We use cookies to provide you with a better experience. If you continue to use this site, we'll assume you're happy with this. Alternatively, click here to find out how to manage these cookies

hide cookie message
RSS FeedRisk

RBS returns to profit, warns of conditions ahead


The part-nationalised lender said it had cut its exposure to Greece and Italy due to the debt crisis

Article comments

Royal Bank of Scotland returned to profit on Friday when it announced a third quarter net profit of £1.2 billion but warned that it expects difficult market conditions in the next quarter.

Third quarter net profit was up from a second-quarter loss of £897 million, although the operating profit at its core division fell to £1.3 billion from 1.7 billion in the previous quarter.

With banks around the world hit by Europe's debt crisis, the part-nationalised lender said it had cut its exposure to Greece and Italy.

RBS added that it had taken a further impairment loss of £142 million on its exposure to Greece during the third quarter.

RBS, which is 83 percent owned by the government following a state bailout during the 2008 credit crisis, followed the likes of Barclays and Morgan Stanley in benefiting from a debt accounting gain, which boosted its earnings by £2.36 billion and helped offset lower profits at its GBM investment banking division.

"RBS's third-quarter results show the improved strength and resilience we have built up since 2008," chief executive Stephen Hester said in a statement.

"They also highlight the external pressures facing banks, and economies more broadly, which are making the road to recovery longer and bumpier than hoped for," he added.

RBS shares, which have fallen nearly 50 percent over the last year, rose sharply in early morning trade as analysts and investors said they were reassured by the bank's underlying business performance and capital position.

RBS had a core Tier 1 capital ratio of 11.3 percent and said it had a liquidity poll of £170 billion.

RBS shares were up 4.6 percent at 23.85 pence, making it the top gainer on Britain's benchmark FTSE 100 index, which rose by 0.6 percent. The stock however remains well below the average 49.9 pence price at which the British taxpayer acquired its stake in the bank.

RBS added it sold £2.5 billion of Italian bonds in the third quarter, leaving it with just £294 million worth, following rivals including BNP Paribas, ING and Barclays in selling down sovereign debt in the face of euro zone turmoil.

RBS had cut its holdings of sovereign debt from Portugal, Italy, Ireland, Greece and Spain to £772 million at the end of September, from £4 billion at the start of the year, with most sales in the third quarter.

Britain acquired stakes of around 83 percent in RBS and 40 percent in rival Lloyds after having to bail out both banks during the 2008 credit crisis.

RBS was rescued in October 2008 after its finances were stretched by the credit crisis and its part in the acquisition of Dutch bank ABN AMRO in 2007.

Share:

Comments

RBS returns to profit, warns of conditions ahead
Risk

Energy risk: How data is eating up all the energy

Energy risk: How data is eating up all the energy

Any failure in energy supplies to data servers can result in severe consequencesmore ..


EMEA corporate upgrades outnumber downgrades, says Moody’s

Rating agency notes first such instance since the financial crisis yearsmore ..

World hit by record wave of 'mega' data breaches in 2013

Over half a billion records compromisedmore ..

CFOs bullish on UK growth prospects

Finance chiefs' appetite for risk has doubled that of a year agomore ..

Why BYOD needs to be on every CFO’s agenda

The Software Alliance explains why BYOD can be a legal nightmare for businessesmore ..

Audits key to managing cyber risks

Cybersecurity controls and reporting procedures should be assessed annuallymore ..

Send to a friend

Email this article to a friend or colleague:


PLEASE NOTE: Your name is used only to let the recipient know who sent the story, and in case of transmission error. Both your name and the recipient's name and address will not be used for any other purpose.



In Depth
How M&A teams can create value by challenging the CEO

How M&A teams can create value by challenging the CEO

A typical “hold” period of nine to 18 months can generate increased sale value more ..

In Depth
What every company needs to do about big data?

What every company needs to do about big data?

In the first of a three part series, Pat Brans explores just how big 'big data' will get? more ..

Advertisement

* *