City pencils in record RBS profits despite credit woes

ROYAL Bank of Scotland is poised to announce a 10 per cent rise in its dividend this week and announce further synergies from its acquisition of Dutch giant ABNAmro.
Scotland’s largest company is also set to report profits ahead of expectations. Analysts expect RBS to reveal record profits of around £10.3 billion for 2007, up from £9.4bn in 2006, but it is thought the final figure will be at least slightly ahead of this level.

The increases come despite the credit crunch, exposure to subprime loans and RBS’s part in the takeover of ABNAmro, the largest ever financial services takeover.

RBS, which announced almost £1bn in writedowns in December, is expected to write off slightly more on Thursday from structured investment vehicles (SIVs) and other instruments, which have dropped in value as a result of tight credit markets.

Edinburghbased RBS is expected to be the only bank in Britain to announce that both income and pretax profits have risen, despite trouble in the financial markets.

RBS is not the only bank to announce a dividend rise, with both Lloyds TSB and Barclays announcing increases last week.

Halifax Bank of Scotland, Scotland’s secondlargest company, is also reporting this week. HBOS is also reportedly preparing to increase its dividend.

However, the focus is likely to be on impairment provisions. Recent bad news from mortgage rival Bradford & Bingley pushed HBOS shares down, with concerns of further writedowns and arrears.

At its last trading statement in December, HBOS said bad debt charges had fallen in the second half, but some analysts expect it to have among the highest baddebt provisions in the sector.

Analysts are expecting underlying pretax profits of £5.76bn, up marginally on 2006’s £5.54bn. HBOS has already revealed a £180m blow from the credit crunch, but the market will be watching for news of further losses or exposure.

Also on Wednesday, Stem Cell Sciences, the biotech company which is moving to Cambridge as a result of a costsaving plan, will report annual results.

It is expected to announce larger losses than the market was forecasting, which is what prompted the decision to close one of its UK operations.

CRANEWARE FITS THE BILL

CRANEWARE, a medical billing software company, will give its first results as a publiclylisted company tomorrow and an update on its drive into American hospitals.

The Livingstonbased company, which floated on AIM last September, sells its Chargemaster equipment in 46 US states, where there is growing pressure on hospitals from both the government and the health insurance industry to implement technologybased audit systems.

Its technology audits billing systems to prevent patient mischarging, which is thought to occur in up 80 per cent of all cases.

Last month, Craneware revealed that the number of hospitals using its software rose 10 per cent to 878 since the end of June, and despite most AIM shares lagging, Craneware has been steady on 147.5p, compared to 128p at flotation.