Royal Bank of Scotland, which owns Ulster Bank and First Active in the Republic, has signalled an upbeat performance for Britain's second biggest bank.
In a statement issued to the stock market yesterday, RBS chief executive Mr Fred Goodwin told investors profits would be boosted by tight cost control and strong growth in revenue. But he cautioned that the bank's net interest margin, which measures lending profitability, would narrow from last year as a result of the inclusion of the First Active acquisition.
RBS bought the former Irish building society last year for €887 million. Excluding the impact of strong growth in mortgages and rental assets, the margin was stable, he said.
The UK's big banks are benefiting from a lending boom and near-record corporate bond activity amid low interest rates. The RBS statement follows recent positive updates by rivals HSBC and Barclays. "Prospects for the second half are just fine," Mr Goodwin said yesterday. "We continue to experience strong income growth and efficiency continues to improve."
Earlier RBOS said its first-half pre-tax profits would rise by at least 7 per cent broadly in line with forecasts of up to £3.75 billion. This figure excludes goodwill and integration costs. Most analysts have signalled they will not be altering their forecasts.
In the UK, RBS owns NatWest and Direct Line insurance. Mr Goodwin said it was holding or increasing its UK market share.Trading profits in markets such as foreign currencies and bonds had kept up momentum from last year. Mr Goodwin played down the prospect of RBS making more big acquisitions while it integrates its biggest US buy, the $10.5 billion (€8.7 billion) takeover of Charter One.
- (Additional reporting: Reuters)
