RBS Posts Loss, Cautious Outlook
Royal Bank of Scotland Group PLC, which is about to see its government ownership rise to 84%, posted a £1.8 billion ($2.99 billion) net loss for the third quarter, hurt by £3.28 billion in impairment losses, and said it remains cautious on the outlook.
The Edinburgh-based bank's net loss in the three months ended Sept. 30 compared with a net profit of £871 million in the year-earlier period.
RBS's operating loss was £1.5 billion, narrower than £3.5 billion it posted in the second quarter. Adjusting for movements in the fair value of the bank's own debt, it posted a pre-impairment operating profit of £2.2 billion, compared with £2.1 billion in the previous quarter.
"Profitability in our core businesses will recover fully only when our own actions are also complemented by more normal interest rates and bad debt experience," Chief Executive Stephen Hester said.
RBS is about to embark in a massive restructuring--including big asset sales--ordered by the European Union, as the U.K. government pumps an extra £25.5 billion into RBS through an scheme to insure £280 billion in toxic assets.
Last year, RBS received £20 billion in state money, after it fell into disarray when the financial crisis intensified and revealed deep problems in the ABN Amro businesses it had acquired in an ill-timed acquisition, late in 2007.
In exchange for the government aid, RBS will now have to shed businesses over the next four years, as the EU seeks to make sure the bank isn't at a competitive advantage over peers that stayed independent.
The EU's demands come at a time banks are reporting more robust earnings following a year of shaky results.
On Friday, RBS said impairments in the third quarter remained high at £3.3 billion but fell 30% from the second quarter.
It also said net interest margins are stabilizing.
Write to Patricia Kowsmann at patricia.kowsmann@dowjones.com
del.icio.us
Digg
Newsvine
reddit
StumbleUpon