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Commercial banks

Royal Bank of Scotland's Profit Growth and Takeover Speculation

Strategic Insights

— 1 min read

Royal Bank of Scotland's impressive growth rate has made it one of the most attractive stocks in the sector, with analysts expecting a 15% increase in profits to around $510 million. The bank's success can be attributed to solid lending growth, firm margins, and a buoyant contribution from its Direct Line insurance subsidiary. Meanwhile, takeover speculation continues to surround the bank, with some speculating that its search for a new chief executive may be answered from outside the UK.

Key Takeaways:

  • Royal Bank of Scotland's growth rate has earned it the tag of one of the most attractive stocks in the sector, according to market analysts BT Alex Brown.
  • The bank's interim pre-tax profits are expected to rise by 14% to around $510 million, driven by solid lending growth, firm margins, and a strong contribution from Direct Line insurance.
  • The dividend is expected to increase from 7.1p to 8.1p per share.
  • ScottishPower, another UK-based bank, is expected to report flat full-year profits of around $644 million due to increased competition in the deregulated domestic gas market.
  • The dividend for ScottishPower is expected to rise from 20.4p to 22.5p.
  • Telecoms companies Cable & Wireless Communications and Colt Telecom will report recent earnings, with CWC expected to show continued success in securing new customers and Colt Telecom focusing on its domestic customer growth.
  • Analysts are keen to see updates on Colt Telecom's European expansion programme and Cable & Wireless Communications' customer base and churn rate.

Statistics:

  • Royal Bank of Scotland's expected 14% increase in interim pre-tax profits is worth around $62 million ($510 million - $448 million).
  • The bank's expected dividend increase from 7.1p to 8.1p per share represents a 13.98% rise.
  • ScottishPower's expected flat full-year profits of $644 million are up from $624 million last year.
  • The utility company's expected dividend rise from 20.4p to 22.5p represents a 10.49% increase.

Sources:

  • BT Alex Brown
  • Royal Bank of Scotland
  • ScottishPower
  • Cable & Wireless Communications
  • Colt Telecom

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