Today’s results for RBS were very much a
tale of two banks. Operating
profit up from £1.8bn in 2011 to £3.5bn, but net profit showed a huge loss of £ 5.2bn which was in excess of the
expected £3.5bn loss that analysts had been predicting. CEO Steven Hester will be hoping people
will focus on the good news – that under his guidance ‘new RBS’ is improving
and moving towards a better future.
But early signs suggest the markets have focused on the losses of ‘old
RBS’ – losses created by adjustments to loan values, mis-selling compensation
and fines that are the legacy of the pre-crisis world of finance. In immediate trading after the
announcement, their share price fell by more than 3% to some £3.35.
So, what are the issues behind these
figures?
