The Royal Bank of Scotland Group plc 's ( RBS ) first-quarter
2013 (ended Mar 31, 2013) net operating income came in at £829
million ($1,095 million). This reflects a substantial rise of 49.9%
from £553 million ($730 million) in the prior quarter.DEUTSCHE BK AG (DB): Free Stock Analysis ReportICICI BANK LTD (IBN): Free Stock Analysis
ReportROYAL BK SC-ADR (RBS): Get Free ReportUBS AG (UBS): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment
Core operating income stood at £1,334 million ($1,762 million),
down 10.8% sequentially. Further, non-core operating loss came in
at £505 million ($667 million), down 46% sequentially.
The results reflect an improvement in the core bank's operating
results and further reduction in operating losses, partially offset
by a decline in net interest income. However, increase in operating
expenses depicts poor expense management.
Furthermore, division-wise, on a sequential basis, Retail &
Commercial reported a 13.7% fall in operating profit to £1,594
million ($2,105 million) and Direct Line Group recorded a 21.2%
decrease to £89 million ($118 million). However, the Market
division reported a rise of 82.6% to £294 million ($388 million).
Central items reported an operating loss of £43 million ($57
million) compared with a profit of £126 million ($166 million) in
the prior quarter.
Performance in Detail
Net interest income fell 3.5% on a sequential basis to £2,737
million ($3,615 million). The decline was driven by reduced day
count. Net interest margin was 1.95%, in line with the prior
Non-interest income came in at £3,543 million ($4,679 million), up
Operating expenses for the quarter totaled £3,639 million ($4,806
million), up 12.6% from the prior quarter. The rise in expenses was
mainly driven by an increase in staff expenses. Moreover, core cost
to income ratio deteriorated from 57% in the prior quarter to
Loan impairment losses were £1,036 million ($1,368 million), down
26.1% sequentially. This was led by a 17.8% dip in loan impairments
in the core portfolio to £599 million ($791 million) and a drop in
the non-core portfolio by 35.1% to £437 million ($577
As of Mar 31, 2013, funded balance sheet was £876 billion ($1,436
billion), up £6 billion ($8 billion) sequentially. The rise was
driven by higher central bank deposits within Group Treasury and a
recovery in market counterparty positions. Total assets stood at
£1,308 billion ($1,676 billion), down 0.3% sequentially.
Loans and advances to customers rose 0.23% sequentially to £433
billion ($555 billion), driven by a £3 billion ($4 billion)
increase in US R&C, partially offset by run-off and disposals
in non-core. Loan to deposit ratio improved from 100% to 99% in the
As of Mar 31, 2013, core tier 1 ratio stood at 10.8%, compared
with 10.3% in the prior quarter. Gross risk weighted assets came in
at £446 billion ($572 billion), down 3.0% sequentially from £460
billion ($590 billion). The decline reflects a £13 billion
reduction in markets and a £6 billion decrease in non-core.
Management expects economic and regulatory challenges to continue
through the remainder of 2013. Further, RBS aims to maintain a
strong balance sheet and capital position along with cautious
expense management initiatives.
RBS expects trends in Core Retail & Commercial businesses to
be consistent with the first quarter. Moreover, net interest margin
is expected remain somewhat stable compared with the prior
Performance of Other Foreign Banks
Deutsche Bank AG 's ( DB ) earnings per share
came in at €1.71 in the first quarter of 2013, compared with a loss
of €2.31 in the prior quarter and year-ago earnings of €1.45. Net
income came in at €1.7 billion ($1.3 billion), up from €1.4 billion
($1.1 million) in the prior-year quarter. The quarterly performance
was driven by higher revenues and lower expenses.
UBS AG ( UBS ) reported
first-quarter 2013 net income attributable to shareholders of CHF
988 million ($1,062.3 million), which substantially outpaced the
prior-quarter's loss of CHF 1.9 billion ($2.0 billion). The
positive quarterly results were primarily impacted by lower net
charges for provisions for litigation and regulatory matters and
reduced own credit loss.
ICICI Bank Ltd. 's ( IBN )) fiscal
fourth-quarter 2013 (ended Mar 31) net profit came in at INR23.04
billion ($424 million). This reflects a rise of 21% from the
year-ago profit of INR19.02 billion ($350 million). For fiscal
2013, net income reached INR83.25 billion ($1.5 billion), up 29%
from INR64.65 billion ($1.2 billion) in fiscal 2012.The robust
performance came on the back of an augmented net interest income
and lower loan loss provisions, partially offset by a rise in
operating expenses and a decrease in fee income.
We expect RBS' diversified business model and sound financial
position to contribute to its overall growth in the future.
However, increased competition, volatility in the global economy
and effects of the Eurozone crisis remain major concerns.
Shares of RBS currently carry a Zacks Rank #3 (Hold).