NEW YORK (TheStreet) -- Shares of Royal Bank of Scotland Group (RBS - Get Report) are up 10.82% to $12.39 after the bank reported first half results a week early because they were well ahead of market expectations even though the bank warned that "significant" conduct and litigation issues would hold it back for the rest of the year, the Financial Times reports.
The bank, 81% owned by the U.K. government, said pre-tax profits for the six months to the end of June would come in at 2.65 billion pounds, compared with 1.37 billion pounds in the same period last year.
Operating profit, meanwhile, would be up to 2.6 billion pounds, up from 708 million pounds, the Times said.
TheStreet Ratings team rates ROYAL BANK OF SCOTLAND GROUP as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate ROYAL BANK OF SCOTLAND GROUP (RBS) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income and expanding profit margins. However, as a counter to these strengths, we find that the company's return on equity has been disappointing."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- RBS's revenue growth has slightly outpaced the industry average of 5.1%. Since the same quarter one year prior, revenues slightly increased by 0.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Commercial Banks industry. The net income increased by 194.1% when compared to the same quarter one year prior, rising from $720.15 million to $2,117.73 million.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- ROYAL BANK OF SCOTLAND GROUP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ROYAL BANK OF SCOTLAND GROUP reported poor results of -$2.68 versus -$1.72 in the prior year. This year, the market expects an improvement in earnings ($55.97 versus -$2.68).
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Commercial Banks industry and the overall market, ROYAL BANK OF SCOTLAND GROUP's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: RBS Ratings Report