Income boost powers 44% Coutts profit jump

Improved lending margins powered the profit rise at Coutts as it prepares for the implementation of the retail distribution review.

Profit totalled £65 million in the third quarter a 44% increase on the corresponding period of the previous year.  

Net interest income rose 8% at the RBS-owned private bank thanks to both better lending margins and growth in divisional treasury income. Deposit income increased through a £1.3 billion growth in volumes and a 10 basis points improvement in margins.

At the same time expenses decreased by 1%, largely reflecting favourable exchange rate movements, assisted by close management of discretionary costs.

These factors overrode a 9% decline in non-interest income as continued market volatility subdued client demand for transactions, resulting in reduced brokerage and foreign exchange income.

Overall assets under management declined by 1% as favourable market movements were offset by net new business outflows of low margin custody assets.

Coutts also said it had made further progress in freshening up its strategy and that its retail distribution review restructure was virtually complete.

In a statement to the stockmarket, RBS said:  'The [wealth] division made further progress in implementing the refreshed Coutts strategy across all jurisdictions.

'This included two new appointments to the board of Coutts & Co Ltd Zurich, who will work closely with senior management on the development of the business and enhancements to the client franchise and product offering, in line with Coutts strategy of growth in the region.'

RBS added: 'In the UK, Coutts is finalising preparations for the implementation of the Financial Services Authority's retail distribution review regulations by 31 December 2012.