RBS has suggested 2018 will be a more profitable year following its results today, which saw the bank report a £7bn loss in 2016, its ninth consecutive year of losses.
The bank’s losses since the financial crisis now total £58bn with a series of legacy issues hitting profits.
On a positive note, the bank’s operating expenses fell by £1bn and net lending in the personal and business arm increased by 10 per cent.
Laith Khalaf, senior Analyst at Hargreaves Lansdown, says: “there is a decent bank inside RBS struggling to get out,” but he is concerned by the regularity of costly controversies the bank encounters, such as the US litigation relating to mortgage-backed securities, which cost £3.1m, and the U-turn on spinning off Williams Glyn.
Khalaf adds that the bank will continue to be majority state-owned “for the foreseeable future”, as the share price needs to double for the taxpayer to break even.
“The bank is certainly making progress, though it has been severely hampered by mopping up the mess left by the financial crisis. There is every reason to believe RBS can be a profitable bank, returned to private hands, the question is how long it will take to get there.”
The share price of RBS was down 4.4 per cent to 238.4 in midday trading. The FTSE 100 was dragged down by banking stocks, falling to its lowest level in over a fortnight at 7,216, down 0.8 per cent.
Spreadex’s Connor Campbell says: “The thrust of this decline stemmed from the banking sector, which hasn’t quite been the boost the FTSE was looking for this week.”