Ulster Bank and First Active parent Royal Bank of Scotland expects its first-half results to be in line with analysts' expectations after good income growth early this year, Britain's second-biggest bank said today.
In a trading update, RBS cited a strong performance this year by its global banking and markets arm, which is effectively its investment banking business, and said the outlook for the unit remained positive.
The bank said the overall quality of its loan portfolio should show a small improvement for the six months to end-June, with a lower increase in bad debts than growth in loans and advances.
RBS shares were down 3.05 per cent at £17.18 by 9am, underperforming a 1.5 per cent decline in the FTSE 100 index and a 1.9 per cent drop in the pan-European banking index.
Analysts said the comments on "in-line" trading were reassuring but not sufficient for RBS to buck a negative broad market trend.
The bank in February unveiled a £1 billion share buyback programme and a 25 per cent dividend hike, which boosted its stock. Its shares have failed to sustain that rally, however, leaving it with one of the lowest valuations among global banks.
Over the last six years, RBS has transformed itself into one of the world's biggest banks via near $60 billion of deals. This has left dealers wary of more deals to come, despite its assurance that no more big deals are on the horizon.
The bank said it expected its Tier 1 capital ratio to be around 7.5 per cent at the end of June.
That could give it leeway if it wanted to buy back more shares. RBS previously said it would consider buying back shares when that capital ratio was between 7 and 8 per cent. The ratio had improved to 7.6 per cent by the end of 2005 from 6.7 per cent a year earlier.