RBS posts annual profit rise

Royal Bank of Scotland boss Stephen Hester said Thursday there was 'important work still to do' as the company released its annual results.

Royal Bank of Scotland boss Stephen Hester said Thursday there was 'important work still to do' as the company released its annual results.

The bank beat analysts' expectations, posting core operating profits of £6.3bn for 2012, up 5.0% from the year before, with retail and commercial down 6.0% but markets improving by 68%. Nomura had pegged core profits at £6.1bn.

Group operating profit almost doubled year-on-year as it climbed from £1.8bn to £3.4bn, buoyed by core growth and a 32% reduction in non-core losses.

Non-Core operating losses came to £2.8bn, £1.3bn lower than 2011, mainly due to a significant fall in impairments in the company's commercial subsidiary, Ulster Bank, and other real estate portfolios.

The results come as the bank undergoes a massive restructuring and tries to rework its image following a LIBOR rigging scandal. The company agreed to pay penalties of £87.5m, $325m, and $150m to the Financial Services Authority (FSA), Commodity Futures Trading Commission (CFTC) and Department of Justice (DOJ), respectively.

In an effort to cut costs after being bailed out by the government in 2008, the bank was said to be considering a hybrid sale of more than 300 branches to private equity firms and institutional investors.

The bank was also rumoured to be selling its US retail arm Citizens to offset its debts. In a statement alongside its financial results, the board said it had decided it was the right time to begin work on a partial flotation of Citizens in the next two years.

Chief Executive Officer, Hester, admits the bank has plenty of work to do before it bounces back but is making progress.

"RBS is four years into its recovery plan and good progress has been made," he said.

"We are a much smaller, more focused and stronger bank. Our target is for 2013 to be the last big year of restructuring. There will be important work still to do, but an increasingly sound base from which to work. As the spotlight shifts to the 'new RBS' post restructuring, we are determined that it will show a leading UK bank striving to be a really good bank. By serving customers well RBS can become one of the most respected, valued and stable of banks. That is our goal."

RD

Recommended

Marks & Spencer shares look cheap – should you buy in?
Retail stocks

Marks & Spencer shares look cheap – should you buy in?

Marks & Spencer shares have been a disappointment for investors for two decades. But with the company now on something of a comeback, Rupert Hargreave…
25 May 2022
The Federal Reserve wants markets to fall – here’s what that means for investors
Stockmarkets

The Federal Reserve wants markets to fall – here’s what that means for investors

The Federal Reserve’s primary mandate is to keep inflation down, and lower asset prices help with that. So, asks Dominic Frisby – just how low will st…
25 May 2022
Four high-quality US stocks to give shelter from the storm
Share tips

Four high-quality US stocks to give shelter from the storm

Professional investor Timothy Parton of the JPMorgan American Investment Trust picks four solid US stocks to buy now.
24 May 2022
Three undervalued mid-cap stocks with attractive prospects
Share tips

Three undervalued mid-cap stocks with attractive prospects

Professional investor Katen Patel of the JPMorgan Mid Cap Investment Trust picks three fast-growing mid-cap stocks to buy now.
24 May 2022

Most Popular

The world’s hottest housing markets are faltering – is the UK next?
House prices

The world’s hottest housing markets are faltering – is the UK next?

As interest rates rise, house prices in the world’s most overpriced markets are starting to fall. The UK’s turn will come, says John Stepek. But will …
23 May 2022
Everything is collapsing at once – here’s what to do about it
Investment strategy

Everything is collapsing at once – here’s what to do about it

Equity and bond markets are crashing, while inflation destroys the value of cash. Merryn Somerset Webb looks at where investors can turn to protect th…
23 May 2022
The Federal Reserve wants markets to fall – here’s what that means for investors
Stockmarkets

The Federal Reserve wants markets to fall – here’s what that means for investors

The Federal Reserve’s primary mandate is to keep inflation down, and lower asset prices help with that. So, asks Dominic Frisby – just how low will st…
25 May 2022