Thursday, 30 July 2015

RBS - progress is being made slowly

RBS is not exactly an uncontroversial UK company but it has been a portfolio friend to me over time having first got active near 300p 18 months odd ago with a target of around 400p the shares have, over the last year, got increasingly volatile and do currently look capped at any price around the aforementioned 400p level.

Today's numbers inevitably will be written up by the broader media with a focus on the 'attributable profit' but to me the progression on the cost and capital aspects of the business are probably more important.

With the company's shares in the mid 350s now they are trading around x.0.9 tangible book which is good value if you perceive the overall group is generating 11% RoE...of course this is 'adjusted'.  But the scope for a 400p+ share price is still there IF the turnaround plan is successfully applied.  

In terms of progress on this front it is reasonable.  Management opined they perceive they are 'ahead of plan'.  

Of course risks remain high - as a quick look at the provisions update noted:

On balance however I still see scope for a 400p plus share price.  Progress is being made slowly. 

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