New RBS boss Alison Rose to plot fresh path for the bank

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
Newly installed RBS Chief Executive Officer Alison Rose. (Dominic Lipinski/PA Images via Getty Images)

New Royal Bank of Scotland (RBS.L) chief executive Alison Rose is set to outline her new strategy for the bank later this week.

Rose is expected to outline her plans for the state-owned lender on Friday when the bank delivers its full-year results. Rose took over from Ross McEwan as chief executive in November and Friday will mark the first time she oversees results.

Alongside the results presentation, Rose will deliver a speech to staff and investors titled ‘Building a Purpose-Led Bank.’ The speech will set out her strategy for addressing priorities she outlined in November.

Read more: RBS CEO quits after turnaround leaves bank on 'strong and profitable footing'

Rose told staff on her first day in the job she wants RBS to focus on “building financial skills and confidence,” supporting British businesses, and taking “bold” action on climate change. She added that she would “continue to simplify the bank” and embrace data and technology.

Rose has taken over RBS at a time when lending margins are under pressure and the investment banking division, NatWest Markets, is struggling. The bank is also facing competition from a raft of digital challenger banks in both the retail and business market.

Shares in the bank, which is still 62% owned by the British government, have fallen 7% over the last 12 months and are down almost 35% over the last five years. RBS admitted last year that its target of hitting 12% return on tangible equity by 2020 would likely not be hit.

Read more: First woman to lead top UK bank as RBS names Alison Rose CEO

Former RBS chief executive McEwan radically reduced the size of the bank during his five years in charge and focused on domestic UK banking at the expense of international investment banking.

However, the downsizing helped RBS return to profit for the first time in a decade in 2018 and analysts expect to see a rise in profits on Friday. City forecasts project an operating profit of £3.7bn ($4.8bn), compared with £3.3bn last year. Analysts at Barclays last month said Rose could also announce cuts to the markets business.

RBS’s full-year results will be preceded by Barclays (BARC.L), which kicks of earnings season for UK banks on Thursday. Analysts expect Barclays to report a pre-tax profit of £6bn for 2019, up from £5.7bn the year prior.

Read more: Outgoing RBS CEO McEwan leaves with 'huge blot in his copy book'

Shares in European banks have struggled in recent years as the sector has battled low or negative interest rates around the world and competition from resurgent US lenders.