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The Royal Bank of Scotland and Lloyds certainly share a few things in common, not least being bailed out by the UK taxpayer in the darker days of the financial crisis. But they’re now some way apart in their respective battles to put all that behind them.
On Thursday 30 July the RBS will post its second-quarter figures, and on a year-on-year basis it won’t make for good reading. The adjusted earnings per share are expected to have fallen from £0.08 to £0.068, sales could be down from £4.925 billion to £4.108 billion and the pre-tax profit is looking to have collapsed from £1.01 billion to £35.5 million.
Institutional analysts are not full of optimism with four buys, 15 holds and nine sell recommendations. The full-year price target still offers a little upside. But, with the current price around 350p the twelve-month target of 361p doesn’t leave too much to get excited about.
RBS is still battling historical issues as it continues to try and reduce its cumbersome size by asset stripping. However, still hanging over the business are ongoing financial penalties and costly legal battles. The fourth-quarter of 2014 saw costs of $1.475 billion and another $1.15 billion in the first-quarter of 2015.
Now the Conservative Party faces slightly fewer policy restrictions, it has made it clear it aims to reduce UK taxpayer exposure to the banks as quickly as possible. To make acquiring RBS shares more appealing to the investment community, the reintroduction of dividend payments is a must. The last time RBS paid out a dividend was 23 May 2008.