Bosses at Royal Bank of Scotland have warned over a Brexit hit as uncertainty weighs on the economy.
At the lender’s annual general meeting in Edinburgh, RBS chairman Sir Howard Davies told shareholders that worries over the EU departure were hampering economic growth, which will take its toll on the Bank’s performance.
He said: “The UK economy has proved remarkably resilient but lack of clarity about our future relations with the EU is undoubtedly having an impact, with consumer confidence muted and many businesses pausing on investment.”
“That will affect our income,” he cautioned.
Outgoing chief executive Ross McEwan, who announced his resignation earlier on Thursday, also warned investors of the knock-on effect to the bank of Brexit-hampered growth.
He said: “As a large, predominantly UK- focused bank, our results will of course reflect the economic performance of the UK.”
The comments come ahead of Friday’s first quarter figures from RBS, which is still 62.4% owned by the taxpayer.
It marks the latest Brexit alert by the bank after it suffered hefty share price falls in October after warning over the impact.
The lender took a £240 million impairment charge, including £100 million to reflect the “more uncertain economic outlook” in Britain ahead of Brexit.
The RBS bosses are also expected to be grilled by shareholders over pension perks for top executives at the lender’s annual meeting.
The group is the latest bank to face scrutiny over the discrepancy between pensions enjoyed by board members and those of the average worker.
Mr McEwan receives a pension of £350,000, which amounts to 35% of his £1 million basic salary, but those working in branches typically receive just 10%.
Sir Howard told investors the group was renewing its pay policy, including pensions, next year and confirmed the recent deal for its new chief financial officer Katie Murray – with a pension funding rate of 10% of salary – showed the “expected direction of travel”.
“We will start consulting with shareholders later this year ahead of putting a new policy to a vote at next year’s AGM,” he said.
RBS investors have also been urged to vote down the remuneration report by shareholder advisory firm PIRC, which is angry at Mr McEwan’s £3.6 million pay packet.
PIRC said elements of Mr McEwan’s pay award are “excessive”, and pointed to the fact he is paid 46 times more than the average bank employee.
The New Zealander’s pay packet last year consisted of a £1 million basic salary, a £1 million fixed share allowance and another £1.1 million as part of a long-term incentive award.
Aside from Brexit and pay, Mr McEwan also turned his attention to the shift towards digital banking, but pledged not to shut any more branches this year, with no plans for closures either in 2020.
He said: “We continue to see a decrease in traditional payment methods such as cash and cheques as customers embrace our digital channels at an increasing pace.”
But he added: “To be clear, our branches remain a core part of our service and we are investing in them.”
He also confirmed that, despite handing in his notice, he will be “around for a while yet” to ensure an orderly handover.
During the meeting, the bank faced criticism from shareholders relating to the scandal over its treatment of small businesses.
RBS saw its reputation suffer after its notorious turnaround unit, the Global Restructuring Group (GRG), was accused of deliberately pushing firms towards failure in the hope of picking up assets on the cheap.
The group and its senior management escaped action over the scandal, after the Financial Conduct Authority concluded GRG’s activities were not within its remit and that its powers did not apply.
One shareholder called the bank the “Fagin of the modern financial world” and said Mr McEwan had failed to live up to expectations.
Another compared the firm to a “vampire” which had been “sucking the life out of British businesses”.