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PREVIEW - RBS's second quarter under the spotlight

Tax-payer controlled Royal Bank of Scotland is the latest big UK bank to report earnings

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On Monday, RBS also insisted it was on track with plans to make sure it can withstand financial shocks despite performing poorly in latest European stress tests

Tax-payer controlled Royal Bank of Scotland (LON:RBS) is the latest big UK bank to report earnings.

It comes after Lloyds (LON:LLOY) and Barclays (LON:BARC) recently reported and after shares in Britain’s banks fell this week after the City watchdog extended the deadline for payment protection insurance (PPI) claims by more than a year.

On Monday, RBS also insisted it was on track with plans to make sure it can withstand financial shocks despite performing poorly in latest European stress tests.

RBS capital ratios dropped more than seven percentage points in European Banking Authority (EBA) tests to assess how big banks would do in another major crisis.

Deutsche Bank analyst David Lock said he expects limited impact of Brexit on RBS's  second quarter results tomorrow, given the vote was late on in the three months.

However, RBS's investment case is potentially more impacted from Brexit, he said.

"Of the 3 large-cap domestic banks, we think RBS’s investment case is potentially more impacted from Brexit: dividends are likely to be further delayed, and the nascent growth in the core bank may be impacted in the near-term," he said.

Deutsche has repeated a 'hold' stance and targets 200p a share (current price: 192.5p).

Deutsche is forecasting core adjusted earnings of £662mln for the second quarter numbers, slightly lower than the first quarter on lower write-backs.

On loan growth, it expects growth to be slower than in the first quarter of 2016, which saw a 15% annualized increase in balances particularly in commercial, retail and private banking.

The target for this year is 4% loan growth.

Significant announcements expected

Interims  -  esure Group plc (LON: ESUR), William Hill PLC (LON:WMH), Kennedy Wilson Europe Real Estate Plc (LON: KWE), Royal Bank of Scotland Group PLC, HSBC Holdings PLC (LON: HSBA).

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