Royal Bank of Scotland

I had been eagerly awaiting the RBS trading update today and have listened with great interest to the press and analysts conferences (the media conference was much more interesting). The statement was very solid and Sir Fred impressed me as being very clear and straightforward in his presentation. Pragmatic and, as he put it, just delivering what they said they would. RBS (excluding ABN) is expected to produce operating profit and EPS well ahead of consensus whilst ABN is in line with guidance. Integration is going well and the acquisition is expected to produce a better return than originally envisaged. Credit market write downs were significant at £950m but were much less than the had market feared and contained within the overall earnings expectations. Sir Fred refused to be drawn on 2008 but expressed great satisfaction with the greater diversity by business and geography that RBS now had. Overall there was less business to be done but underlying business growth and ABN opportunities remained. Asia was a particular high spot. In the UK as yet there were no tangible signs of increased stress amongst corporates nor consumers and indeed they were seeing very high levels of credit card spending compared to last year which seemed positive for Christmas. An interesting point that leveraged finance is less than 2% of income so the slow down here wouldn't have a great impact. http://www.rbs.com/