RBS Financial Plans "Ambitious", say Analysts

RBS may be back in black after turning around £7 billion losses in 2016 to a £750 million profit last year, but equity analysts think 2018 targets are too high

Derya Guzel 26 February, 2018 | 7:53AM
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Royal Bank of Scotland returns to profit financial stocks banking sector UK equities

Royal Bank of Scotland (RBS) posted full-year annual net income of £752 million versus a £7 billion net loss in 2016. While lower than we were expecting, net income was higher than the consensus loss estimate. While operationally somewhat better than last year, significantly lower litigation and conduct cost and lower restructuring costs helped RBS to return the bank to profit. Although it is rather slower than peers, it seems RBS management has found a good path to resolve outstanding issues and to operationally catch up with other banks on digitalisation.

During the conference call held by management, RBS management reiterated its target of a 50% cost/income ratio by 2020. However, it has also increased its restructuring cost target by £1.5 billion to £2.5 billion.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
NatWest Group PLC216.60 GBP0.00Rating

About Author

Derya Guzel  is an Equity Analyst for Morningstar