RBS Results

RBS announced its full-year 2009 results today which were significantly better than expected by the consensus opinion. They lost £3.6billion vs the average view that they would lose £5billion.

This may still sound awful, but underneath the headline figures it is obvious that significant improvements are being made. Stephen Hester has also made the bold statement that he believes loan impairments have peaked, which is good news for the financial sector and whole economy.

Stephen Hester also said: “We have exceeded all the principal milestones we set for the first year of our (five-year turnaround) plan. An £8.3bn profit for 2009 in our core businesses provides evidence that the new RBS can deliver sustainable earnings. RBS is also becoming safer and smaller more quickly than we expected.”

He confirmed in an interview this morning that the RBS Insurance business may be floated in late 2012 or early 2013 which would extract maximum value. Half of RBS Sempra has also been sold.

Most importantly, he mentioned he felt RBS would return to profitability next year!

RBS shares are currently trading at 38p (still well below the 51.3p Net Asset Value per share). 15% up from the 33p price when I first wrote about them. I still feel £1.00 is achievable within 2 years.

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