Royal Bank Of Scotland (RBS) still has £600 million available to pay future successful PPI claims, according to figures published in their annual report.
The bank has set aside a total of £5.3 billion so far – including £200 million which was added to the pot in 2018 because of what it called ‘greater than predicted complaints volumes’ – and only £4.7 billion has been used so far.
2.8 million complaints
The report also revealed it has dealt with almost 2.8 million complaints to date and upheld 89% in favour of the consumer.
The average payout on those claims was £1,664.
Estimates for the remaining eight months until the PPI claims deadline on August 29th are for another 260,000 claims which it predicts will be 90% upheld in favour of the customer at an average payout of £1,512 per claim.
The cost of processing each complaint is revealed as £152.
While the bank believes there is no need to add any further funds to their PPI provision it remains cautious about what will happen in the period up to the claims deadline.
The report stated: “The PPI provision remains sensitive to key assumptions, the most significant of which is future complaint volumes.
Management’s estimate was within our range of outcomes based on reasonable alternative assumptions.”
Online and mobile banking
The rise in profits was partially attributed to savings of £278 million as the bank continued its development of online and mobile banking.
Last year it announced the closure of 216 branches affecting more than a thousand jobs. It reported branch transactions down by 34% since 2014. In the same timescale online banking rose by 53% and mobile transactions by 74%.
RBS, which is still 62% owned by the taxpayer, made £1.62 billion in profit for 2018, more than double the £752 million figure for 2017.
The Chancellor of the Exchequer, Philip Hammond, has said he wants to return the bank to public ownership as soon as is practical and has warned MPs they are unlikely to recover all of the £45.5 billion paid to rescue the bank in 2008.
at the height of the financial crisis the Labour government bought shares at £5.02, but the current RBS share price is less than half that at £2.42.
The government is committed to returning the bank to public ownership by the end of 2024 at a loss predicted by the Office for Budget Responsibility of £28.5 billion.
Chancellor Hammond has told the House of Commons: “We have to live in the real world and make decisions on the future of our holding in RBS in the best interests of taxpayers.”