16th May 2019 17:09
LONDON (Alliance News) - Royal Bank of Scotland Group PLC welcomed on Thursday the move by S&P Global Ratings to upgrade the long-term credit rating for the lender to BBB with a Stable outlook.
S&P upgraded RBS - which also owns the Natwest and Ulster Bank brands - to BBB from BBB- previously.
The upgrade followed what S&P analyst Richard Barnes described as a "long period of restructuring and refocusing" at the FTSE 100-listed firm which has "strengthened" its credit fundamentals.
"It has addressed the majority of legacy assets and legal risks, maintained a robust capital position, and laid the foundations for improved cost efficiency and earnings," Barnes explained.
As a result of this, the credit analyst believed the creditworthiness of RBS was now "more comparable" with its peers. Consequently, it moved the rating closer to the BBB+ credit rating anchor it has for UK banks.
"As RBS has become a more focused and less complex group, its credit profile is increasingly driven by its core franchise, led by its UK retail and commercial banking businesses," Barnes continued. "Its asset quality metrics have improved toward the peer group average and its credit losses are currently very low."
"RBS restored consistent profitability in 2017 and targets a return on tangible equity in excess of 12% next year," Barnes added. "We see this as ambitious but nevertheless expect RBS's performance to strengthen as it reduces strategic restructuring charges and operating costs."
Shares in RBS closed 0.7% higher at 231.90 pence on Thursday.
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