Shore Capital continues to see Royal Bank of Scotland Group (LON:RBS) as a ‘hold,’ pointing to the pending settlement with the US Department of Justice (DoJ) over residential mortgage-backed securities (RMBS), WebFG News reports. The comments follow the bailed-out lender’s first-quarter results last week.
RBS’ share price has been little changed in today’s session, having inched 0.19 percent higher to 268.90p as of 14:29 BST. The stock is marginally outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.1 percent higher at 7,509.43 points. The group’s shares have added about 1.5 percent to their value over the past year, as compared with a 4.4-percent rise in the Footsie.
ShoreCap sees RBS as hold
Shore Capital reaffirmed RBS as a ‘hold’ today following the lender’s results on Friday which showed that the bank’s profits had jumped in the first quarter of the year. The lender, however, provided no update on the looming DoJ fine, which is the last major obstacle to the government to start offloading its stake in the bank.
“While underlying operating performance is improving, the outlook continues to be overshadowed by the impending US RMBS settlement with the DOJ for which the timescale is out of the group’s control,” the broker’s analyst Graeme Kyle pointed out, as quoted by WebFG News, adding that ShoreCap’s dividend forecast was “predicated on the US RMBS settlement being resolved in the current financial year”.
Broker to wait for settlement
Graeme noted that the broker would await the outcome of the DoJ settlement “before deciding whether it is appropriate to take a more active stance on the shares” while retaining its current preferences for Lloyds Banking Group (LON:LLOY).