Royal Bank of Scotland, the UK's second-largest bank, has reported record 2004 pre-tax profits having benefited from a significant contribution from recent acquisitions.
Following on from other British banks to post bumper results for last year, Royal Bank of Scotland (RBS) said it had broken through the GBP8 billion profit barrier for the first time. Profits before tax, goodwill amortization and integration costs, rose by 15% to GBP8.1 billion ($15.4 billion).
The bank’s balance sheet showed that it had achieved strong growth across all its businesses. In particular, the performance of Citizens, its US division, enabled RBS to dismiss concerns surrounding its $10.5 billion acquisition of US bank Charter One last August. RBS said that profits at Citizens increased by 36% to $1.9 billion.
RBS has spent around $61bn in the process of acquiring several companies, including NatWest, over the past five years. Such a spending spree led to suggestions that the overall bank would be unable to improve its rate of return. Chief executive Sir Fred Goodwin did however, state that RBS had no plans to make any further large US acquisitions in the immediate future.
RBS was also boosted by its insurance business which increased its income by 52% to GBP862 million, reflecting both the acquisition of Churchill in September 2003 and organic growth. RBS said that the division was now the second largest general insurer in the UK.
Upon the presentation of its results, RBS is said to be confident on its prospects for this year. Economic growth during 2004 was strong in virtually all of the economies in which we operate, and this trend is expected to continue in 2005 albeit at a slightly lower rate, stated Sir Goodwin.