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Rbs Back In Red With £1.4Bn Losses

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Published on Fri Nov 05 08:04:31 GMT 2010

Part-nationalised Royal Bank of Scotland has said it had fallen back into the red with losses of £1.4 billion in the third quarter.

RBS, which is 83% owned by the taxpayer, said the loss came largely after an £825 million hit in relation to its use of the Government's toxic asset protection scheme.

Underlying figures showed earnings of £726 million in the three months to September 30, up from £250 million in the third quarter as it continued to benefit from lower bad debts.

The NatWest parent had returned to profit in the first half of the year, but chief executive Stephen Hester said its figures were impacted by highly volatile accounting charges, which can "obscure our underlying story".

Trends at the bank mirrored those reported by fellow taxpayer-backed rival Lloyds Banking Group earlier in the week, with bad debts down and better profit margins in its retail banking arm.

Losses on loans turned sour were down 40% year-on-year and 21% lower since the second quarter, according to RBS.

Its retail arm saw operating profits rise 12% to £1.1 billion, partly boosted by higher margins on mortgage business as borrowers came off cheap deals on to its standard variable rate.

But RBS said while gross mortgage lending remained strong, up 8% on the previous three months, figures on a net basis were hit as more customers redeemed home loans.

It lent another £7.6 billion to small businesses, but said demand for credit was weak.

The bank's lending to large and small businesses has reached £30.9 billion since March and RBS confirmed it was on track to meet the Government-set target for £50 billion gross lending in the year to March 2011.

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Results were actually better than expected. Read a similar article on the BBC, very misleading TBH. Reuters have a more detailed analysis:


"Overall, the results looked better than expected. The group's expansion in net interest margin was a positive and the loss from the non-core business was less than I had expected," said Execution Noble analyst Joseph Dickerson.

RBS's shares opened strongly and were 1.61 percent higher by 0832 GMT.

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