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RBS and Lloyds announce losses while Barclays enjoys jump in profits

08 May 2009 / by Rachael Stiles
While RBS has announced pre-tax losses of £44million, and Lloyds has warned losses on its corporate loan book will rise to £13.5billion this year, Barclays is basking in a 15 per cent rise in profits.

RBS, which is 70 per cent owned by the taxpayer, already announced a record loss of £24.1billion last year – the biggest in UK corporate history – and has also announced bad debt charges of £2.9billion for the first quarter of 2009.

Stephen Hester, chief executive of the RBS group, said that the figures reflect the "challenging conditions" currently facing the market, and which he expects to continue.

"We expect credit conditions to continue to deteriorate over the next few quarters consistent with these trends," he said. "Some commentators are beginning to

talk about economic recovery; we remain cautious and continue to plan and manage our businesses in the full expectation that both 2009 and 2010 will be very tough years for RBS."

Similarly, Lloyds Banking Group has said in its interim management statement that, consistent with its previous predictions for the year, the first quarter of 2009 saw a "significant rise in impairment levels" at the group.

This is largely due to "the impact of the further economic deterioration, including the effects of rising unemployment, reduced corporate cash flows, the continuing impact of lower house prices and falls in the value of commercial real estate," the statement said.

Anticipating a "continuing difficult economic outlook," the group estimates that corporate impairments will be 50 per cent higher this year than in 2008, causing some shareholders to call for a change in management.

Meanwhile, despite experiencing a 79 per cent increase in bad debts during the credit crisis, Barclays has announced a 15 per cent rise in profits for the same period, to £1.37billion, compared to the first quarter of 2008.

John Varley, chief executive of Barclays, said in the group's interim statement that the first quarter results show the "continued benefit of diversification" across its businesses. "We generated strong income growth across most business lines," he continued, as a result of expanding its investments and buying US bank Lehman Brothers.

"This, together with good cost control, has enabled us to shield the anticipated increase in impairment and absorb further credit market writedowns on legacy assets," Mr Varley added. "We recognise the importance of continued capital generation and we remain committed to prioritising returns over growth and to reducing leverage."

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