Britain's RBS announces first dividend in a decade

Britain's RBS announces first dividend in a decade

For long-suffering investors, including United Kingdom taxpayers who still hold more than 62% of the stock, the token 2 pence per share interim payout, announced with half-year results on Friday, is the first tangible sign that RBS's massive restructuring and fix job is reaching its end.

The bank will pay an interim dividend of 2p a share once its provisional $4.9bn settlement with the US Department of Justice is finalised, ending an investigation into sales of mortgage-backed products.

RBS has not paid a dividend since 2008 during the financial crisis when it was bailed out with £45mln of taxpayer money.

The bank remained profitable over the first half of 2018, posting an attributable profit of £888 million ($1.15 billion) over the period between January and June. But since the fine was much lower than expectations of up to US$12bn, RBS released £241mln of the provision it set aside for litigation.

Total income over the period dropped from £6.9bn to £6.7bn.

RBS said its net interest margin, a key measure of profitability, slumped 16 basis points to 2.02%, partly due to intense competition in the mortgage market.

That compared with £680 million in the same part of the previous year.

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Today's figures show that the group's operating profit fell by 6.4% to £1,826m during the first half.

Now that chief executive Ross McEwan has fixed these problems, I expect to see a wider range of fund managers buying the shares.

Richard J Hunter, head of markets at interactive Investor commented: "RBS continues to take small steps, rather than large strides, but even so is demonstrating something of a return to health".

"Despite this positive progress, the shares have been weak of late and are beginning to look more interesting to us from a valuation perspective", he added, ascribing fair value to the shares of 285p.

Last month, the government lost £2.1 billion after selling a tranche of RBS shares at 271p each, nearly half the 502p a share it paid for them in 2008.

Atlas Capital Advisors LLC bought a new position in shares of Royal Bank of Scotland Group PLC (NYSE:RBS) in the 2nd quarter, according to the company in its most recent 13F filing with the Securities and Exchange Commission (SEC).

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