RBS profits rise despite single name losses

Royal Bank of Scotland’s credit default swaps have ended the week roughly flat around 170bp, after it reported second quarter results today. The bank posted operating profit of £869 million, up from £713m in Q1 and losses of £2.6 billion in the same period last year. However, nearly £620 million of the figure relates to gains recorded from fair value on RBS’s own debt, note strategists at Royal Bank of Canada.

Nevertheless, the Q2-attributable profit of £257 million leaves the H1 number around £9 million ahead of consensus. Total impairments fell 7% to £2.5 billion, although core impairments were up quarter-on-quarter, due mainly to single name impairments in the global banking and markets arm. This area saw its sales down 31% and profits down 40% but the retail and commercial bank posted improving trends with sales up 4% and expenses down 3% year-on-year.