Royal Bank of Scotland Group Plc (RBS,RBS.L) Thursday reported a wider loss for its fourth quarter and full year, as the British lender took a further charge for Payment Protection Insurance or PPI claims and regulatory fines. Impairment losses, however, fell year-over-year. RBS said it is targeting for the most important restructuring actions to be substantially completed by the end of 2013.
The Group made a further 450 million pounds provision for PPI claims in the quarter. Earlier this month, RBS agreed to pay about $612 million to U.S. and UK regulators to settle allegations that the company's employees tried to manipulate key global benchmark interest rates.
Looking ahead, the company expects the economic and regulatory challenges present in 2011 and 2012 to continue into 2013. The overall loss is also expected to decline somewhat compared with 2012.
Stephen Hester, Group chief executive stated, "RBS is four years into its recovery plan and good progress has been made. We are a much smaller, more focused and stronger bank. Our target is for 2013 to be the last big year of restructuring."
The company said its board has decided for a partial flotation of its US banking business Citizens, within 2 years from now. Citizens has 14,700 employees. The company also plans for restructuring of its investment banking due to lower returns.
In the fourth quarter, operating loss before tax widened to 2.20 billion pounds from 2.04 billion pounds in the previous year. Loss before impairment losses was 745 million pounds, compared to 123 million pounds reported last year.
Net loss attributable to ordinary and B shareholders were 2.6 billion pounds or 23.4 pence per share, wider than 1.8 billion pounds or 16.6 pence per share in the prior year. Loss per share from continuing operations totaled 21.4 pence, compared to a loss of 16.9 pence per share last year.
Group operating profit stood at 581 million pounds, compared to 144 million pounds loss in the prior-year quarter. Core operating profit was 1.52 billion pounds for the reporting period.
On a per share basis, Core adjusted earnings per ordinary and B share, including Direct Line Group, were 1.8 pence, as against a 5.3 pence loss last year.
Quarterly net interest income declined to 2.77 billion pounds, from 2.99 billion pounds a year ago. Meanwhile, non-interest income improved to 1.83 billion pounds from 1.19 billion pounds in 2011.
Total income grew to 4.60 billion pounds from 4.17 billion pounds last year.
Operating expenses advanced to 5.35 billion pounds from 4.29 billion pounds in the preceding year.
For the full-year 2012, the company's operating loss before tax sharply widened to 5.17 billion pounds from 1.19 billion pounds a year ago. Loss attributable to ordinary and B shareholders were 5.97 billion pounds or 54.3 pence per share, compared to a loss of 1.2 billion pounds or 18.5 pence per share a year earlier.
The Group's Core Tier 1 ratio was 10.3 percent, compared with 9.7 percent in 2011, excluding effect of Asset Protection Scheme.
In London, RBS shares are currently trading at 340 pence, down 1.96 percent, on a volume of 7.12 million shares.
RBS ended on Wednesday at $10.64 on the NYSE.
by RTT Staff Writer
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