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5th August 2011

RBS bigger loss - underlying progress

Royal Bank of Scotland reported a net LOSS of £678m (€778m $1,107m ¥88.1bn Y7,128m) for Q2 and a LOSS of £794m (€911m $1,296m ¥103.2bn Y8,348m). This compares with respective profits of £1,174m and £1,169m in 2010.


The operating profit for the bank was £818m for Q2 and £1,871m for the half year UP from £250m and £1,132m in 2010. The difference between the two profit figures is due to the one off payment for mis-selling PPI insurance, a loss on Greek bond writedowns, a payment to the government for the Asset Protection Scheme and some other fair value write down.
The very large Greek bond write down is hopefully one of the last times the ill-fated purchase of ABN Amro comes back to sting the bank with yet more losses.


The bank can be seen to have made progress in its restructure though is still has not quite reached the stage of paying back the UK government for its rescue.


Royal Bank of Scotland Q2 2011 2010 change
£m £m %
Core
Total income 6,789 7,307 -7
Operating expenses -3,557 -3,528 1
Insurance net claims -703 -1,108 -37
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Operating profit before impairment losses 2,529 2,671 -5
Impairment losses -853 -1,097 -22
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Operating profit 1,676 1,574 6

Non-Core
Total income 978 856 14
Operating expenses -335 -575 -42
Insurance net claims -90 -215 -58
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Operating profit before impairment losses 553 66 738
Impairment losses -1,411 -1,390 2
_______________________
Operating loss -858 -1,324 -35

Total
Total income 7,767 8,163 -5
Operating expenses -3,892 -4,103 -5
Insurance net claims -793 -1,323 -40
_______________________
Operating profit before impairment losses 3,082 2,737 13
Impairment losses -2,264 -2,487 -9
_______________________
Operating profit 818 250 >
Fair value of own debt 339 619 -45
Asset Protection Scheme, CDS - fair value -168 500 --
Payment Protection Insurance costs -850 - --
Sovereign debt impairment -733 - --
Other items -84 -195 -57
_____________________
(Loss)/profit before tax -678 1,174 --