Shares in Royal Bank of Scotland Group (LON:RBS) have gained ground in London in today’s session, ahead of the lender’s interim results tomorrow. Analysts expect the bailed-out bank to unveil stronger second-quarter profits than a year ago, but a drop on a quarterly basis, as it continues to recover from its turbulent past marked by a state-funded rescue and a string of regulatory fines.
As of 14:37 BST, RBS’ share price had added 2.59 percent to 257.40p, outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.83 percent higher at 7,473.09 points. The group’s shares have added more than 34 percent to their value over the past year, and are up by some 14 percent in the year-to-date.
RBS is scheduled to update investors on its second-quarter and half-year performance tomorrow and Interactive Investor reports that Deutsche Bank’s research analyst David Lock expects pre-tax profit of £943 million for the quarter, down quarter-on-quarter, with Q1 having benefited from very low impairments and strong Natwest Markets performance, but up year-on-year on the back of higher income.
“RBS remains the most rate-sensitive of the large-cap domestic banks,” the analyst pointed out, while acknowledging that a rate rise is unlikely before Brexit completes. “Trading at 0.9 times tangible net asset value… RBS does not screen particularly cheap.”
Investors are also likely to look out for any provisions, after peers Lloyds (LON:LLOY) and Barclays (LON:BARC) booked fresh charges in relation to the payment protection insurance scandal. RBS also has yet to reach an agreement with the US Department of Justice over mis-sold mortgage-backed securities in the run-up to the financial crisis.
The update will come after the bailed-out lender recently moved a step closer to avoiding the forced sale of its Williams & Glyn business after the government agreed ‘in principle’ with Brussels over an alternative plan.