Royal Bank of Scotland reported a 59% slump in first-quarter profit after impairment losses soared, as borrowers struggled to repay loans amid the Covid-19 crisis. The lender's bottom line profit for the three months through March dropped to £288m, down from £707m on-year. Underlying operating profit fell 49% to £519m, as impairment losses jumped to £802m, up from £86m. RBS's net interest margin contracted 4 basis points to 1.89%, which it said reflected structural pressure in its mortgage business and the contraction of the yield curve. For the full year, the bank said it expected impairment loss rates to be 'meaningfully higher' than its guidance of below 30-to-40 basis points. 'The impacts of Covid-19 and the mitigating benefits of government schemes are uncertain and challenging to forecast accurately,' RBS said. 'At this time it would be inappropriate to provide full-year loss rate guidance.' 'We expect to achieve lending growth of greater than 3% across our retail and commercial businesses, given the significant increase in lending during 2020 to date.' RBS had, along with other British banks, already announced a dividend freeze.
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