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State-owned Royal Bank of Scotland posted a 1 billion-pound ($1.7 billion) net loss in the first-half on Friday, as bad debts soared to 7.5 billion pounds, and warned of more "poor" results to come as its recovery would take time.
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Sharon Lorimer |
"There will be no miracle cure. There will be a couple of years of heavy lifting ahead, both for RBS and for the world economy," Chief Executive Stephen Hester said on a conference call. "This will be a marathon, not a sprint."
RBS's [RBS-LN
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] shares were down over 12 percent at the market close, shedding strong gains made in the last two days on disappointment with the bank's cautious tone, dealers said.
In currency markets the pound fell more than 0.2 percent against the dollar to $1.6722 after the RBS result.
"It was disappointing," said Neil Jones, head of European hedge fund sales at Mizuho Corporate Bank in London.
"Traders expected an "in-the-black" headline number ... It will create an addtional incentive to sell sterling into fresh short positions."
The headline net loss attributable to shareholders compares with a year-ago loss of 827 million pounds.
UK rival Lloyds Banking Group [LLOY-LN
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] this week said the worst was over for its bad loans and hinted a recovery could be around the corner.
But RBS struck a more cautious note, warning that its results would be "poor" over the next two years.
"Overall, results may not substantially improve until 2011 and full recovery will take time," Hester said in a statement.
The bank said its "core bank" — which excludes assets the bank aims to sell or wind down — had an operating profit of 6.3 billion pounds, up from 4.7 billion a year ago. Its non-core operations, however, sank to a loss of 9.6 billion pounds.
Its investment banking arm, Global Banking and Markets, posted a first-half profit of 4.87 billion pounds, after impairment losses, up from 1.12 billion a year ago as it benefitted from the same boom conditions seen at investment banking rivals such as Barclays [BARC-LN
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] and HSBC [HSBC-LN
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].
Commercial and retail banking, however, was hit by lower revenues and margins and higher bad debts.
The bank also named former Bank of New York Mellon [BK
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] chief financial
officer Bruce Van Saun as its new finance director, completing the overhaul of its top team.
It also set a raft of targets for 2013, including a return on equity of at least 15 percent.
Data is a real-time snapshot *Data is delayed at least 15 minutes