Where RBS Isn't Doing a Great Job

Guy Johnson, CNBC Anchor

Judging by Thursday's share price performance, Royal Bank of Scotland has delivered all that has been asked of it. The bank's loss wasn't anything like as bad as analysts had expected, non-performing loans have peaked and the core operations (the bits it's going to hang on to) were profitable.

Its chief executive, Stephen Hester, has good reason to be happy and, to be honest, he looked it this morning during our interview. He did, however, make it very clear to me that the bank is not out of the woods yet and that this is a long-distance race to recovery, not a sprint.

There is though one area in which Hester and his team are failing to deliver: business lending. While the gross business number may have been strongly positive in 2009, the real story comes with the net number and this one figure that RBS does not seem to want to highlight.

Indeed, this lending number is so well buried in today's release that the even the RBS PR team didn't have it at its finger tips when I asked them about it earlier and had to ring downstairs to check what it was.

It's pretty clear why the bank doesn't want to highlight this number. That's because it is negative, very negative; 12 billion pounds ($18.24 billion) negative, to be precise, and that's a big problem.

Sharon Lorimer

When I asked him about this earlier, Hester was keen to point out that this aberration was due to a lack of loan demand and that with so many of its customers paying back debt it's hard to print a positive figure. While there may be some truth to this, it is still a big miss of a key government target.

The British economy needs credit creation right now; the Institute of Directors says that companies are struggling to get the bank loans they need. So while Hester is doing a great job on so many fronts, lending to business is not one of them.