While RBS (RBS) passed this week's EU-wide stress-testing exercise rather less comfortably than had been hoped - it adverse scenario capital ratio reached just 6.7 per cent, compared to the 5.5 per cent minimum - the lender's third quarter figures offered more comfort.
Indeed, improving credit quality - especially at the Irish operations - drove a chunky £800m provision write-back. That helped the lender's underlying operating profit to reach £2.2bn in the third quarter, comfortably beating analysts' consensus estimates of about £2bn. Capital adequacy looks comfortable, too, and Investec Securities expects a Basel III-basis core tier one ratio of 10.8 per cent for end-2014.
Like most big banks, however, misconduct-related costs continue to drag: £400m was set aside for charges related to potential foreign exchange market rigging and the PPI redress provision was bolstered by £100m.
