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RBS to unveil best figures since bail-out

  • Ulster Bank sale likely to be reversed
  • Group profits to be significantly higher

Royal Bank of Scotland is this week expected to unveil its best trading performance since it was rescued by the government in 2008.

Analysts are anticipating a significant growth in profits, a reversal of its plan to sell Ulster Bank, and a sharp fall in impairment charges for payment protection insurance.

The bank, which issues third quarter figures on Friday, is not expected to follow Lloyds by announcing further branch closures. It believes it is already ahead of the sector in reshaping its network.

Nor is the bank likely to provide anything but a brief statement on its search for a successor to Sir Philip Hampton who will step down as chairman next year.

Markets will focus their attention on figures widely expected to be well ahead of earlier estimates as an improved outlook for the UK and Irish economies feeds through to the banking sector.  RBS is expected to post operating profits in the region of £1.6 billion.

A recovery in the UK and Irish housing markets has helped the turnaround in the once toxic loan book, say analysts at IG. The bank expects £800 million in positive contributions from write backs on distressed loans.

Chief executive Ross McEwan is likely to confirm that the bank has reversed its plan to sell Ulster Bank which has benefited from a recovery in the Irish property market. McEwan recently said that the Irish property market has “been going well”. He noted a 23 per cent rise in Dublin residential prices this past year as well as more activity in the commercial property market.

RBS has provided more than £15 billion in capital to Ulster Bank which suffered catastrophic losses in the collapse of the Irish property market. However, it has turned a huge loss into small profits in two quarters this year.

Investors will be seeking further updates on the £29 billion of unwanted assets which are now managed its capital resolution division – the formal name for its “bad bank”.

Lloyds Bank yesterday announced 9,000 job losses and 150 branch closures.

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