RBS to update on cuts in first results under Alison Rose

The financial services giant is expected to report its third consecutive annual profit on Friday as the banks’ annual reporting season gets underway. There has been speculation that there may be sizeable job cuts from the bank’s 65,000-strong workforce – with its NatWest arm particularly in the firing line – although there is not expected to be a detailed announcement this week. The bank will also unveil the size of its annual bonus pot which is thought to be around £300 million, the lowest since it was bailed out by the UK government over a decade ago. Analysts have pencilled in a £3.77 billion operating profit for the 2019 financial year, an increase from £3.4bn the year earlier. Investors will also be looking for an update on early progress at the group’s new digital bank Bo which launched in November as a rival to start-ups such as Monzo. Richard Hunter, head of markets at Interactive Investor, said the key focus will be on whether a disappointing third quarter at the bank was “more of an anomaly than a trend”. He said: “There was an additional PPI (payment protection insurance) charge of £900m – although at last the line has been drawn in the sand – and both net interest income and net interest margin reduced against a backdrop of historically low interest rates.” However, Hunter said there were some positives in the third quarter which investors hope will have continued into the final quarter, adding: “The full year target of £300m cost savings remained on track, and the bank was comfortably ahead in terms of pre-tax profit at £2.7bn at the nine-month stage.” One eye will be on how the bank’s largest shareholder, the UK government, might react to the results. “There have already been rumours the Chancellor, Sajid Javid, might look at selling the government’s remaining 62 per cent in RBS at a fairly early opportunity, but that will depend to some extent on the bank’s performance,” said analysts at the Share Centre. Meanwhile Barclays, which reports on Thursday, is expected to increase full-year pre-tax profits to £5.4bn from £3.5bn in 2018. Russ Mould, investment director at AJ Bell, said investors will be hoping for a more stable period ahead following turbulent times. “The furore over the intervention of activist Edward Bramson over the role of Barclays’ investment bank appears to have passed, for now at least, and the PPI compensation payments deadline is also now in the past after Q3’s £1.6bn charge that took the total cost of that scandal to £11.2bn,” he said. Bank of Scotland-owner Lloyds will update on its trading next week.