Royal Bank of Scotland swung to a far better than expected first-quarter profit of 259 million pounds ($334.24 million), sending its shares up as much as 4 percent as the lender showed signs of progress in a decade-long turnaround. RBS's first quarterly profit since September 2015 had been expected, but the amount exceeded the 50 million pounds forecast average of analysts' estimates compiled by the bank. Chief Executive Ross McEwan has said 2017 will probably be the final year RBS makes a loss, as it moves nearer to closing the darkest chapter in its 290-year history.
The bank has racked up more than 58 billion pounds in losses since its 45.5 billion pound bailout, the biggest for a European bank, at the height of the 2008-2009 financial crisis. RBS shares lost some of their early gains on Friday and were up 2.3 percent by 0800 GMT, the second best performer in the STOXX European Banks index, which dipped 0.3 percent.
The goal of making a profit in 2018 depends on resolving RBS's two biggest remaining headaches: its talks with the US Justice Department on mortgage mis-selling, and with the European Union on the bank's state aid requirements. RBS stands accused like many peers of mis-selling mortgage securities in the build-up to the 2008 financial crisis, and is expected to settle with US authorities rather than fight the case like rival Barclays. "We have nothing more to say on any engagement with the Department of Justice," McEwan told reporters on the call.
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