Royal Bank of Scotland Group (RBS) has reported a pre-tax loss of £5.17bn ($7.84bn) as a result of further provisions for mis-selling compensation and own credit charges.
The largest contributor to RBS yearly loss is an accounting charge for adjustments to the value of its debt and derivative liabilities of £4.6bn.
The state controlled bank set aside £450m in Q4 2012 for fresh PPI mis-selling compensation, bringing the total to £2.2bn.
In February 2013 RBS was fined £381m as a result of LIBOR rate fixing, and expects to incur additional penalties.
Total assets across the Group fell to £1.3tn, down 13% from £1.5tn.
More positive metrics at the bank include:
– Excluding one off fees and charges the bank posted an operating profit of £3.4bn, up from £1.8bn in 2011;
– Core RBS operating profit £6.3bn versus £6bn in 2011;
– Group net interest margin rose by one basis point to 1.93%.
– Revenues for the year were up 36% to £2bn.
– A loan to deposit ratio of 100% (down from 108% in 2011).
Stephen Hester, Group Chief Executive, said: "RBS is four years into its recovery plan and good progress has been made. We are a much smaller, more focused and stronger bank. Our target is for 2013 to be the last big year of restructuring. There will be important work still to do, but an increasingly sound base from which to work.
As the spotlight shifts to the ‘new RBS’ post restructuring, we are determined that it will show a leading UK bank striving to be a really good bank. By serving customers well RBS can become one of the most respected, valued and stable of banks. That is our goal."
Ulster bank posted poor results within the group. Operating loss increased by £56m to £1bn reflecting a reduction in income driven by lower interest earning asset volumes.
RBS has confirmed that it is to carry out a partial floatation of its US subsidiary Citizens Bank in around two years. Analysts estimate Citizens to worth in the region of £8bn. Citizens Bank employs 14,700 and serves 5m customers in the north-east of the US.
The UK government, which currently owns 81% of RBS shares, plans to return the bank to private ownership in the within the next few years but as the bank continues to run at a loss analysts predict it may take longer.