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For the purpose of this you are required to consider either Royal Bank of Scotland Group (RBS) Plc. or Lloyds Banking Grou - Essay Example

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For the purpose of this you are required to consider either Royal Bank of Scotland Group (RBS) Plc. or Lloyds Banking Grou

The Banking Industry in United Kingdom The Royal Bank of Scotland (RBS Group) carries out its business activities in the United Kingdom, Asia, Europe, the Americas and the Middle East, with more than thirty mullion customers. Large corporations, institutions and individuals are among the customers, that the group provides its products to (RBS Group, 2013). Despite the adverse effects of the financial and economic crises that faced the world and the United Kingdom, banks and the economy of the United Kingdom began this year with a stronger position, compared to last year (Accenture, 2012). The last five years have been characterised with poor performance among many companies. In the United Kingdom, the banking industry is unique. This is because it is large and diversified, accommodating a large international industry (Accenture, 2012). As a result, competition is great, and individual banks have to analyse their strategies to ensure superior performance in the financial markets, given the volatile, current and future economic conditions. Income Statement Analysis From the common size income statement of the Royal Bank of Scotland, it is evident that revenue has been decreasing each subsequent year, for the last three years. For instance, the bank’s revenue for 2012 was ?17, 941 Million, compared to revenue of ?24,651Million earned in 2011 and ?31, 798 Million earned in 2010 (RBS Group, 2013, p, 45). This trend shows that revenue has been decreasing significantly. Subsequently, the Bank’s operating loss increased significantly, over the three years. In 2010, the Royal Bank of Scotland had an operating loss of ?469 Million. In 2011 the operating loss increased to ?1,190 Million, while it further increased to ?5,165 Million in 2012. The same trend was recorded in loss after tax of the Royal Bank of Scotland for the three years of analysis. For instance the Royal Bank of Scotland recorded a loss after tax of ?1,033 Million in 2010, while the figure increased to ?2,317 Million and ?5,806 Million for 2011 and 2012 respectively (RBS Group, 2013). This resulted to a loss for the period of ?1,666 Million in 2010, which increased to ?1,969 Million in 2011 and ?5,806 Million in 2012 (RBS Group, 2013, p, 45).. The Royal Bank of Scotland has never made any dividend payment for the last three years, probably because it has been making losses from its business. Given that the Royal Bank of Scotland has been making losses for the last three years, the earnings per share portray a negative value. For example in 2010, the earnings per share for the Royal Bank of Scotland were -5.00p, while in 2011 and 2012 recorded earnings per share of -2.13p and -53.70p, respectively (Hargreaves Lansdown, 2013). This shows a trend where the performance of the Royal Bank of Scotland has been deteriorating. Balance Sheet Analysis From the common size balance sheet of the Royal Bank of Scotland, the current assets to total assets ratio for the three years under analysis is averaged at 62.62%. In 2010, the bank’s current assets to total assets ratio was 65.66% while in 2011 and 2012, the Royal Bank of Scotland had a current assets to total assets ratio of 60.13% and 62.06% respectively. The common size balance sheet of the Royal Bank of Scotland shows no short term liabilities for the three yea ...Show more

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[THE ROYAL BANK OF SCOTLAND GROUP] (Name) (Instructor/Tutor) (Course/Subject) (Institution/ University) (City, State) (Date) Introduction This financial analysis report examines a high profile bank headquartered in Edinburgh, the Royal Bank of Scotland to evaluate the bank’s performance and financial health…
Author : rickgorczany
For the purpose of this essay you are required to consider either Royal Bank of Scotland Group (RBS) Plc. or Lloyds Banking Grou essay example
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