RBS posts better than expected first-quarter profits as CEO search gets underway

© Reuters. People walk past a Royal Bank of Scotland office in London

By Lawrence White and Iain Withers

LONDON/EDINBURGH (Reuters) – Royal Bank of Scotland (LON:) has posted better than expected first quarter profits, a day after its chief executive Ross McEwan announced plans to leave within a year, kickstarting a new phase for the state-controlled lender.

RBS reported a net profit of 707 million pounds for the period, above expectations of 546 million pounds according to a company-provided average of analyst forecasts, but down from 808 million pounds the previous year.

RBS launched a global hunt for a successor to McEwan on Thursday, with top RBS executive Alison Rose tipped as the leading candidate.

The bank blamed tough trading conditions in the UK for the profit drop, particularly in the highly competitive mortgage market.

The pressure ate into the lender’s net interest margin – a key measure of underlying profitability – which declined 6 basis points quarter-on-quarter to 1.89 percent.

The bank said ongoing uncertainty over Brexit would likely delay borrowing by business customers, making growth more challenging.

RBS’s downsized investment bank performed badly over the period, with income down 41.4 percent on the previous year.

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