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On Thursday 26 February the Royal Bank of Scotland is due to post its fourth-quarter figures. The adjusted earnings per share are called lower at 7.3p down from the previous quarter’s 13.8p. Sales are expected to improve from £4.359 billion up to £4.43 billion, however the pre-tax profit is called lower falling from £1.27 billion down to £813.83 million. The picture is considerably more impressive when we compare the performance of the bank on a year-on-year basis — from a pre-tax loss of £8.983 billion to a £813.83 million profit.
Institutional analysts appear to be at loggerheads as to where in the recovery cycle the company is. Of the 33 firms ranking the company, four rate them as a buy, 19 as a hold and ten as a sell. The average 12-month price target for the shares is 394p, just below the current market price of 398p.
Scrutiny on banks has comparatively cooled in the last quarter although an expected fine from US housing market regulators, of anything between $1.8 billion to $4.5 billion, still hangs over the bank. Widespread speculation in the press has indicated that Sir Howard Davies is being lined up as the new chairman and considering his previous role at the FSA, this points to yet more retrospective regulatory tightening at the bank.
The UK tax payers’ stake in the Royal Bank of Scotland also lingers on, and with the next general election not until early May it looks unlikely to be actioned on before then.
The current price, just bubbling below £4, sits comfortably above the moving averages but is edging into overbought territory. Having previously lost its nerve when popping above this level a solid set of quarterly figures, along with no hidden surprises, may well be required to keep the momentum going in the short-term.