Five questions answered on RBS’s positive quarterly profit results
The bank that was famously bailed out in the 2008 financial crisis has posted its best quarterly profits for over a year. We answer five questions on RBS’s latest figures.
How much pre-tax profit has the bank made?
The bank has made a pre-tax profit of £826m, this is compared to a £1.5bn loss in the same period in 2012 and a £2.2bn loss in the final quarter of last year.
What has been the bank’s response to these positive results?
In a video statement on the bank’s website, Chairman Sir Philip Hampton said he expects the government to start selling shares in the bank from the middle of 2014, or possibly earlier, so the bank can return to privatisation.
He said any such sale would be "terrific for the country".
The government owns an 82 per cent stake in the bank after it bailed it out in 2008.
What else did Hampton say?
"Our balance sheet is substantially fixed... our operating profitability has come through quite strongly," he said.
"What we want to do is have a business that is performing well... enabling the government to start selling shares from, let's say, the middle of 2014 on - it could be earlier, that's a matter for the government - but certainly we think the recovery process will be substantially complete in about a year or so's time."
If the government sold its shares in the next year or so would they be getting a good deal?
It’s not known how much the government would sell its stake for, but currently, RBS shares are valued at 407 pence a share on the government's accounts. However, the government paid 502 pence a share during the bailout.
According to the BBC’s business editor, Robert Peston, this suggests the Chancellor, George Osborne, could opt to sell at the lower price and still claim to be getting fair value for the 82 per cent taxpayer stake.
This would result in a return to shareholders after the government invested billions in the bank five years ago.
How have investors reacted to the quarterly results?
Despite Hampton’s optimism, investors have reacted negatively, with RBS shares falling more than 4.5 per cent in the first 10 minutes of trading on the London Stock Exchange.