On the back of a good first-half performance, UK-based financial services heavyweight RBS Group - owner of the Royal Bank of Scotland - has revealed that it anticipates being able to report interim H1 2006 results in line with expectations.
In a trading update, the bank said that its interim results for the year ending June 30, 2006 should meet expectations as the company has performed well in the first half of the year so far.
Among the results, which will be released on August 4, 2006, RBS said highlights are expected to include good organic growth in income, disciplined expense control and a small improvement in overall credit metrics.
The company said it has continued to achieve good growth in income, with strong performances in corporate markets, particularly global banking & markets, and Ulster Bank. Retail markets’ income growth, meanwhile, reflects the continuing transition in UK customer behavior away from unsecured lending towards savings and investment products, with wealth management performing particularly well. Elsewhere, RBS Insurance has also continued to increase its income, despite tough competitive conditions.
In terms of margins, the company said its net interest margin is expected to be lower, in line with guidance given at its results presentation in February, mainly as a result of changes in the product mix and the continuing impact of the flatter yield curve in the US.
Organic growth has been a key element of the group’s strategy and a prominent theme in our results over recent years, commented Sir Fred Goodwin, group chief executive. 2006 is progressing well, and we are confident that our interim results will clearly demonstrate the inherent strength of our business model, the benefits of our diversified business activities, and the range of options available to us for future organic growth.
However, with the bank’s share price falling by more than 3% following the announcement, it seems investors are somewhat less optimistic.