There are plenty of people watching out for signs of life at Royal Bank of Scotland (LSE: RBS) (NYSE: RBS.US), and they’ll have plenty to peruse on Thursday 27 February when the taxpayers’ bank reveals its full-year figures for 2013.
Not pretty
Now, they’re not going to look pretty, after last month’s trading update revealed the sums set aside to cover the continuing costs of the bank’s past misdeeds. For litigation related to RBS’s dealings in mortgage-backed securities and related issues, the board has earmarked £1.9bn — the sum reflecting recent litigation successes and regulatory judgments.
PPI
And with claims relating to the mis-selling of Payment Protection Insurance (PPI) continuing at past levels rather than falling as the bank expected, a further £465m has been set aside. That takes the total PPI cash so far to £3.1 billion, of which £2.2bn had been used by the end of December.
And then we have the sales of inappropriate interest rate hedging products to small businesses. There’s another £500m gone in that direction, taking that total to £1.25bn.
Bad bank
Finally, with RBS splitting itself into a “good bank” and a “bad bank” with the latter handling all of the toxic assets, we’ll be seeing further “impairments and asset valuation adjustments” for the fourth quarter of 2013 of £4-4.5bn.
Despite RBS having declared a pre-tax profit of £1.37bn for the first half, we’re not going to see much left for shareholders at year-end!
In fact, there’s an analysts’ consensus for a pre-tax loss of about £3.5bn for 2013 — but the range of individual forecasts is quite wide, so it’ll still be anybody’s guess until we get the actual figures.
More to come?
There is a return to a significant profit, of £3.6bn, currently forecast for 2014.
But we really can’t be sure RBS will be out of trouble for quite some time to come — with its ruinous expansion policy exposing it to all sorts of risks all over the banking world, and with those mis-selling claims still going strong, we really can’t tell what’s going to hit next.
Still, it should be an interesting set of results.
