ii view: RBS cuts costs and declares a special dividend

by Keith Bowman from interactive investor |

Royal Bank of Scotland returns £1.7 billion to shareholders.

Half-year results

  • Operating profit up 47% to £2.69 billion
  • Interim dividend of 2p and special dividend of 12p per share – totalling £1.7 billion
  • 2019 outlook - unchanged

ii round-up:

Headquartered in Edinburgh, the Royal Bank of Scotland’s history dates to 1727. 

Today the bank’s brands include RBS itself, NatWest, Ulster Bank, Child & Co, Drummonds and Coutts. 

In April this year and after more than five and a half years at the helm, Ross McEwan its chief executive announced that after a handover period he would be stepping down. 

In the aftermath of the 2008 financial crisis, the bank is still majority owned by the UK government. 

For a round-up of these half-year results, please click here.

ii view:

2018 and ten years on from the height of the financial crisis saw RBS passing the Bank of England’s latest stress tests. The bank’s journey through and out of the financial crisis has few rivals. 

Today, fines and settlements for a series of legacy issues now sit in the rear-view mirror. Simplification and refocus have proved themes. The UK government is still the majority shareholder. 

For investors, Brexit and how it impacts the bank and its customers occupies the near-term. Might a no deal Brexit see the Bank of England reducing interest rates, hitting the net interest margin for RBS? Beyond Brexit, shareholder returns and possible special dividend payments offer attraction. 

Positives  

  • Costs are being cut - £173 million was achieved in H1 2019
  • Special dividend of 12p
  • RBS passed the Bank of England stress test back in 2018

Negatives

  • UK economy faces uncertainty given pending Brexit
  • UK government’s shareholding leaves it more so than rivals in the political firing line
  • Higher interest rates are good for banks. A hard Brexit might see rates being cut

The average rating of stock market analysts:

Buy

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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