RBS has done well but caution is needed

By Damian Reece, Head of Business Published: 6:00AM GMT twenty-six February 2010

Royal Bank Of Scotland Group

The stockmarket toasted the numbers with a diminutive dram, adding some-more than 6pc to the bank"s share price. But Hester"s right to be discreet since 2009 will go down in story as an additional burble year for the UK and we"ll be entrance down with a shrill cocktail in 2010.

That bubble, on purpose arrogant by supervision spending, quantitative easing and the central Bank rate at 0.5pc, gave Hester"s investment promissory note arm a once in a lifetime event to accelerate the organisation with an injection of cash, receiving RBS"s core stability operations to handling increase of �8.3bn, scarcely stand in 2008. Those numbers would give a 5p gain per share figure, that could simply indicate a share cost of 50p utilizing a price-earnings comparative measure of 10 contra last night"s close of 38p.

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It was already at 50p and on top of for most of Aug by Oct last year, suggesting it"s right away in accord with value.

But the opening this year won"t be as great since the investment promissory note excavation of last year is cooling. That gathering two-thirds of the bank"s performance, whilst sell and blurb was the rest. For a solid state, Hester needs to retreat those ratios. But violence �8.3bn of handling increase will be a delayed routine as it will take substantial time for sell and blurb to reinstate investment banking, generally with a indolent economy.

But the change piece is in improved shape, with core tier-one equity at 11pc. However, this will come underneath aria and could see some-more similar to 8pc underneath the new Basel arrangements, nonetheless that should be sufficient of a aegis to equivocate carrying to lift nonetheless some-more equity from shareholders.