Friday August 8, 12:49 PM
RBS reports first loss after £5.9bn writedown
By Jamil Hussein
LONDON (ShareCast) - Royal Bank of Scotland (LSE: 91ID.L - news) reported its first loss in 40 years as a publicly traded company after
booking credit market writedowns of £5.9bn for the half year.The results were better than the estimates of a around £1bn loss but the losses were still the biggest in British history. Chief executive Fred Goodwin said the £691m loss on a proforma basis, against a £5.1bn profit last year, was due to "unprecedented market conditions on a number of our business lines." "It has been a chastening experience and reporting a pre-tax loss of £691 million is something I and my colleagues regret very much," he added. On a statuary basis pre-tax loss was £692m from £5.7bn profit last year. Excluding write-downs and other one-off items, total income fell 1% to £16.8bn and underlying profit declined by 3% to £5.1bn. The group said the loss was down to the previously signalled write-downs of £5.9bn. Impairment losses increased to £1.4bn, compared with £936m in 2007. "In response to these new market conditions we moved decisively to strengthen our capital position materially. In so doing we are acutely aware that we drew heavily on our shareholders for financial support and we recognise that we must now deliver a level of performance that meets their expectations for the company and restores value to our shares," said the group The group said its capital ratios, on a pro-forma basis, were ahead of target. The core Tier 1 ratio was 5.7%, compared with a 5% target. The group added that the difficult conditions in the financial markets look set to be compounded by a deteriorating economic outlook, with consensus forecasts pointing to slowing growth in many countries. "Whilst the dislocation of global financial markets which began in 2007 makes this task more complex, it also has the effect of increasing the risk premium available on most business lines," it said.
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