RBS make £1.37B in first half of year

[Ecosseven]

Looks like the banks may be turning a corner. Both Lloyds and RBS have announced decent first half pre-tax profits.

How long before the Government starts to think about selling part of its stake in Lloyds?

[P-Jay]

I guessed they've written down as much as they possibly can against losses on PPI

Lloyds - gone by the next election, RBS maybe, certainly not long after if they can't.

[Pulse]

I found that quite interesting re PPI.

I know that Nationwide have had to INCREASE their PPI pot, so it surprises me that they claim the improvements have been found from PPI.

Could it be that PPI claims are drying up? Are Nationwide just more cautious?

[dave stew]

My business bank manager (Nat West) phoned me last week offering me a new loan!

Nearly crashed the car with surprise! No, seriously - it is good news.

[AmitG]

P-Jay said:

I guessed they've written down as much as they possibly can against losses on PPI

Lloyds - gone by the next election, RBS maybe, certainly not long after if they can't.

My guess is:

Lloyds - starting gun fired this side of the general election, including pre-election bribes distribution of shares.

RBS - manifesto commitment to actively explore privatisation during the next parliament, nothing more.

RBS still has a lot of legacy issues to work through, and resolving them might require splitting the bank.

[b0rk]

Pulse said:

I found that quite interesting re PPI.

I know that Nationwide have had to INCREASE their PPI pot, so it surprises me that they claim the improvements have been found from PPI.

Nationwide as private building society had an effective reason to be less cautious in terms of initially declaring their forecast exposure to PPI than the state owned banks, taking a risk adverse approach would have materially effected the level of capital reserve required to satisfy the PRA and potentially spooked wholesale markets raising the cost of funding. RBS and Lloyds had no reason not to overstate PPI exposure as the market expected them to be badly exposed so had already priced it in to wholesale funding costs.

[Pulse]

They're having to increase their capital reserves now anyway, which is interesting.

If it were risk-adjusted, they'd be fine, but I do think there are some tough times ahead for Nationwide upping their reserves, despite their recent rise in profit.