Royal Bank of Scotland Group tossed the kitchen sink at investors on Friday, but markets only had eyes for weakness in results from the mostly government-owned bank.
In an otherwise lackluster session of trading in London, shares of the bank RBS, +0.51% RBS, -8.61% slumped more than 6% amid a barrage of news that included a rebranding effort and a green-friendly investment move.
“Not even the combination of a name change to NatWest Group, a meaty increase in the dividend and a laudable attempt to do its bit for the move toward a carbon-zero world can conceal how Royal Bank of Scotland’s profit outlook for is a cautious one as the bank joins rival Barclays in pushing back when it hopes to meet its long-term profit goals,” said Russ Mould, AJ Bell investment director, in a note to clients.
Royal Bank of Scotland Group on Friday reported an increased profit for the fourth quarter of 2019, but a cut to its medium-term returns target caught the eyes of investors. The bank also said it would change its name to NatWest Group and cut the size of its investment bank unit.
And it plans to halve the climate impact of all financing by 2030 and double funding for climate and sustainable finance to 20 billion pounds ($26 billion) by 2022.
“RBS had already abandoned the 15% return on tangible equity target laid down by then-CEO Stephen Hester back in 2009 and had been aiming for 12% under Ross McEwan. But new boss Alison Rose has revised this figure to a range of 9% to 11% by 2021, thanks in part to regulatory pressures and costs associated with the downsizing of its investment bank,” added Mould.
Not helping the bank is sluggish growth in the U.K. and a heavily indebted world where new borrowers are hard to find, he added.
The FTSE 100 index UKX, -0.01% was barely higher at 7,461.94, after a 1% slump on Thursday as the pound and bond yields shot higher after the surprising resignation of Sajid Javid as Chancellor of the Exchequer. The pound traded flat at $1.3031.
Elsewhere, shares of NMC Health NMC, -4.69% were down 4% for a second day, in what has been a roller coaster week for investors. Shares fell anew Friday, on news that Executive Vice Chairman Khalifa Butti Omeir Bin Yousef had resigned with immediate effect.
On Monday, the Middle East-focused private health-care company announced a legal review that would verify the total interests of some of its shareholders over concerns they hadn’t been reported correctly. That review will include the holdings and interests of Khalifa Butti Omeir Bin Yousef, the company said.
NMC Health shares slumped on Tuesday after private equity company Kohlberg Kravis Roberts said it hadn’t made a proposal to buy the company and didn’t intend to make one. Speculation of a bid sent shares rocketing higher on Monday.