According to JP Morgan analysts, RBS profits continue to be strong despite a huge addition of £6 billion for PPI provisions, the last it would provide for PPI in the years to come.
RBS, HSBC and Barclays now face a collective £15.1 billion-worth of provisions for mis sold PPI, forex scandal fines and other penalties related to US mortgages in the next two years. The addition of more than £6 billion for mis sold PPI will bring the UK total to more than £28 billion in the years to come, making it the monumental financial scandal in the country.
RBS had lost its appeal ot the US Supreme Court as it sought to stop lawsuits from the Federal Housing Finance Agency over mortgage troubles.
However, its 10% rise in shares adds £3 billion to the value of its taxpayer’s stake due to its increasing improvement in profits amounting to £2.6 million for the first six months of 2014. The bank had reported a £1.3 billion profit in 2013.
Investors are quite confident that RBS could ride out the storm despite financial troubles with PPI. Once all issues are resolved, RBS could rebuild capital and bring profit and economic support for the United Kingdom.