Royal Bank of Scotland Group PLC (LON:RBS) kick-starts the 2018 full-year results season for the listed UK banks on Friday and investors will be hoping that strong profit growth will bring a further dividend reward for long-suffering shareholders .
In the third quarter, RBS posted pre-tax profits of £961mln, up 10% on the same quarter in 2017, putting it on course to finish the year with profits of over £3bn. That would be well above last year’s small net gain of £752mln, which was its first profit in ten years.
The bank paid an interim dividend in 2018 of 2p a share, its first pay-out in the ten years since its 2008 rescue from collapse by the UK government during the financial crisis. Analysts at Deutsche Bank expect another 3p pay-out, taking the total dividend for 2018 to 5p per share.
The majority taxpayer-owned lender recently got shareholder approval to buy-back shares directly from the UK government. At 62.3%, the UK taxpayer is still the bank’s single largest shareholder, and it will be years before that holding is fully unwound, nonetheless, a regular share buy-back would represent a major step forward.
Friday’s full-year results will be an important measure of how much things have improved for RBS, although growth seems to be slowing across the sector, although low-interest rates and high levels of employment should mean that bad loans issues remain subdued.
Although Brexit remains a cloud on the horizon, and analysts expect the bank to strike a cautious note in its outlook, with markets now pricing in a UK rate rise before the end of the year – a boost to margins for the banking sector - the longer term outlook for RBS is looking rosier than it has for a long time.
Segro sloughing off the gloom
Elsewhere, FTSE 250-listed real estate investment trust Segro PLC (LON:SGRO) will also issue its full-year 2018 results on Friday
The property group, which specialises in warehousing and it also has some exposure to light industrial properties, is expected to see its net asset value grow, with consensus estimates looking for a rise in the key metric to 641p per share.
Analysts will also be eyeing Segro’s 2018 net rental growth, which was 2.3% year-on-year in the first half, as well as its vacancy rate, which was 4.8% as of 30 June 2018.
Segro’s ongoing portfolio recycling programme will be assessed as well, with the firm selling assets - recent sales included sites in Belgium and Italy - and reinvesting in new ones elsewhere.
Significant events expected on Friday, February 15:
Finals: Royal Bank of Scotland Group PLC (LON:RBS), SEGRO PLC (LON:SGRO)
Trading update: Ocean Outdoor Limited (LON:OOUT)
Economic data: UK retail sales; US export/import prices; US retail sales; US manufacturing, industrial production; NY Empire State manufacturing survey; University of Michigan preliminary consumer confidence index