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Friday preview: Results from RBS, IAG, Pearson and William Hill

By Oliver Haill

Date: Thursday 22 Feb 2018

LONDON (ShareCast) - (ShareCast News) - Royal Bank of Scotland on Friday will complete the week's series of high street banking results, accompanied by numbers from IAG, Pearson and William Hill.
With the current fascination of interest rates, it may be worth keeping an eye on Bank of England deputy governor Dave Ramsden, who voted against raising rates last year, will be talking at a productivity conference from midday.

Ahead of Friday's final results, RBS has been in the news already this week as a report was published into malpractice at its Global Restructuring Group unit, where it is alleged staff were encouraged in mis-selling unsuitable interest rate products to small businesses.

This week's final numbers could see RBS return to profit for the first time this decade, though like peer Lloyds earlier in the week, it may have taken hits from the recent collapse of Carillion.

Analysts at UBS expect group adjusted profit before tax of 802m, 36% lower on a quarterly basis and down 32% on the year.

Management succession is a key issue, with current boss Ross McEwan last year linked with a move to become chief executive of Commonwealth Bank of Australia, but CBA having officially announced its new CEO. "Questionswill arise again," USB thinks, "on longer term plans for leadership of RBS."

UK domestic banking margins are key, analysts said. "RBS has a fully repriced deposit base and has delivered a more-than-doubling in interest-free deposits over the last five or six years. At last count its caterpillar interest rate hedge was delivering about a fifth of profit - in line with Barclays and LBG - with guidance for continued falls in group NIM as older positions mature. Since then, however, the BoE has hiked rates - and we expect will hike again if the UK gets a Brexit transition deal with the EU - and market interest rates have risen markedly. Will this lead to a more upbeat assessment on near term top line trends? Will RBS seek to continue to grow its UK mortgage portfolio as aggressively as in the past?"

The reintegration of Williams & Glyn will also be on investors' minds, connected to last year's announcement about closing 259 of its branches in the first half of this year.

British Airways owner IAG is also reporting full year results.

The consensus is for revenues of €22,983m versus the prior year of €22,567m, with underlying operating profits of €3,046m versus €2,535m, and EPS up to €1.01 from €0.85.

UBS said: "The yield outlook and genrral trading update we think will be of most interest for investors."

William Hill's recent trading update indicated that full year adjusted operating profits are expected to be around 290m, so the focus of these results will likely be on divisional mix and also outlook.

UBS forecast total revenue of 1.7bn, total EBITA of 290m and EPS of 25.5p plus a 2.0p dividend.

For Pearson, Deutsche Bank predicts revenues of 4.6bn and PBT of 494m.

For Rightmove, DB sees revenues of 243m, EBITDA of 187m and EPS of 158.3p.

Friday 23 February

Royal Bank of Scotland Group

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