One of the very few things that RBS’ first-quarter results have going for them is that it was the last bank of the Big Five to report, so their ability to shock or surprise was much more limited,” says Russ Mould, AJ Bell Investment Director.
“The pattern of higher bad loan provisions, falling net interest margins and plunging profits had already been set by HSBC, Barclays, Standard Chartered and Lloyds, although investors in RBS can at least draw some comfort from its strong capital base, as reflected by a 16.3% common equity Tier 1 (CET1) ratio, the highest figure among the FTSE 100’s lenders.”
“Other than that, there was little cheer on offer, as the COVID-19 outbreak and its knock-on economic effects overshadow the absence of litigation costs. RBS booked nothing at all here and between them Barclays, HSBC, Lloyds, Standard Chartered and RBS lost just £84 million to regulatory and conduct issues, the lowest figure since Q1 2014 and second-lowest since Lloyds first took a Payment Protection Insurance compensation claim charge way back in 2011.
“This would have normally given the profit and loss account a tidy boost but higher provisions for bad loans have swamped that benefit. RBS booked £802 million in loan impairments, the biggest charge since Q4 2013.
“In total the Big Five banks took £7.5 billion in provisions for loan losses between them in Q1.