Royal Bank of Scotland (RBS) cannot seem to get away from its past. A list of conduct and litigation costs totalling £5.9bn, up almost two-thirds on the previous year, blew a large hole in the largely taxpayer-owned bank's income statement during 2016. These included a £3.1bn charge in respect of RBS's past US mortgage-backed securities issuance, for which the bank is still under investigation.
Shareholders may have heard a similar tune before, but management hopes to draw a line under its long list of legacy issues, expecting 2017 to be its last year of significant one-off costs and for the bank to be profitable in 2018. On that note, there was some good news on income. The UK retail bank grew its loan book by 10 per cent to £132bn, largely driven by an increase in mortgage lending, although a competitive market saw the margin here fall by 17 basis points. Commercial banking net interest income was also up 7 per cent to £2.1bn, but a £423m charge relating to the Financial Conduct Authority's review of the bank's treatment of SMEs weighed heavily on statutory profit.
Restructuring charges were down by £0.8bn to £2.1bn. This included a £750m provision for the alternative set of measures proposed regarding Williams & Glyn.
Analysts at Shore Capital expect adjusted tangible net assets of 316p a share at the end of December 2017, (from 296p at end-2016).
ROYAL BANK OF SCOTLAND (RBS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 237p | MARKET VALUE: | £28bn | |
| TOUCH: | 236.9-237p | 12-MONTH HIGH: | 261p | LOW: 148p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 411p | LEVERAGE RATIO: | 18.5 | |
| Year to 31 Dec | Total operating income (£bn) | Pre-tax profit (£bn) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 25.8 | -5.17 | -54.4 | nil |
| 2013 | 19.4 | -8.82 | -85.0 | nil |
| 2014 | 15.2 | 2.64 | 0.5 | nil |
| 2015 | 12.9 | -2.70 | -27.7 | nil |
| 2016 | 12.6 | -4.08 | -59.5 | nil |
| % change | -2 | -51 | -115 | - |
Ex-div: na Payment: na | ||||
