RBS Net Rises 18% After 2.13 Billion-Pound Writedown

RBS Net Rises 18% After 2.13 Billion-Pound Writedown

Feb. 28 (Bloomberg) -- Royal Bank of Scotland Group Plc, the U.K.'s second-biggest bank, posted an 18 percent increase in 2007 profit and wrote down 2.13 billion pounds including bad debts and losses on credit market-related securities.

Net income climbed to 7.3 billion pounds ($15 billion), or 75.7 pence a share, from 6.2 billion pounds, or 64.4 pence, a year earlier, the Edinburgh-based company said today in a statement. That beat the 6.84 billion-pound median-estimate of 10 analysts surveyed by Bloomberg.

``Whilst the future seems as difficult as ever to predict, it's clear that we enter 2008 with real momentum behind our organic growth,'' Chief Executive Officer Fred Goodwin said in the statement.

RBS, which bought ABN Amro Holding NV's Asian and securities units for 16 billion euros ($23 billion) last year, said in December it would post 1.25 billion pounds in net writedowns on securities linked to U.S. subprime mortgages. U.K. banks face ``earnings headwinds'' this year because of their dependence on wholesale funding, indebted consumers and slumping property markets, analysts including Citigroup Inc. have said.

RBS has declined 7.7 percent in London trading this year amid speculation it would need to make a larger writedown or have a rights offer to strengthen its capital.

British banks have declared lower writedowns from credit market-related securities than U.S. counterparts including Citigroup Inc., which wrote down subprime-mortgage investments by $18 billion in the fourth quarter. Barclays Plc last week posted a 1.6 billion-pound writedown at its securities unit for 2007.

``We may have to wait several years to see if ABN Amro delivers shareholder value,'' said Howard Wheeldon, an analyst at BGC Partners in London. ``I wouldn't like to see any further acquisitions.''

BLOOMBERG