Monday 27 March 2017

RBS posts loss but remains 'ahead' of targets

Andrew MacAskill and Jon Menon

Britain’s biggest government-controlled lender Royal Bank of Scotland has reported a narrower-than-expected full-year net loss, and said impairments for bad loans are likely to have peaked.

RBS reported a net loss of £3.6bn (€4.1bn), compared with a loss of £24.3bn a year earlier, the bank said today in a statement.

Impairments “appear likely to have peaked,” the company said in today’s statement. “The group is ahead of its targets on every published measure for this first year of the five-year plan.”

RBS, which needed £45.5bn in UK taxpayer-funded support, is undergoing the most complicated restructuring of any company in history, the bank's chief Stephen Hester said last month.

The bank is selling assets and halting some activities such as leveraged finance after putting £282bn of assets into a government protection program that caps losses on toxic loans.

“The numbers look better-than-expected and capital ratios are in line with expectations,” said Arturo De Frias, an analyst at Evolution Securities Ltd. in London who has a “buy” rating on the stock. “Impairments look less than expected.”

RBS today said impairments on bad debt rose “sharply” to £13.9bn.

‘Significantly outperformed’

Operating profit at RBS’s investment bank was £6.35bn compared with a loss of £1.27bn last year, the bank said.

Hester, 49, will waive his right to a bonus of £1.6m amid public anger over such payments after taxpayers bailed out the banking system.

The bank said Hester had “significantly outperformed” his 2009 targets and that he would be rewarded “fairly, appropriately and at market levels.”

Executives at Barclays and Lloyds Banking Group are also forgoing their bonuses.

RBS set aside 27pc of revenue for pay and bonuses for investment bankers in 2009.

Barclays Capital, the investment banking unit of Barclays, paid 38pc of revenue, while Goldman Sachs paid 36pc.

RBS has fallen 37pc in London trading since the end of August to yesterday, making it the worst-performer in the five-member FTSE 350 Banks Index, which has fallen 2.8pc. RBS has a market value of £20.4bn.

Barclays, Britain’s second-largest bank, more than doubled second-half profit to £7.5bn when it reported results.

Lloyds Banking Group, Britain’s biggest mortgage lender, reports tomorrow and HSBC on March 1.

Bloomberg

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