Royal Bank of Scotland in Profit

Royal Bank of Scotland reports improved core results with £225m operating profit, but restructuring and litigation charges continue

Derya Guzel 28 October, 2016 | 3:50PM
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Royal Bank of Scotland (RBS) reported improved core banking results relative to last year. Its operating profit for the third quarter was £255 million, compared with last year's loss of £14 million. RBS' net income for the quarter came in at a loss of £469 million, versus profit of £940 million, although last year's results were bolstered by a £1.2 billion gain on the sale of its Citizens Bank stake.

There were several large charges in the quarter totalling £1.1 billion, including £469 million of restructuring costs, £429 million in litigation, and £300 million in deferred tax asset impairment. Following the prior quarter's £450 million payment protection insurance provisions, RBS made no further PPI provisions in this quarter.

While quarterly results show some improvement in the core business, we believe the bank is not out of the woods yet; its restructuring and misconduct charges will continue to pressure the bottom line, as well as posing downside risk to overall capitalisation. We're maintaining our fair value estimate of £2.75 per share

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
NatWest Group PLC191.00 GBP0.00Rating

About Author

Derya Guzel  is an Equity Analyst for Morningstar

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