The bank made a pre-tax profit of £826m, a significant improvement on the reported losses of £1.5bn in Q1 2012 and £2.2bn in the final quarter of the year.
However, operating profits fell 28% to £829m, considerably below forecasts, and some analysts have stated the bank remains their least favoured stock in the sector.
The bank does not feature in the top ten holdings of any UK funds, according to data provided by FE.
SME support
The bank reported a modest increase in lending to SMEs, and provided loans and facilities with a value of £7.8bn during the first quarter.
The bank also stated it gave £1.5bn of loans as part of the Funding for Lending scheme, and it accounts for 35% of the SME lending market.
The 1% increase in SME loans pales in comparison to that of Santander, however, which has increased loans of this type by 15% over the past 12 months.
Government sell out
Speaking in a video following the announcement of the results, bank chairman Stephen Heston said the bank would be ready to return to the private sector next year, and the completed restructure would be in large part completed by 2014.
In a subsequent press call he admitted there had been no explicit talks with the government about the sale of their holdings.
The taxpayer currently holds an 82% stake in the bank, and the shares were bought for 502p, but are valued at 407p.
Lloyds Bank posted strong quarterly results earlier in the week, but has not put a date on when it may be ready to return to the private sector in full.
Patrick Gordon, senior investment analyst and head of fixed income at Killik & Co, said: “RBS results were weaker than expected at a revenue level, although performance on the balance sheet was strong. The primary area of weakness is in the markets division, where restructuring and RWA reduction seems to be having an impact on performance relative to peers.
“Until there is more visibility that this is a business that can earn a decent return on equity, investors will continue to question RBS’s investment case. There are also significant operational issues that need to be achieved by management such as the partial IPO of the US bank, the disposal of the branch network – which still requires significant work to achieve – and the final disposal of Direct Line.
“While RBS remains cheap on a book value basis, at 0.64x tangible book value, until there is more certainty of underlying profitability, a re-rating appears unlikely. We remain neutral.”
