RBS reports a wider loss
By Jane Wardell |
August 8, 2009, Saturday
|
Print Edition
Print Edition
THE Royal Bank of Scotland yesterday posted a larger first-half net loss compared with a year ago, as bad debts jumped to 7.5 billion pounds (US$12.6 billion) and sluggish activity in its retail and corporate businesses wiped out strong gains in investment banking.
Shares in RBS, in which taxpayers hold a 70 percent stake after a government bailout last year, plummeted 13.7 percent as Chief Executive Stephen Hester warned that overall results may not substantially improve until 2011 and full recovery "will take time."
The bank, Britain's biggest in balance sheet terms, also announced that it had appointed US banker Bruce Van Saun as its new finance director, completing a management overhaul which began after the government bailout in October.
RBS reported a net loss of 1.04 billion pounds in the first half, compared with a loss of 827 million pounds a year ago.
Revenue rose 58 percent to 21.84 billion pounds, from 13.84 billion pounds a year ago.
Chief Executive Stephen Hester said first-half results were "poor," but he added that, analyzed alongside the bank's new strategy, "they highlight well our core business potential, the hard work of our people in difficult times and the vulnerabilities and economic headwinds we grapple with."
Partially offsetting the increase in the writedown on bad debts was a 3.8 billion pound profit from buying back the bank's own debt when the banking crisis made it cheap.
That gave the bank a statutory pretax profit of 15 billion pounds, bringing it back into the black.
But the market focused on the negatives, with the share price down 6.7 pence at 46.75 pence in early morning trade yesterday. The stock had soared 10 percent on Thursday in anticipation of a more benign earnings report.
RBS earned the dubious honor of posting the largest annual loss in British corporate history last year - a 24.1 billion pound black hole fed by the bank's aggressive acquisition spree of recent years, including the takeover of ABN Amro.
Hester added that RBS had shrunk in size by around 26 percent so far this year to put the bank on a firmer footing.
Shares in RBS, in which taxpayers hold a 70 percent stake after a government bailout last year, plummeted 13.7 percent as Chief Executive Stephen Hester warned that overall results may not substantially improve until 2011 and full recovery "will take time."
The bank, Britain's biggest in balance sheet terms, also announced that it had appointed US banker Bruce Van Saun as its new finance director, completing a management overhaul which began after the government bailout in October.
RBS reported a net loss of 1.04 billion pounds in the first half, compared with a loss of 827 million pounds a year ago.
Revenue rose 58 percent to 21.84 billion pounds, from 13.84 billion pounds a year ago.
Chief Executive Stephen Hester said first-half results were "poor," but he added that, analyzed alongside the bank's new strategy, "they highlight well our core business potential, the hard work of our people in difficult times and the vulnerabilities and economic headwinds we grapple with."
Partially offsetting the increase in the writedown on bad debts was a 3.8 billion pound profit from buying back the bank's own debt when the banking crisis made it cheap.
That gave the bank a statutory pretax profit of 15 billion pounds, bringing it back into the black.
But the market focused on the negatives, with the share price down 6.7 pence at 46.75 pence in early morning trade yesterday. The stock had soared 10 percent on Thursday in anticipation of a more benign earnings report.
RBS earned the dubious honor of posting the largest annual loss in British corporate history last year - a 24.1 billion pound black hole fed by the bank's aggressive acquisition spree of recent years, including the takeover of ABN Amro.
Hester added that RBS had shrunk in size by around 26 percent so far this year to put the bank on a firmer footing.
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