Royal Bank of Scotland Group PLC (LON:RBS) reports its first quarter results on Friday with the focus on its outlook for the rest of 2018 amid uncertainties facing the bank.
Any day now the lender is expected to receive a large fine from the US Department of Justice for the mis-selling of toxic mortgage-backed securities in the lead up to the 2008-09 financial crisis.
Last month it agreed to a US$500mln settlement with the state of New York over the mortgage securities saga.
RBS also faces the prospect of further costs arising from the payment protection insurance mis-selling scandal after setting aside a £746mln provision in the fourth quarter.
The Financial Conduct Authority has set a deadline of August 2019 for PPI claims.
Investors continue to exercise caution over the stock given the long-list of legacy issues the bank is yet to put behind it.
RBS needs to resolve these issues before it can return to dividends and pave the way for the government to begin selling its stake.
The bank remains more than 70% owned by the taxpayer following a government bailout during the financial crisis despite reporting its first full year profit in a decade in February.
RBS has been undergoing an extensive restructuring to reduce its risk-weighted assets and strengthen its capital position.
Deutsche Bank expects restructuring costs of £313mln in the first quarter.
Meanwhile, the lender has had to contend with margin pressure in the competitive mortgages market.
Deutsche Bank estimates a broadly flat net interest margin in the first quarter compared to the previous three months, in line with the bank’s own forecasts.
It also expects investors will question RBS on the outlook for the rest of 2018 following the end of the Bank of England’s £140bn Term Funding Scheme, which was launched after the Brexit vote to boost the supply of cheap funding to the economy.
The results from RBS follow quarterly earnings from Barclays PLC (LON:BARC) on Thursday and Lloyds Banking Group PLC (LON:LLOY) on Wednesday.
Significant events due:
Interims: Royal Bank of Scotland (Q1) (LON:RBS)
Finals: Harvey Nash PLC (LON:HVN), Virgin Money PLC (LON:VM.)
Trading updates: Computacenter PLC (LON:CCC), Merlin Entertainments PLC (LON:MERL), RotorkPLC (LON:ROR), Travis Perkins PLC Royal Bank of Scotland Group PLC (LON:RBS) reports its first quarter results on Friday with the focus on its outlook for the rest of 2018 amid uncertainties facing the bank.