Financial Trading Blog

Stock of the day 28/04/2016 – Royal Bank of Scotland Group PLC



With earnings woes for both Barclays and Lloyds how will Royal Bank of Scotland fare with its own first quarter figures on Friday?


It was one way traffic for RBS as 2016 got underway, the stock seeing a near uninterrupted fall from £2.99 at the start of the year to £2.21 by February 11th. The bank did see a brief bump in the middle of the month, lifting back to the £2.60 mark, only for its full year figures to nip any nascent goodwill in the bud.

In a blow to George Osborne (the bank still 73% owned by the government) RBS sunk further into the red for an 8th consecutive year, revealing a £2 billion loss for 2015. The bank’s numbers were bad across the board, with a £1.6 billion drop in underlying profit to £4.4 billion, £3.6 billion in (largely US-based) charges and fines, and £2.9 billion set aside for restructuring.

Royal Bank Of Scotland Group PLC Chart April 2016 Spreadex Financial Spread Betting
(Source: IT-Finance.com 28/04/2016)

This put RBS on the back foot, and despite a slight increase over the first 3 weeks of March by the start of April the stock was lurking at a 3 and half year-plus low of £2.04. Yet from this nadir RBS has seen a sharp rebound in the last few weeks, hitting a 2 month high of £2.57. The bank sits at a current trading price of £2.50 (IT-Finance.com, 28/04/2016).

In terms of those Q1 figures analysts are expecting revenue to drop by nearly a third to £2.93 billion, with the main focus likely to be on the bank’s £957 million loss (just shy of double what was seen this time last year), largely incurred due to £1.2 billion ‘golden share’ payment to the Treasury during the quarter. Of course investors will also be looking for news (or, ideally, no news) of any further compensation, fines and legal expenses, with Standard & Poor’s reporting earlier in the week that the UK’s Big Four could still end up paying out £19.5 billion between them across 2016 and 2017.

Royal Bank of Scotland Group PLC has a consensus rating of ‘Hold’ with an average target price of £3.01.

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