RBS raises City hopes after posting first profit since 2015

Royal Bank of Scotland turned its first profit since September 2015 today, offering hope it has finally turned the corner and suggesting the Government could start selling its 72% stake.

The bank, which sponsors the Six Nations rugby tournament, still faces massive headwinds in the face of a settlement of at least $10 billion (£7.7 billion) with the US Department of Justice over mis-sold mortgage bonds and a potentially embarrassing court case that could see former boss Fred Goodwin give evidence against it.

RBS made a profit of £259 million for the first quarter, compared with a loss of £968 million last time.

Shares jumped 4% to 259p on the news — still a long way off what the Government paid for them. Without restructuring costs, RBS made a profit of £1.3 billion.

City analysts think it should make at least that much in pure profit every quarter once the bank is finally cleaned up.

RBS made a loss last year of £7 billion. Next month’s court case is over whether investors were misled about a rights issue before the bank went bust. Goodwin is likely to be a controversial witness.

Richard Hunter, head of research at Wilson King Investment Management, said: “Though it’s too early to hang out the bunting, there are some signs of recovery at the beleaguered bank.”