2nd May 2014
Shares in Royal Bank of Scotland jumped 13% in early trading following its announcement that pre-tax profits surged to £1.6bn for the first three months of 2014.
Its latest set of numbers are nearly double the £826m it achieved in the same period last year.
By 9:30am, its stock was up 39.2p to 345.80p on the back of the news. Currently the broker consensus has the shares rated a ‘hold’ and this morning analysts at Numis Securities upgraded their position to fall in line with the general sentiment while Investec Securities reiterated its own ‘hold’ position.
Operating profit for the first quarter was £1.5bn, up from £747m for the January to March period in 2013 driven largely by stronger business performance in its UK retail and corporate sectors as well as the turnaround at Ulster Bank, which reported its first quarterly operating profit since 2009.
Its new chief executive Ross McEwan, who took over from Stephen Hester last year, and set out a strategy to make RBS the “most trusted bank in the UK” said the results show the plan is in a “steady state”.
In a statement he said: “RBS will be a bank that does a great job for customers while delivering good returns for our shareholders.
“Everyone at RBS is focused squarely on doing everything we can to earn the trust of our customers and in the process change the banking sector for the benefit of the UK.”
However it is expected it will still deliver a loss for the year and McEwan admitted there was still much work to do and “plenty of issues from the past to reckon with”.
Commenting on RBS’s market update, Graham Spooner, investment research analyst at The Share Centre, says: “Revenues and profits for the period came in ahead of expectations, as long term recovery plans and the slimming down of the balance sheet continues to make progress.
“This update delivered the best news investors have received for some time and it is encouraging to see signs management are on track with restructuring efforts. However, there is still a long way to go for the bank and further cost cutting will continue to impact figures. We believe there are better opportunities to be had for investors elsewhere in the market, and prefer Lloyds and HSBC in the sector.”