In 1999, RBS was the 39th biggest bank in the world by market capitalisation, today it ranks at fifth. Between 1999 and 2004, the bank grew its assets by 510% to $1119.5bn. Year-end figures for 2004 showed that group operating profit (after loan loss provisions but before goodwill and integration costs) was up by 18% on a constant exchange rate, and that revenues had grown by 106% over the last five years – of which 60% was due to organic growth. This year, as it has every year since 1992, RBS increased its dividend by 15%.
And yet it trades at miserable price-to-earnings (PE) multiples – hovering around the 8-9xPE mark (while HSBC trades at 13.4xPE and Barclays at 11xPE, according to data provider Thomson Financial) and its shares are trading at much the same level as they were in January 2001. The stock trails its UK peers. RBS’s share price is down about 11% over the last 27 months compared to a 8% rise at the FTSE banks group, for a total return over the same time period of -5% versus 19%, respectively.
