RBS slips on news of huge losses

(Source: Yahoo! Finance)

RBS has slipped over three per cent after posting losses of £5.2bn. Our reporter Cathy Adams:

The bank said it had set aside a further £450m to compensate customers mis-sold PPI taking its total provision to £2.2bn. Some £1.3bn has already been paid out.

RBS has also set aside £700m to compensate small businesses mis-sold complex interest rate hedging products.

(Full article)

Mike van Dulken, Head of Research at Accendo Markets said:

The operating profit level highlights 89% progress over the past year with a £3.5bn profit posted and the differential stemming from Libor and PPI redress, a significant charge relating to own credit improvements (inverse relationship) and still important restructuring costs.

While shares may be in the red, they have settled and the reaction has not been as weak as might be expected from such a headline number. Support likely from those delving deeper and looking to ‘core’ numbers showing stability with operating profit growth of 5%, core tier 1 capital up above target 10%, continued deleveraging and, most importantly, news that the bank sees itself closer to good financial health meaning progress towards the issue of being able to pay a dividend and the government sell down its 82% stake, something market participants have been looking for evidence of over every set of results since its rescue.