The Q1 underlying profit figure is promising, representing as it does a 5% rise on the previous quarter and more than double the £444m it managed for the same period last year. But chief exec Stephen Hester poured cold water on the prospect of the British taxpayer getting any money back on its majority stake any time soon, saying ‘As far as I am aware, there is no desire to sell at current share prices.’ And he may have a point - although its stock has risen some 20% this year to around 25p, that’s still well adrift of the 50p which represents break even for the government’s holding.
The bank had two other pieces of good news to share – firstly that it is to resume paying dividends on its preference shares, although ordinary shareholders will have to wait a while longer yet for their divi to recommence. And secondly that this month it will make the final payment on the £75bn of state-backed loans it received during the financial crisis. This is a key milestone in the bank’s rehabilitation, and one which Hester – who turned down a £1m bonus recently as a result of public and political pressure – will doubtless be pleased to have passed.
But despite these signs of progress, there is a way to go yet. The banks statutory results paint a rather less glowing picture, as that £1.05bn profit morphs into a £1.4bn loss once fluctuations in the value of its debt are included in the calculation. Of course RBS is not the only bank to choose to regard this debt valuation as an exceptional charge in current circumstances, but until those numbers start to look a little healthier it seems unlikely that RBS’s shares will recover sufficiently well to make a return to the private sector a realistic proposition.
It was reported in March that Adu Dhabi’s Sheikh Mansour had been eyeing a £10bn investment in RBS which would have helped pave the way for a sell off, but Hester’s comments today seem to scotch that prospect at least for the time being. It looks like patience is still the name of the game for the long-suffering British taxpayer as far as RBS is concerned.