RBS set to report a profit over last quarter
ROYAL BANK of Scotland is expected to report a second consecutive quarter in the black this week, even as it stomachs extra restructuring and misconduct costs.
A consensus of City analysts forecast that the lender, which is still 72 per cent owned by the taxpayer, will report a £343m profit for the three months to June 30, following on from a £259m profit in the first quarter.
Graham Spooner, investment research analyst at The Share Centre, said investors were beginning to “see light at the end of what has been a very long tunnel”.
However, RBS is also predicted to detail £248m in conduct and litigation costs and £228m in restructuring charges.
When added to £577m of restructuring costs booked in the first quarter, it would take the total for the six months to June to over £1bn. The group has racked up several billion in litigation and conduct costs since it was rescued by the Government at the height of the financial crisis.
Earlier this month, RBS agreed a £4.2bn US settlement over claims it mis-sold toxic mortgage bonds in the run-up to the crisis, and it will take a £151m charge in its second quarter as a result of the deal.
However, it is yet to reach a separate settlement with the Department of Justice, which is expected later in the year, and the bank may need to set aside more cash to settle outstanding claims.
Chief executive Ross McEwan has signalled that the bank could return to a full-year profit by 2018, but forecasts suggest that it will remain in the red this year.
The Government bought its 72 per cent stake in the bank for £45bn in 2008 at £5.02 a share.
Shares are now worth around half that.
Investors are beginning to see light at the end of a very long tunnel. Graham Spooner, investment research analyst.