Royal Bank of Scotland Group Plc, the
United Kingdom’s second-largest bank by assets and parent company of Providence-based Citizens Financial Group Inc., said it expects to increase
pretax annual earnings about 8 percent, buoyed by the purchase of
U.S. lenders.
Royal Bank is on track to meet analysts’ forecasts that
income before tax, goodwill and integration costs will rise to
about 6.95 billion pounds ($12 billion), or 154 pence a share,
Fred Watt, the finance director of the Edinburgh-based bank, said
on a conference call with analysts. Last year, the bank earned
6.45 billion pounds before tax, integration and goodwill.
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“The strength of Royal Bank is its diversity,” said Andrew
Hobson, who helps manage the equivalent of $645 million including
Royal Bank shares at Exeter Investment Group in Exeter, England.
“The statement is very positive on their income growth.”
Chief Executive Officer Fred Goodwin has spent $4.5 billion
on eight acquisitions this year in a bid to maintain profit
growth that has averaged an annual 43 percent in the last five
years, according to Bloomberg data. Royal Bank shares have gained
less in 2003 than competitors Barclays Plc and HSBC Holdings Plc
on concerns the company may overpay for future purchases.
Goodwin has focused on expanding Citizens Financial through what he calls “small, tactical” acquisitions. Since its purchase in 1988, Citizens has grown from being the No. 7 bank in the smallest U.S.
state to the second-biggest lender in the six-state New England
region, behind FleetBoston Financial Corp. Five of RBS’s
purchases this year have been in the United States.
“There will be plenty of opportunities in 2004” for
further acquisitions, Goodwin said on a call with journalists.
Shares in Royal Bank have gained 9 percent this year.
Bloomberg News
