Eyes Down For Royal Bank of Scotland Group plc’s Results

Royal Bank of Scotland Group plc (LON: RBS) is the second bailed-out bank to report next week.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

rbsThere 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.


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.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

> Alan does not own any shares in Royal Bank of Scotland.

More on Investing Articles

Businessman use electronic pen writing rising colorful graph from 2023 to 2024 year of business planning and stock investment growth concept.
Investing Articles

Buying 8,617 Legal & General shares would give me a stunning income of £1,840 a year

Legal & General shares offer one of the highest dividend yields on the entire FTSE 100. Harvey Jones wants to…

Read more »

Man writing 'now' having crossed out 'later', 'tomorrow' and 'next week'
Investing Articles

£25k to invest? Here’s how I’d try to turn that into a second income of £12,578 a year!

If Harvey Jones had a lump sum to invest today he'd go flat out buying top FTSE 100 second income…

Read more »

Union Jack flag in a castle shaped sandcastle on a beautiful beach in brilliant sunshine
Investing Articles

2 lesser-known dividend stocks to consider this summer

Summer is here and global markets could be heading for a period of subdued trading. But our writer thinks there…

Read more »

pensive bearded business man sitting on chair looking out of the window
Investing Articles

Here’s how I’d aim to build a £50K SIPP into a £250K retirement fund

Our writer outlines the approach he would take to try and increase the value of his SIPP multiple times in…

Read more »

Investing Articles

9.4%+ yields! 3 proven FTSE 100 dividend payers I’d buy for my Stocks and Shares ISA

Our writer highlights a trio of FTSE 100 shares with yields close to 10%. He'd happily pop them into his…

Read more »

Mixed-race female couple enjoying themselves on a walk
Investing Articles

Are Raspberry Pi shares a once-in-a-lifetime chance to get rich?

With Raspberry Pi shares surging after a successful IPO, could this UK tech startup offer a long-term wealth creation opportunity…

Read more »

Newspaper and direction sign with investment options
Investing Articles

Huge gains and 9% yields: why now’s an amazing time to be a stock market investor

The stock market’s generating fantastic returns in 2024. Whether you're looking for gains or income, it’s a great time to…

Read more »

Hand of person putting wood cube block with word VALUE on wooden table
Investing Articles

This steady dividend payer looks like one of the best bargain stocks in the FTSE 100

A yield of 4.7% and a consistent dividend record make this FTSE 100 company look like good value in an…

Read more »