million pounds ($1.4 billion) in the first three months of 2016 — more than double the loss reported in the same period last year. In a statement, the bank attributed the loss to a 1.2 billion pound ($1.76 billion) one-off dividend payment in March to the U.K. government.
RBS was bailed out by the British government in the aftermath of the financial crisis and is still 73 percent state-owned. The terms of the 2008 bailout deal prevent the lender from making dividend payments to other shareholders before paying the U.K. government.
The bank said that if the dividend payment to the government was excluded, profit in the quarter would have stood at 225 million pounds ($330 million).
Pretax profits in the quarter came in at 421 million pounds ($617 million) — up from 37 million pounds ($54.2 million) in the year-earlier period. Revenue, however, dipped 13 percent, to 3.06 billion pounds ($4.5 billion) from 3.52 billion pounds ($5.16 billion), as RBS shrunk its investment banking unit and sold off U.S. businesses.
“RBS remains on track with its plan to build a strong, simple, fair bank for customers and shareholders,” the lender said in the statement. “RBS remains on track to achieve an £800 million [$1.17 billion] cost reduction in 2016 after achieving a £189 million [$277 million] reduction in the first quarter. We retain our expectation that cost reduction will exceed any income erosion across our combined core businesses.”
The bank’s restructuring costs also dropped in the quarter, to 238 million pounds ($348.6 million) from over 450 million pounds ($659.2 million) in the same quarter last year. However, it was forced to set aside another 31 million pounds ($45.4 million) in litigation and conduct expenses, including costs related to claims over sale of toxic mortgage securities in the U.S.
During early trade Friday, the bank’s London-listed shares were down 0.8 percent. Year-to-date, RBS’ stock has dropped 18.5 percent, underperforming the broader index.