FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For the month of June 2007
Commission File Number: 001-10306
The Royal Bank of Scotland Group plc
Business House F, Level 2
RBS, Gogarburn, PO Box 1000
Edinburgh EH12 1HQ, DEPOT CODE: 045
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
| Form 20-F X | Form 40-F |
| Yes | No X |
THE ROYAL BANK OF SCOTLAND GROUP PLC
Pre-close Trading Update
5 June 2007
Introduction
The Royal Bank of Scotland Group ('RBS') will be holding discussions with
analysts and investors ahead of its close period for the half year ending 30
June 2007. This statement sets out the information that will be covered in those
discussions. Comments relate to expected results for the half year ending 30
June 2007, unless otherwise stated.
Summary
The Group continues to perform well in 2007 and we expect the rate of underlying
earnings growth in the first six months of the year to be slightly higher than
that implied by the consensus earnings forecast for the full year*. Highlights
of our interim results for 2007 are expected to include good organic growth in
income, disciplined expense control, measured investment in faster-growing
businesses and continued strong credit metrics.
Group
The Group is delivering good growth in total income in 2007, with non-interest
income continuing to grow faster than net interest income. Loan volumes remain
strong, though we have maintained our conservative approach towards unsecured
personal lending, while deposit volumes also continue to grow strongly. Margin
trends remain in line with previous guidance. As expected, reported income
growth will be slightly affected by the weakness of the US dollar.
The Group expects to report a cost:income ratio slightly lower than for the full
year 2006. Expenses continue to be tightly managed, and we have achieved further
productivity gains from our manufacturing platform while investing in a number
of high growth business opportunities.
Overall credit metrics remain strong, with a benign corporate credit environment
and a modest reduction in UK retail impairment losses. Total impairment losses
are expected to represent a slightly lower proportion of total loans and
advances.
Returns on equity, and capital generation, remain strong. The Tier 1 capital
ratio is expected to be stable in the middle of the 7% to 8% range.
*The market consensus forecast for 2007 adjusted earnings per ordinary share is
72.1p.
Divisions
Divisional performances remain consistent with the trends displayed in 2006.
Particular features are highlighted below.
Corporate Markets continues to perform well across its activities, with
continuing strength in Global Banking and Markets and sustained good growth in
UK Corporate Banking. We are continuing to invest in expanding our geographical
footprint, product range and customer relationships. Our risk profile remains
conservative and the corporate credit environment is stable.
Retail Markets is expected to show Wealth Management growing strongly and good
growth in business banking, mortgages, savings and investment products. We have
maintained our cautious approach to unsecured personal lending. Credit quality
is improving, and we expect a modest reduction in impairment losses. Costs
remain tightly controlled.
Ulster Bank continues to deliver good growth across the island of Ireland in
both business and personal lending. We continue to invest in the expansion of
our footprint and in the broadening of our product range.
Citizens continues to diversify its sources of income and has achieved good
growth in its corporate and commercial activities, as well as in home equity
lending. US retail deposit and lending volumes remain subdued but margins have
stabilised. Costs are under tight control and underlying credit metrics remain
strong, reflecting the high quality of our portfolio.
RBS Insurance continues to focus on more profitable customers acquired mainly
through its direct brands. Selective price increases have been introduced and
RBS Insurance maintains its disciplined approach to risk selection.
International and commercial activities continue to grow strongly. Expenses and
claims remain rigorously managed.
Sir Fred Goodwin, Group Chief Executive, commented:
"We expect that our first half results will again demonstrate the Group's
ability to deliver profitable organic growth, building on the many opportunities
with attractive risk and reward characteristics that we have established in the
UK and internationally. I am confident that the Group will continue to
capitalise on these opportunities and deliver another strong performance in
2007."
CONTACTS
Sir Fred Goodwin Group Chief Executive 0131 523 2203
Guy Whittaker Group Finance Director 0131 523 2028
Richard O'Connor Head of Investor Relations 0131 626 1014
0207 672 1758
For media enquiries
Andrew McLaughlin Director, Economic and Corporate Affairs 0131 626 3868
Carolyn McAdam Head of Media Relations 0131 523 2055
Unless otherwise stated, comments on trends contained in this statement refer to
the results for the half year ending 30 June 2007 compared with the equivalent
period in 2006.
This announcement contains forward-looking statements, including such statements
within the meaning of Section 27A of the US Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. These statements concern or may
affect future matters, such as RBS's future economic results, business plans and
strategies, and are based upon the current expectations of the directors. They
are subject to a number of risks and uncertainties that might cause actual
results and events to differ materially from the expectations expressed in the
forward looking statements. Factors that could cause or contribute to
differences in current expectations include, but are not limited to, regulatory
developments, competitive conditions, technological developments and general
economic conditions. These factors, risks and uncertainties are discussed in
RBS's SEC filings, including, but not limited to, RBS's report on Form 6-K
containing this announcement and certain sections of RBS's Annual Report on Form
20-F. Information in this announcement of the price at which investments have
been bought or sold in the past or the yield on investments cannot be relied
upon as a guide to future performance. RBS assumes no responsibility to update
any of the forward-looking statements contained in this announcement.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Date:05 June, 2007
| THE ROYAL BANK OF SCOTLAND GROUP plc (Registrant) |
| By: | /s/ H Campbell |
| Name: Title: |
H Campbell Head of Group Secretariat |