Royal Bank of Scotland Group Plc (RBS), the recipient of the biggest bank bailout in history, dropped by the most in 11 months after operating profit fell by more than analysts estimated.
Operating profit declined to 829 million pounds ($1.3 billion) from 1.16 billion pounds a year earlier, Edinburgh- based RBS said in a statement today. That missed the 1.2 billion-pound estimate of six analysts in a Bloomberg survey. The shares fell as much as 8.9 percent in London, the most since June 28.
We’re “running hard to stand still,” Chief Executive Officer Stephen Hester, 52, told reporters on a conference call today. “If our customers aren’t growing we’re not going to grow. We’re working hard on costs and impairments to offset revenue trends. The business is solid, but it’s awaiting economic recovery.”
Under pressure from the government to raise capital, Hester said in February the bank would further shrink its profitable investment-banking business. The bank, which received the biggest banking bailout in the world in 2008, will “substantially complete” its restructuring program next year, Hester said today.
The shares fell 3.6 percent to 296.3 pence in London at 8:35 a.m. The stock has dropped about 9 percent this year, making RBS the worst-performing bank in Britain.
Revenue at its investment bank, the markets division, fell to about 1 billion pounds in the first quarter from 1.7 billion pounds.
“The markets business is very disappointing,” said Cormac Leech, a banking analyst at Liberum Capital Ltd. in London with a buy rating on the shares “There’s a risk the pressure the government is putting on it kills the golden goose.”
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