Scotsman.com Business - RBS profit for 2007 'set to top £10.3bn'

Scotsman.com Business - RBS profit for 2007 'set to top £10.3bn': "RBS profit for 2007 'set to top £10.3bn'"

ROYAL Bank of Scotland said yesterday that its interim underlying earnings this summer would beat City expectations, fuelling market expectations that it will make a profit of at least £10.3 billion for the whole of 2007.
This would be up 9 per cent from the £9.2bn profit in 2006. It came as Sir Fred Goodwin, RBS's chief executive, played down the need for early renewed talks with Bank of America on the ABN Amro takeover tussle.
Goodwin said no talks were active with BoA on a deal on ABN's American LaSalle subsidiary, sold to BoA alongside Barclays' agreed bid for ABN.
RBS wants LaSalle, or bits of it, as part of its consortium's rival unsolicited bid for ABN.
"Rome was not built in a day, there's no sort of rush here," Goodwin said. "I'm happy to have a conversation. We've had one before, which would suggest there is a basis for a conversation. But if one happens it happens, if it doesn't, it doesn't."
The comments came as RBS's trading update said UK retail bad debt charges had improved slightly.
But interim income growth will be reined in by the strength of the dollar. Yesterday RBS said its overall loan volumes remained strong in 2007.
The market forecast for its 2007 adjusted earnings per share was 72.1p, up 8 per cent on 2006.
Guy Whittaker, RBS's finance director, said: "We are flagging that we expect to be slightly ahead of that."
The group said that it also expected to report a lower cost-income ratio, while the corporate credit backcloth remained benign.
Corporate Markets, which embraces UK and global corporate banking as well as financial markets activity, continued to perform well, RBS noted.
The division made a £5.5bn profit at the full-year stage. In the retail market division, wealth management was growing strongly, while there was also decent growth in smaller business banking, mortgages, savings and investment products.
RBS insurance, meanwhile, "continues to focus on more profitable customers acquired mainly through its direct brands". These include Direct Line and Churchill.
Meanwhile, it is understood Barclays was not quibbling with redundancy figures released by the consortium, which also includes Fortis of Belgium and Santander of Spain.
The consortium said if it was successful in its ABN bid it would lead to a maximum of 2,000 job losses in Britain, compared with 11,000 if Barclays was successful.
But it is believed Barclays will press the case to investors that, globally, after outsourcing, only 12,600 jobs will be lost under its takeover compared with 19,000 globally under RBS.
A Barclays spokesman said: "We are aware that these [costcutting] measures can have difficult consequences for a number of staff.
"When it comes to matters affecting staff Barclays has a very good reputation."
STUCK IN GEAR
RBS boss Sir Fred Goodwin said there had been a "gentle movement upwards" in insurance, but declined to call a definite turn in the motor insurance market.
Premiums in the sector have fallen behind claims inflation for several years now.
All Sir Fred would say was that "we are starting to see a floor emerging".
RBS is Britain's biggest car insurer and said in March it was starting to see an improvement in premiums inflation.