LONDON (Reuters) - Royal Bank of Scotland swung to a better than expected first quarter profit of 259 million pounds ($334.24 million), it reported on Friday, its first quarterly profit since September 2015.
The result was more than the 50 million pounds forecast from the average of analysts’ estimates compiled by the bank, as the state-backed lender battles restructuring costs and conduct fines resulting from its years of over-expansion leading into the 2008 financial crisis.
The bank has said 2017 will probably be the final year it makes a loss as it moves nearer to closing the darkest chapter in its 290-year history, which has seen it rack up more than 58 billion pounds in losses so far.
The lender said it had no update on progress in talks with the U.S. Justice Department as the bank seeks to settle claims that it like many peers mis-sold mortgage securities in the build-up to the 2008 financial crisis.
RBS in January set aside a further 3.1 billion pound provision as it prepares to settle the claims, which some analysts have said could end up costing it as much as 9 billion pounds in total.
Resolving the case is one of the bank’s two biggest remaining barriers to the goal of making a profit in 2018.
The other is an obligation RBS had under European state aid demands, whereby in recompense for receiving its bailout the bank would have to sell its Williams & Glyn unit.
RBS said in February it had found a potential escape from that seven year-process, which had been fraught with rising costs and complexity. Instead the government is applying to the European Commission to approve a new plan whereby RBS will instead put in place measures to boost the competitiveness of smaller British bank peers.
The European Commission is investigating the proposals.
RBS said its core capital ratio, a key measure of financial strength, rose to 14.1 percent from 13.4 percent a year ago.
Reporting By Lawrence White, editing by Huw Jones
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