The Banking and Strategy Initiative

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A look at UK bank results: How RBS survives the apocalypse it brings

RBS posted gross profits of GBP 1.3 bln from its insurance on GBP 4 bln in Gross premium even as 2011 revenue fell an expected 13% to GBP 28 bln, NII billing top class GBP 12.7 bln even as impairments of GBP 7.5 bln were just a bln lower than 2010 impairments of GBP 9.2 bln, keeping Op Profit right there at GBP 1.9 bln or $2.85 bln giving shares quite a start in the afternoon ahead of the Jobless claims report.

Operating expenses were lower than $1.8 bln , on the right path for someone under government ownership and expect to post weak operational Income. Don’t get too hung up on them though as asset sales would be needed to fill another $3 bln in net losses of this year wiping already $80 bln till last year in losses since the crisis, making it $8 bln in the last three years

RBS Insurance business doubled its Gross income to GBP 1.2 bln or almost $2 bln while staff costsfor the group were barely down 10% yet. the year’s numbers include only GBP 850 mln on PPI and GBP 1 bln on Integration while the Cost income ratio was a disastrous 62%

English: Sign of the times - Foreclosure

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It debited GBP 1 bln in Sovereign debt losses, and booked a loss of GBP 100 mln on its asset sales and GBP 300 mln for the bank levy.

Lloyds’ reports tomorrow and HSBC and Stanchart before the end of the month. RBS equity has already been written down from the GBP 70 bln in equity to GBP 46 bln or $70 mln a loss of 33% and excluding the Insurance investments equity from Core Tier I, the RWA of GBP 500 bln ( GBP 344 bln in Credit Risk and GBP 100 bln in Couterparty and Op Risk) are covered 8.2%  approximately while the bank claims APS deductions and does not write back Insurance capital yet in its reporting of the Core Tier I ratio



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