What to Expect from RBS Q4 Results
Fiona Cincotta February 12, 2020 4:24 PM
The 62.5 % government owned bank is expected to report its third consecutive annual profit.
Friday 14th February
- £3.77 billion operating profit up from £3.4 billion year earlier
These will be the first results under new Chief executive Alison Rose, who started her new position in October. The 62.5 % government owned bank is expected to report its third consecutive annual profit. Here’s what to watch:
PPI coming to an end
Friday’s results come after a tough Q3, where RBS posted pre-tax loss of £8 million, well short of the £720 million profit expected.
Whilst Q3 was marred by another write down in PPI at £900 million, Q4 will be the first results which do not carry the threat of a major PPI redress, given that the deadline for claims was at the end of the summer.
Traders will be keen to see that the Q3 disappointment was more of an anomaly rather than the start of a new worrying trend.
The BoE voted 7-2 in favor of keeping interest rates at 0.75% in its January meeting. This provided some relief given that expectations for a rate cut were at 50 / 50 and that the banks are already under considerable pressure with net interest margins, a closely watched metric.
Mark Carney earlier this week said that the low interest rate environment will be with us for the foreseeable future. Any rate hike is highly unlikely until well after the end of the transition period. Given that RBS is primarily a retail bank, lending is a key revenue driver, one that looks set to remain subdued for some time to come.
Whilst there was a lot to dislike in Q3 results, cost savings were a strong point. In Q3 the £300 million full year cost savings remained on track, traders will be watching this figure closely. There have also been rumors of large-scale job cuts, however details are unlikely to be announced this week and could focus on the under performing NatWest Markets and Ulster units.
Rumors are already circulating that Chancellor Sajid Javid might be looking to sell the government’s remain stake in the bank at the earliest opportunity. This will obviously depend on the bank’s performance.
RBS share prose jumped 12% higher to 265p following the decisive Conservative win in the general election. However, with low interest rates and Brexit uncertainty lingering, RBS has steadily pared those election inspired gains. It bounced off a low and trend line support of 215p in early February. Immediate support can be seen around 220. A meaningful break below here could negate the current uptrend which has been intact since mid August.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.