Royal Bank of Scotland's profits up, announces buyback worth £1 billion

Royal Bank of Scotland's profits up, announces buyback worth £1 billion

	Published : Wed, 01 Mar 2006 16:55 By : Phil Bateman Print this Story

LONDON: Royal Bank of Scotland Group Plc. posted a 16.7 per cent rise in its net profit for 2005 at 5.39 billion pounds, compared to 4.62 billion pounds in 2004. The bank's total income rose 14 per cent to 25.57 billion pounds.

Its operating profit rose 16 per cent to 8.25 billion pounds.

In line with the encouraging results, the bank, second largest in the U.K., announced a share buyback programme worth 1 billion pounds. The buyback will be carried out through 2007.

The bank had to set aside more funds to cover bad loans during the financial year, but it said there are "signs of a stabilisation in credit quality" in the retail market. Its total impairment losses rose 7 per cent to 1.71 billion pounds, the bank said.

The bank has been under pressure to return cash to shareholder, after several purchases -- totally worth over 35 billion pounds -- it had made since 2000 including NatWest for 21 billion pounds and an investment of 919 million pounds made in Bank of China in August last year.

The bank also raised its full year dividend to 72.5 pence, up 25 per cent from 2004 and lifted its payout ratio -- or the dividend divided by earnings -- to 41 per cent.

Chief executive Sir Fred Goodwin said he is pleased with the geographic mix of the profits, 42 percent of which come from its international operations. He said the bank has set itself up for future growth with a variety of possibilities in different countries, a strong capital base, higher credit quality and tight cost control.

Goodwin said there was no pressure on him from shareholders to announce the buyback, but it was a "significant milestone" for the bank.

It was more a case of the bank now having the correct capital ratios to launch a buyback and repaying shareholders for strong support for a series of big acquisitive moves in recent years, he said.

The bank's shares were up 4 per cent at 1,938 pence on the London Stock Exchange.