Outgoing RBS chief blames Brexit worries as profits fall

BREXIT is causing people to hold fire on investment and borrowing decisions, the outgoing boss of RBS has warned as it unveiled a slide in profits.

Ross Mcewan said that customers “pausing” investment because of the uncertainty created by Brexit “impacted both our lending and income in the [first] quarter”.

He made the comments after chairman Sir Howard Davies warned that Brexit was weighing on the economy and would hit the bank’s performance. The lender said it recognised that the “ongoing impact of Brexit uncertainty on the economy, and associated delay in business borrowing decisions, is likely to make income growth more challenging in the near term”.

However, Mr Mcewan insisted the bank stood “ready to lend” to businesses, noting it had doubled the size of its fund to help firms to £6bn.

US investment bank Goldman Sachs has warned that “the side-effects of Brexit on the UK economy have intensified”.

“Brexit has taken a toll on the UK economy – even though it has not yet happened,” Goldman analysts wrote to clients. Goldman still believes the UK will leave the European Union with some form of deal, but warned that “the politics of Brexit have clearly become more protracted”. It added that an increase in jobs masked the fact that businesses were not investing in capital or technology to make themselves more productive.

RBS reported a 12.5pc fall in profits to £707m in the first quarter, indicating there is plenty of work ahead for the person who replaces Mr Mcewan, who announced his resignation on Thursday after more than five and a half years in charge.

“Today’s results offer a stark reminder that the RBS recovery remains unfinished business. His successor will have his (or more likely, her) work cut out,” said Investec’s Ian Gordon, in reference to the front-runner to replace Mr Mcewan, Alison Rose, an RBS lifer who runs the bank’s commercial and private banking arm.

RBS, which was rescued by a £45bn bailout at the height of the 2008 financial crisis and still 62pc owned by the taxpayer, also revealed it saved £45m during the quarter and was on track to cut £300m by the end of the year. Its shares closed down 4pc at 240p. The Treasury wants to sell all its shares in the bank by 2024.