RBS reports a pre-tax loss of £44 million as it is hit with a £4.9 billion impairment or bad debts and toxic loans charge.
Interestingly, before the impairment charge, RBS made a £4 billion operating profit, including a sizeable contribution from its investment bank.
However, chief executive Stephen Hester, was not overly optimistic as he said ‘we remain cautious and continue to plan and manage our businesses in the full expectation that both 2009 and 2010 will be very tough years for RBS.’
This update from RBS, comes after the unexpected trading statement from Lloyds Banking Group yesterday, in which it warned that it expected to see a significant rise in its HBOS bad debt.
The RBS share price is currently up over 11%, Lloyds up almost 5% and Barclays up almost 1%.
The Share Centre, established to provide value-for-money share services for private investors, is now advising shareholdeers to sell RBS shares.
That said investment adviser at The Share Centre, Nick Raynor, added ‘Seasoned investors willing to trade high risk shares may wish to take a punt on RBS, given the current weakness of its share price.’
There may be some signs that the banks are getting themselves back on track but clearly there’s a huge job still to be done on the long road to recovery.