RBS has no reason to crow about its first profit in ten years

Boss Ross McEwan says it's symbolic but we focus far too much on symbols in this country. They’re simple, and they’re easy to digest, but they have a tendency to obscure the real picture.

RBS CEO Ross McEwan has hailed bank's first profit in ten years as "symbolic" (Getty)

“Symbolic,” is the word Royal Bank of Scotland CEO Ross McEwan used to describe the institution's first annual profit in a decade.

I should clarify: the first annual attributable profit. Banks like to quote lots of different figures for their profits. RBS has, for example, been able to declare operating profits from its day to day business on several occasions over the last ten years. But they always ended up getting wiped out at the headline level by various one off nasties. Fines, settlements and the like. Charges that really aren’t one offs at all if you consider the frequency with which they occur.

What’s different about these latest results is that after all the deductions have been knocked off there is still £752m left in the kitty. By the way, a shade over 70 per cent of that “attributable profit” is ours. By which I mean, the taxpayer’s. Aren’t you pleased?

We focus far too much on symbols in this country. They’re simple, and they’re easy to digest, and they make some people feel good, but they have a tendency to obscure the real picture.

That explains why the current generation of politicians is so fond of them and why you’ll soon be paying through the nose for a blue passport. Forget the grotesque damage the Government is causing with the lunatic Brexit course it is charting. The passport is blue now! Aren’t you pleased?

Back to RBS. The true picture there is that the bank still faces a truly enormous fine from the US authorities for the role it played in flogging dodgy products linked to dodgy mortgages a decade ago.

There’s £3.2bn in the kitty to cover it but I don’t imagine that’ll be enough given the way these things go. Had the case been settled this year, as the bank was hoping, the symbolic profit everyone’s getting terribly excited about probably wouldn’t have been there.

There remains the continuing issue of the small business customers mistreated by the business, an open wound that RBS is still trying to apply a dressing to (with the help of a High Court judge who’s looking at complaints).

It isn’t altogether clear that the business really grasps what went wrong with the since closed Global Restructuring Group, that used to handle struggling borrowers, even after a blizzard of reports, including a critical one commissioned by the Financial Conduct Authority that was finally published by the Treasury Committee earlier this week. Not deep down. And if you don’t really understand the illness there’s a good chance it will recur.

RBS is also set to incur a £2.5bn restructuring charge over the next couple of years. A dividend? Forget about it.

Despite that symbolic profit, the shares fell, and by quite a bit, in response to the results, which tells you all you need to know. The markets don’t have any time for symbolism.

At its current level the price is at less than half where it needs to be for the Government to make a profit on the investment it made on our behalf.

So symbolism be damned. RBS has still got a lot of work to do and it has nothing to crow about.