A lack of profitability in its core business is a concern for Royal Bank of Scotland Group plc (LON:RBS) and there are further potential headwinds coming.
That's the view of Mike Ingram, a market analyst at BGC Partners, on the day the banking titan posted annual results today, which showed losses in 2016 almost trebling from 2015.
It was the ninth consecutive loss from RBS - and worse than City scribes had expected. The stock, 73% owned by the taxpayer, is the least favoured of the UK 'big four' players by analysts.
Bigger than expected
Ingram said: "This was about half a billion pounds bigger than expected and brings the cumulative loss ver the last nine years to somewhere north of £50bn."
He noted that was even bigger than the £45.5bn paid by the Government to bail them out in 2009.
"It's the lack of profitability in the core business which is a concern and I think that probably explains why RBS is trading at something like a 40% discount to its equity value relative to the other European banks," he told Proactive.
One-offs keep happening..?
Admittedly, there was about £10bn of one-offs but these "one-offs" seem to keep happening to the bank, said Ingram, who added that the group has further pushed back its 12% return on equity target further out to 2020.
"It was a huge organisation. It was vastly complex. It grew largely through acquisition and a lot of those problems are coming back to haunt the bank, note Ingram.
Headwinds ahead include potential fallout from Brexit, and RBS is already starting from a weaker position from others, such as rival Lloyds (LON:LLOY), he adds.
RBS shares are down 3.42% on the day to stand at 240.9p a pop.