London shares opened higher on Thursday as BAe Systems and Lloyds Banking Group rose after results, though gains were restricted by a sharp fall in Shell after the oil giant revealed a plunge in net profit. …read more
Source: FULL ARTICLE at Fox World News
By Evan Niu, CFA, The Motley Fool
Filed under: Investing
There’s been a lot of talk about the growing consumer trend toward phablets, oversized smartphones that approach tablets in dimensions. Analyst continue to call on Apple to address this niche segment of the smartphone market, particularly because Samsung and the rest of the Google Android army has been able to tap it quite successfully.
At the same time, investors are expecting the next big wave in computing to come in the form of smaller wearable devices. Should devices get bigger or smaller?
We want bigger phones!
Among others, Topeka Capita Markets analyst Brian White believes that Apple absolutely needs a phablet in order to compete, since that form factor is popular in markets like China.
There’s certainly a case for Apple to release such a device, but chances are that Apple won’t release a larger iPhone until next year. Besides, there’s data that suggests that Apple shouldn’t be in any rush, since the 3.5-inch iPhone 4S outsold the 4.8-inch Galaxy S3 in 2012. Flurry Analytics also thinks phablets comprise a relatively modest slice of the broader market.
Oh no! Phones are too big!
One of the reasons why people also expect Apple to release an iWatch at some point is because phones are getting too big and becoming cumbersome to carry around. Microsoft is reportedly laying some component groundwork for a possible smart watch.
That’s despite the fact that Microsoft used to offer a smart watch, except it failed to gain traction in part because it carried a $10 monthly subscription fee. Microsoft could even be considered a first mover in smart watches.
Google will likely be the first to market with a wearable device when it launches Google Glass later this year. Glass will be a different approach to the market, with the search giant going straight for the jugular.
RBS analyst Wanli Wang was quoted as saying, “We see growing demand for wearable gadgets as the size of the smartphone has become too big to carry around.”
So now we have analysts calling for bigger smartphones, which is almost immediately followed by analysts deriding smartphones as being too big. Is there room for both? Or do analysts and consumers need to make up their minds?
As one of the most dominant Internet companies ever, Google has made a habit of driving strong returns for its shareholders. However, like many other web companies, it’s also struggling to adapt to an increasingly mobile world. Despite gaining an enviable lead with its Android operating system, the market isn’t sold. That’s why it’s more important than ever to understand each piece of Google’s sprawling empire. In The Motley Fool’s new premium research report on Google, we break down the risks and potential rewards for Google investors. Simply click here now to unlock your copy of this invaluable resource.
From: http://www.dailyfinance.com/2013/04/17/make-up-your-mind-should-devices-get-bigger-or-sma/
By Sam Robson, The Motley Fool
Filed under: Investing
LONDON — Over the last year, I’ve slowly been building up a small portfolio that currently consists of an income share, a growth story, and a contrarian play, across different industries that include insurance, alcohol, and telecommunications.
My best performing share has arguably been Vodafone, which has yielded healthy dividends, and I’ve seen the share price recover over time following a dip soon after I bought in — further evidence that the Foolish philosophy of buying shares that you’re only prepared to hold for three to five years at least — and resisting short-term market turbulence — pays off! From a growth perspective, however, Diageo is the front-runner in my portfolio, having seen a 7.2% increase since I bought them in mid-January.
As we enter into April and a new British tax year, though, I have been looking for new shares to invest in — and, in the interest of further diversification, I’ve been looking at the banking sector. Specifically, the one that’s caught my eye is Barclays .
Now, I know that banks and their top brass have taken a battering in recent times, but I took an interest in Barclays when new CEO Anthony Jenkins revealed the bank would be shoring up its U.K. operations and providing more transparency for its shareholders — for example, Barclays will be reviewing 75 of its business units to determine which can provide a decent return without further threatening the company’s reputation.
Yielding around 2.3%, it also pays a dividend — unlike its high-street banking rivals Lloyds and RBS — while Jenkins has also declared his intention to eventually pay shareholders 30% of earnings, and a return on equity above 11.5% (currently 7.8%, up from 6.6% last year).
The recent turbulence in the eurozone caused by Cyprus rippled through the FTSE, causing the U.K.’s premier index to dip and many of its constituents — especially banks — to fall back with it. However, I believe that a continued economic recovery will see Barclays share price motor, and led by a strong management team with Jenkins at the helm and the new wave of shareholder transparency that has been promised, I believe that its current price of 285 pence represents a buying opportunity, and I have added the bank’s shares to my portfolio.
If you’re looking for companies outside of the banking sector that have strong potential to soar in price, then we’ve pinpointed our favorite growth share from elsewhere in the FTSE 100. The Motley Fool’s top analysts have produced a free report in which they evaluate its finances and risks, and its growth prospects going forward. Simply click here to get your copy delivered to your inbox immediately — it’s completely free.
The article Why I’m Banking on Barclays originally appeared on Fool.com.
Sam owns shares in Vodafone, Diageo and Barclays. The Motley Fool has recommended shares in Vodafone. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse …read more
Source: FULL ARTICLE at DailyFinance
By David O’Hara, The Motley Fool
Filed under: Investing
LONDON — In one month’s time, Royal Bank of Scotland Group will announce its results for the first three months of 2013. I expect that this announcement will be an important milestone in the bank’s turnaround.
RBS shares have take a battering in the last month, falling 13%. After a great 2012, they are down a total of 16% so far this year.
RBS shares have suffered in the aftermath of the crisis in Cyprus. This was followed by the banking regulator announcing that it wants the sector to raise more capital by the end of the year. Bearish sentiments increased further this week as it was announced that investors would be suing the bank regarding a fundraising that it underwent in 2008.
Back in February, shares in RBS changed hands for more than 350 pence. I believe that a series of events is about to play out that could see RBS shares return to that level in May.
On 3 May, RBS will announce its Q1 results. I believe this could inspire new confidence in the bank and its ability to generate profits.
In 2012, RBS reported a 5.6 billion-pound loss from ongoing operations. This was a result of 5.3 billion pounds of impairment losses, 1.5 billion pounds paying for misdeeds and a 4.6 billion-pound accounting charge (ironically resulting from RBS‘s perceived rehabilitation).
If RBS can avoid further fines in 2013 and impairments continue to reduce at a similar rate, the company could report an operating profit for the full year of around 2.5 billion pounds.
At the end of 2012, RBS announced a tangible net asset value of 446 pence per share. That’s a long way ahead of today’s share price.
I believe profitable companies should not trade at a discount to their asset value. If RBS can convince the market that it will be profitable again, I expect that discount will narrow.
Furthermore, a profitable bank will likely be increasing its asset value. RBS‘s May statement could demonstrate that the bank’s shares are currently too cheap by half.
While RBS‘ recent recovery has been considerable, analysts here at the Motley Fool believe that there is an even better large-cap growth share available on the market today. Despite this company’s great success, it still trades on an attractive valuation. To find out more about this share and why our team have staked their reputations on it, get the free Motley Fool report “The Motley Fool’s Top Growth Share for 2013.” This report is 100% free. Just click here to get your copy today.
The article Is This Your Last Chance to Buy Royal Bank of Scotland? originally appeared on Fool.com.
David owns shares in Royal Bank of Scotland. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
Copyright …read more
Source: FULL ARTICLE at DailyFinance
By Roland Head, The Motley Fool
Filed under: Investing
LONDON — Royal Bank of Scotland Group is back in the headlines again, thanks to a new round of lawsuits from investors. They feel that the bank misled them when they participated in a 12 billion pounds rights issue in 2008, only to see the value of their shares plummet a few months later, when the bank was bailed out.
RBS‘s share price is down by 25% from its January peak of 367 pence. As I write, you can pick up RBS shares for less than 280 pence — and I reckon that’s a good deal.
Forget the lawsuits
The latest lawsuit to hit RBS comes from the RBoS Shareholders Action Group, which says that RBS may have to pay them 4 billion pounds in compensation for their losses.
Maybe. But I suspect it won’t, and claims like this usually rumble on for years before reaching any conclusion. Whatever the outcome, I don’t believe it will affect Royal Bank of Scotland‘s recovery prospects.
6 billion-pound capital shortfall?
Last week, a Bank of England report into U.K. banks found that they had a collective capital shortfall of 25 billion pounds. The BoE didn’t release a breakdown, but most analysts believe that RBS is worst affected, and may have a shortfall of 6 billion pounds.
Although this does need addressing, it isn’t urgent and will probably be dealt with by retaining profits and postponing dividend payments a little longer. Discussing the report, BoE Governor Sir Mervyn King, said that the problem was “perfectly manageable” and “is not an immediate threat”.
Pay 63 pence for 1 pound
The shares of a healthy bank would normally trade at or slightly above its book value. But at 280 pence, RBS shares are currently trading at just 0.63 times the bank’s tangible book value, which I think is a great opportunity for value investors.
The main risk is these assets may fall in value, or that RBS will sell some of them to raise cash. So what can we expect?
Last year, the bank’s net tangible asset value per share dropped from 501 pence to 446 pence, as it scaled back some of its operations and disposed of non-core assets. RBS expects 2013 to be the final year of restructuring so, assuming a similar performance to last year, RBS may be left with 400 pence of tangible assets per share.
At a share price of 280 pence, this still gives a potential upside of nearly 25% for new investors.
A safer alternative?
If you want to diversify away from the U.K.’s bailed-out financial sector, then I have another suggestion.
This company outperformed the FTSE 100 by 32% in 2012, and has delivered 44% earnings-per-share growth since 2009. It’s already ahead of the wider market in 2013, too.
The Fool’s analysts believe this company’s shares could be seriously undervalued, and have put all the details in a new free report. To find out more, click here to download your free copy now — but hurry, …read more
Source: FULL ARTICLE at DailyFinance
Royal Bank of Scotland shareholders have filed a 4 billion pound ($6 billion) lawsuit against the company, claiming they were misled into thinking the bank was healthy just before its collapse.
A group representing 12,000 investors says the bank didn’t include vital information in the prospectus for a 12 billion-pound share sale that took place just a few months before RBS was bailed out by the government.
The bailout diluted the holdings of existing shareholders and the stock plunged, slashing the value of their holdings. The bank is now 82 percent owned by the British government.
The group said in a statement Wednesday that the lawsuit names former Chief Executive Officer Fred Goodwin and three other directors, as well as the bank itself, as defendants.
By Tony Reading, The Motley Fool
Filed under: Investing
LONDON — The threat of being forced to raise more capital has weighed on banks since last November, when the Financial Policy Committee pronounced that U.K. banks in aggregate could be 50 billion pounds undercapitalized.
The Committee last week halved its estimate to 25 billion pounds. Banks have to raise that by the year-end, but around half is covered by initiatives already in train. So the real shortfall is a much lower 12 billion pounds.
It’s no surprise, then, that the report was greeted with a jump in the share prices of the three banks most affected, RBS , Lloyds , and Barclays , though the turmoil in Cyprus left them overall down on the day.
The FPC has not revealed how the 12 billion-pound capital shortfall is split between individual banks, but the Financial Times says it includes 6 billion pounds for RBS, 3 billion pounds for Lloyds, and around 1 billion pounds for Barclays.
Fudge
There’s some political expediency at play. Judging how much capital a bank needs is a subjective process, and the FPC chairman, Bank of England Governor Mervyn King, is a capital hawk. But the government said it wouldn’t put more equity into RBS and Lloyds, so if the FPC had been too harsh, then both banks could have found themselves between a rock and a hard place.
Higher capital ratios also reduce banks’ ability to lend, with knock-on effects on the economy. With Mervyn King on his way out, policy is shifting toward the perceived greater emphasis on growth of his successor Mark Carney. Conveniently, the FPC lowered its yardstick for minimum capital Tier 1 ratios (after its judgemental adjustments) from 9% to 7%.
Some of the under-provided risks might remain, but the threat of banks being forced to raise dilutive equity has diminished.
Capital raising
Fundamentally there are three options to cover the shortfall: raise new capital, shed assets, or conserve cash.
Barclays is expected to make another issue of contingent capital bonds after its $3bn issue last year was five-times oversubscribed. The bonds pay a 7.6% coupon but get wiped out if the bank’s Tier 1 ratio drops below 7%. RBS and Lloyds might follow suit.
RBS and Lloyds are still shedding assets, but those initiatives are presumably included in the FPC‘s assessment. RBS plans to make even bigger cuts in its investment bank to help meet the FPC‘s shortfall.
RBS is also planning to partially float its U.S. retail bank Citizens. With the U.S. economy and its banks healthier than the U.K., a successful IPO could put some fire under RBS‘s shares.
LLoyds
Announcing last year’s results, Lloyds boasted that it was ahead of its transformation plan. Costs had been reduced by 5% and it had sold 40 billion pounds of distressed assets against a plan of 25 billion pounds. That might give it less headroom to shed more assets, but then, Lloyds is probably better placed than RBS to launch a contingent bond issue. It has a similar convertible issue on its books already.
The third …read more
Source: FULL ARTICLE at DailyFinance
(AP)—British bank RBS says technical issues have prevented customers from logging into its mobile applications—another in a series of computer glitches that has hit the struggling institution. …read more
Source: FULL ARTICLE at Phys.org
By G. A. Chester, The Motley Fool
Filed under: Investing
LONDON — There are things to love and loathe about most companies. Today, I’m going to tell you about three things to loathe about taxpayer-owned bank Royal Bank of Scotland .
I’ll also be asking whether these negative factors make RBS a poor investment today.
A multitude of sins
Do you look at company results each morning via a regulatory news provider such as FE Investegate? If you own a large portfolio of shares, you probably do. Financial hacks like me certainly do. It’s very convenient… mostly.
RBS is one of a few companies that like to make simple things complicated. Its latest annual results were released in eight separate parts — an improvement on the 13 parts it was producing a couple of years ago, but a pain in the backside all the same.
Global banking giant HSBC Holdings manages to get its results out in a single release. Why can’t RBS?
Known knowns, known unknowns
Companies make “provisions” for any liabilities arising from past events for which a reliable estimate can be made. These “known knowns” are recorded on the balance sheet.
Sometimes it’s not possible to determine whether any loss to the company is probable or to estimate the amount of any loss. No provision is made for these “known unknowns.” In RBS‘s case, the known unknowns involve legal proceedings, investigations, and regulatory matters, which, if resolved against the company, could produce a big hit to net assets and cash flows.
RBS‘s litany of known knowns and known unknowns runs to 13 pages under 18 different subheads. If you want to read all the gory details, you’ll find them in part three of the results.
Political football
Owned by taxpayers to the tune of 82%, RBS is in a position unlike any other company in the FTSE 100. For the time being, the bank remains shackled by the conditions inflicted on it as a result of the government bailout, such as a bar on paying dividends and forced asset disposals.
How, when, and at what cost RBS will return to regular plc status remains to be seen — just another uncertainty in RBS‘s veritable catalogue of known unknowns.
A poor investment?
RBS‘s shares are currently trading at 275 pence, a discount of 38% to net tangible assets. Such a discount can be a “value” indicator for investors. The trouble is that RBS‘s assets may not be worth as much as their book value — and probably aren’t. Put that together with the pile of potential liabilities, and the discount could easily prove to be a mirage.
If RBS isn’t a poor investment, it’s certainly a highly risky one. This is not a stock I’d personally be buying for my retirement!
If, like me, you’re in the market for more solid blue-chip companies, I recommend you read this brand-new Motley Fool report.
You see, our top analysts have scoured the FTSE 100 and come up with five great shares to retire on. You can read an in-depth review …read more
Source: FULL ARTICLE at DailyFinance
By Andrew Marder, The Motley Fool
Filed under: Investing
U.K. banks are sitting on a $38 billion hole, according to the Bank of England. The regulator announced the shortfall today but did not say which banks were looking thin. The move to shore up reserves is driven by the fear of weakness in the European economy and a need for banks to hit the capital requirements of Basel III. By 2018, banks will need to meet a 7% capital ratio, and recent crackdowns have made that a harder target for banks to hit.
While not every bank is in dire need, the consensus is that both RBS and Lloyds are going to need to go back to the table. HSBC reportedly has one of the largest capital ratios, which was bolstered late last year when the company sold off its Ping An holding. In the middle sits Barclays , which has gone on record to say that it will work through 2013 to improve its capital position.
As the deadline for capital requirements approaches, investors need to watch out for banks that fall short. Raising capital will mean selling off valuable assets, diluting shareholder earnings through new offerings, or cutting back on dividends to retain extra capital.
Loops get closed
Earlier this month, the Basel Committee announced that it was going to treat insured risk differently, making it harder for banks to boost their capital by simply insuring against default. Up to this point, banks had been able to purchase protection for their risky assets, in effect making them less risky. While the premise is sound — and not nearly as close to the rererereinsured mortgage portfolios of 2008 as one might think — banks were abusing the practice. Shocker.
The problem was that banks could buy the insurance, but spread their premiums out over a long timeframe. That meant banks profited immediately on their capital requirements, but didn’t take on the risk of having to pay off the insurance for years. That deferral of risk is one of the things that central banks and regulators have been trying to fight, and Basel decided to crack down on the system.
To this point, banks from Citigroup to Goldman Sachs had been reportedly engaging in the practice to help their balance sheets. While those firms will still be able to insure their risk and add to their capital, they must now recognize the costs associated with that insurance upfront.
Sticky wicket
I know it’s not really like a sticky wicket, but come on. Banks in the U.K. have been fighting to meet these new requirements since their inception. Lloyds is now reported to need about 2.5 billion pounds in order to meet its goal, and the bank has begun selling off some of its holdings to increase its funds. Lloyds came under new public scrutiny this week when the bank confirmed that 25 of its employees had been paid over 1 million pounds in 2012. The drivers of the outcry …read more
Source: FULL ARTICLE at DailyFinance
By Roland Head, The Motley Fool
Filed under: Investing
LONDON — If you’re interested in building a profitable, diversified portfolio, then you will often need to compare similar companies when choosing which share to buy next. These comparisons aren’t always as easy as they sound, so in this series, I’m going to compare some of the best-known names from the FTSE 100, FTSE 250 and the U.S. stock market.
I’m going to use three key criteria — value, income, and growth — to compare companies to their sector peers. I’ve included some U.S. shares, as these provide U.K. investors with access to some of the world’s largest and most successful companies. Although there are some tax implications to holding U.S. shares in a U.K. dealing account, they are pretty straightforward and — I feel — are outweighed by the investing potential of the American market.
Today, I’m going to take a look at the U.K.’s biggest banking bailout recipient, Royal Bank of Scotland Group , and a U.S. bank in which billionaire investor Warren Buffett has approximately an 8% stake — making it one of his biggest four investments — Wells Fargo .
1. Value
The easiest way to lose money on shares is to pay too much for them — so which share looks better value, RBS or Wells Fargo?
| Value | RBS | Wells Fargo |
|---|---|---|
| Current price-to-earnings ratio (P/E) | n/a | 11.0 |
| Forecast P/E | 10.3 | 10.2 |
| Price-to-book ratio (P/B) | 0.5 | 1.4 |
| Price-to-sales ratio (P/S) | 1.0 | 2.3 |
On paper at least, RBS is a much more compelling value investment than Wells Fargo, as it trades at around half its book value and just one times its annual revenue. Consensus forecasts suggest that RBS may return to profit this year, and while this is far from certain, it does look more likely than at any previous time since the bank was bailed out in 2008.
A return to profitability will be the first step on the road back to normality for RBS — it doesn’t currently pay a dividend and is 82%-owned by the U.K. government — and could encourage big institutional investors to move back into the stock, which would help lift the company’s share price closer to its book value.
2. Income
With low interest rates set to continue for the foreseeable future, dividends have become one of the most popular ways of generating an investment income. How do RBS and Wells Fargo compare in terms of income?
| Value | RBS | Wells Fargo |
|---|---|---|
| Current dividend yield | 0% | 2.5% |
| 5-year average historical yield | 0% | 2.3% |
| 5-year dividend average growth rate | n/a | -5.7% |
| 2013 forecast yield | 0.06% | 2.7% |
Wells Fargo is a clear winner in terms of income — although its 2.5% yield is fairly modest by U.K. standards, RBS pays no dividend and is unlikely to pay a meaningful dividend for another year or two, if not longer.
3. Growth
Even if your main interest is value or income investing, you do need to consider growth. At the very least, a company needs to deliver growth in line with inflation — and realistically, most successful companies need to grow ahead …read more
Source: FULL ARTICLE at DailyFinance
By Business Wirevia The Motley Fool
Filed under: Investing
Bottomline Receives Customer Service Leadership Award
Company Recognized Once Again for Outstanding Service
PORTSMOUTH, N.H.–(BUSINESS WIRE)– Bottomline Technologies (NAS: EPAY) , a leading provider of cloud-based payment, invoice and banking solutions, has won the ‘Customer Service Leadership‘ award at the 2013 UK Customer Satisfaction Awards. The Awards recognize and reward organisations that are delivering excellent and innovative service to meet their customers’ needs.
The prestigious annual event was attended by 500 business leaders with some of the largest companies in the world such as RBS, Barclays, Boots, Lloyds Offshore, Virgin Media, Simply Health and Asda named as finalists.
“Providing outstanding customer service is a fundamental part of our culture,” said Rob Eberle, President and Chief Executive of Bottomline Technologies. “This is the third year in a row that Bottomline has been recognized at the UK Customer Satisfaction Awards, which is a great achievement and is testament to our entire team’s dedication and commitment to continually deliver the best in customer service.”
Jo Causon, Chief Executive, Institute of Customer Service said, “The Awards have become an integral part of the business calendar. It is important to showcase and celebrate those who have shown that their organization is committed to their customers at the very highest level. Bottomline is differentiating through service, placing customers at the heart of their business strategy and securing a bright future for their company and employees by doing so.”
About Bottomline Technologies
Bottomline Technologies (NAS: EPAY) provides cloud-based payment, invoice and banking solutions to corporations, financial institutions and banks around the world. The company’s solutions are used to streamline, automate and manage processes involving payments, invoicing, global cash management, supply chain finance and transactional documents. Organizations trust Bottomline to meet their needs for cost reduction, competitive differentiation and optimization of working capital. Headquartered in the United States, Bottomline also maintains offices in Europe and Asia-Pacific. For more information, visit www.bottomline.com.
About the Institute of Customer Service
The Institute of Customer Service is the professional body for customer service delivering tangible benefit to organisations and individuals so that our customers can improve their customers’ experience and their …read more
Source: FULL ARTICLE at DailyFinance
By Tony Reading, The Motley Fool
Filed under: Investing
LONDON — Shares in the U.K.-focused high-street banks, Lloyds Banking , Royal Bank of Scotland and Barclays , were hit this week following the EU bail-out of Cyprus and the accompanying raid on savers’ deposits.
It’s a salutary reminder how vulnerable U.K. banks are to mishaps in the eurozone. But while markets shudder, it’s worth thinking about the long-term trajectory for bank shares.
Governor spies recovery
The Governor of the Bank of England, Mervyn King, said last week that he thought an economic recovery would ‘come into sight’ during 2013. That’s no reason to open a bottle of champagne, but it’s a reminder that the economy is heading upwards, not downwards.
The Governor pointed out that GDP statistics were distorted by problems in North Sea oil construction and production. If it hadn’t been for those, the U.K.’s economy would have grown by 1.5% last year.
Banks are highly sensitive to the economies in which they operate, and share prices generally anticipate future developments. So the banks’ shares should start to reflect expectations of a strengthening economy.
Bad debts
Economic growth translates into a healthier corporate sector, which is more credit-worthy and borrows more.
A healthier economy reduces the incidence of bad debts, alleviating concerns that banks might need to raise more capital. Only recently, shareholder-consultants PIRC calculated that if the old-style U.K. GAAP accounting rules still applied, RBS would need to make an additional 9.4 billion pounds of provisions for bad debts. The hit at Barclays and Lloyds would be 7.3 billion pounds and 2.5 billion pounds respectively.
Investment
Finally, economic growth should feed through into the personal sector.
It looks as if RBS shares the Governor’s optimistic view. It’s going to invest 700 million pounds over the next three years to revamp its U.K. bank branches. Meanwhile, Barclays has identified U.K. mortgages, wealth management and Barclaycard as business areas to invest in. You never know, competition might hot up between the lenders.
With Lloyds and RBS on the path to privatization and Barclays reinvigorated with a new management and strategy, the trio’s shares should react quickly to signs of economic recovery. But the impact of Cyprus‘s bail-out shows they remain vulnerable to the eurozone crisis.
If you already own banks but are looking for a growth story with a lower risk profile, I suggest you look at this company. It hasn’t made a capital call on its shareholders for more than 70 years, and has increased or held its dividend every year since at least 1988.
Its earnings per share have risen by 44% since 2009, and there could be considerable value that isn’t reflected in the share price. That’s why it’s “The Motley Fool‘s Top Growth Stock for 2013.”
You can learn more by downloading a free report from the Motley Fool — just click here.
The article How the Coming Economic Recovery Will Boost Lloyds, Royal Bank of Scotland and Barclays originally appeared on Fool.com.
By G. A. Chester, The Motley Fool
Filed under: Investing
LONDON — It’s more than five years since Royal Bank of Scotland Group and Lloyds Banking Group were bailed out by the British taxpayer — and Barclays narrowly avoided the same fate by raising 7 billion pounds from investors in Qatar and Abu Dhabi.
Today, RBS is still more than 80% taxpayer-owned, and the taypayer’s stake in Lloyds stands at 39%. Meanwhile, Barclays has joined the ranks of the rank-smelling banks after a series of scandals, the latest of which concerns allegations that Barclays’ Middle East rescuers were loaned money to invest in the bank by Barclays itself.
All three banks still have a long way to go to repair their reputations and businesses. After their recent annual results, which of the three offers investors the best value?
Value basics
Let’s start with the key numbers used by classic value investors: discount to tangible net asset value (TNAV), price to earnings (P/E) ratio, and dividend yield
| Share Price | TNAV Per Share | Discount to TNAV | Forecast P/E 2013 | Forecast Yield 2013 | |
|---|---|---|---|---|---|
| Barclays | 320p | 373p | 14% | 8.6x | 2.3% |
| Lloyds | 50.5p | 54.9p | 8% | 11.7x | 0.4% |
| RBS | 308p | 446p | 31% | 12.8x | 0% |
For a simple overview, if we rank the banks on the three value measures, with one being the best value and three being the worst, we get: Barclays 2, 1, 1; Lloyds 3, 2, 2; and RBS 1, 3, 3. On this basic test of relative value, Barclays stands head and shoulders above its rivals.
For some value investors, the fundamental numbers are all that count, and such investors would declare Barclays the best value without going any further. But let’s go a bit further and see where it takes us.
Assets
The banks have been slimming down their businesses by disposing of non-core assets. The affect of these disposals on the balance sheet can be positive or negative, as Lloyds and RBS demonstrated just last week.
Lloyds sold part of its shareholding in FTSE 250 wealth manager St James’s Place for around 500 million pounds, adding 1.7 pence a share to TNAV — bringing the end-of-year number in the table above up to 56.6 pence and the discount to 11%.
RBS also raised around 500 million pounds last week, but in this case incurred a modestly negative result. The bank’s sale of part of its shareholding in FTSE 250 insurance group Direct Line was at 201 pence a share compared with a carrying value of 216 pence on the year-end balance sheet.
RBS‘s sale of Direct Line was mandated by the European Commission, and both RBS and Lloyds face further forced disposals under obligations to Europe.
Lloyds has been in talks with the Co-operative Group since last July about the sale of 632 branches. Meanwhile, there is currently no definite interest in the 316 branches RBS is obliged to relinquish, and there looks little prospect of RBS avoiding a loss on disposal.
While RBS appears to be more vulnerable to asset writedowns than its rivals, how future asset sales will actually play out is anybody’s guess.
Earnings
The banks have made provisions of billions of pounds for a litany of past vices, including the mis-selling of payment protection insurance and interest rate hedging products. …read more
Source: FULL ARTICLE at DailyFinance
By Maynard Paton, The Motley Fool
Filed under: Investing
LONDON — The shares of leading U.K. banks fell during early London trade this morning following news that Cyprus had implemented a bank levy that would charge depositors up to 10% of their savings.
Barclays slid 11 pence to 309 pence, Lloyds Banking lost 1.3 pence to 49.2 pence while Royal Bank of Scotland dropped 10 pence to 298 pence as investors responded to a fresh wave of eurozone debt fears.
The FTSE 100 index dived 62 points to 6,427.
The Cypriot bank levy is part of a wider, 10 billion-euro bailout negotiated by the Mediterranean island with the European Union and International Monetary Fund over the weekend. Cypriots with up to 100,000 euros in their accounts will pay 6.75%, while those with more face a 9.99% charge.
In return, Cypriot savers will receive shares in their bank.
Savers with deposits in the U.K. arms of Cypriot banks are reportedly unaffected by the levy. The U.K. government has also pledged compensation to any U.K. military personnel that suffer a charge.
The news from Cyprus may well test the resolve of U.K. bank-sector shareholders, who have enjoyed racy returns since the summer of last year.
Indeed, from trough to peak during the last year or so, the shares of Lloyds have lunged from 25 pence to 55 pence, RBS has rallied from 196 pence to 366 pence while Barclays has bounced from 151 pence to 327 pence.
Within it latest results, Lloyds said its total asset exposure to Cyprus had dropped from 210 million pounds to 104 million pounds during 2012. In addition, the 2012 figures from RBS showed its exposure to the island falling from 438 million pounds to 377 million pounds.
Meanwhile, last year’s numbers from Barclays showed Cypriot assets reducing from 316 million pounds to 300 million pounds.
Overall, the exposure to Cyprus looks relatively small when each of the three banks reported group risk-weighted assets of more than 300 billion pounds.
Of course, whether the deposit levy in Cyprus will prompt wider banking problems within the rest of the troubled eurozone — and create further selling pressure on U.K. bank shares — is something nobody can really determine right now.
But if you already own your fair share of bank shares and are looking for a less volatile investment right now, this exclusive in-depth report reviews a solid, predictable alternative within the FTSE 100.
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The article Barclays, Lloyds, and Royal Bank of Scotland Head Lower As Cypriot Bank Tax Hits FTSE 100 originally appeared on Fool.com.
Maynard does not own any share mentioned in this article. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range …read more
Source: FULL ARTICLE at DailyFinance
By Rupert Hargreaves, The Motley Fool
Filed under: Investing
LONDON — I’m always searching for shares that can help ordinary investors like you make money from the stock market.
So right now I am trawling through the FTSE 100 and giving my verdict on every member of the blue-chip index. Simply put, I’m hoping to pinpoint the very best buying opportunities in today’s uncertain market.
Today, I am looking at Royal Bank of Scotland to determine whether you should consider buying the shares at 302 pence.
I am assessing each company on several ratios:
Price/Earnings (P/E) Ratio: Does the share look good value when compared against its competitors?
Price/Earnings-to-Growth (PEG) Ratio: Does the share look good value factoring in predicted growth?
Yield: Does the share provide a solid income for investors?
Dividend Cover: Is the dividend sustainable?
| Stock | Price | 3-Yr. EPS Growth | Projected P/E | PEG | Yield | 3-Yr. Dividend Growth | Dividend Cover |
|---|---|---|---|---|---|---|---|
| Royal Bank of Scotland | 302p | 0% | 10.5 | 0.2 | 0% | 0% | N/A |
The consensus analyst estimate for this year’s earnings per share is 28.7 pence (57% growth) and dividend per share is 0.17 pence (reinstated).
First, I must mention that the consensus analyst estimate for this year’s earnings per share is based on underlying earnings, which excludes items such as mis-selling provisions and restructuring costs and which could significantly affect the estimate. In addition, the three-year earnings-per-share growth rate is based on the same underlying figures.
Anyway, using underlying earnings, RBS is currently trading on a projected P/E of 10.5, cheaper than its peers in the banking sector, which are currently trading on an average P/E of around 19.5.
RBS‘s P/E and high growth rate give a PEG ratio of around 0.2, implying the share is cheap for the near-term earnings growth the firm is expected to produce.
Unfortunately, RBS has not paid a dividend since 2008. However, the consensus analyst view is that RBS will offer a small dividend for 2013.
Is RBS a suitable investment yet?
As I have written before, I do not like financial stocks. In particular, I do not like the risks contained within bank balance sheets and the minefields they can become.
That said, similar to its peer Lloyds Banking, RBS has undergone a significant restructuring program during the past few years and the changes are starting to show through.
Indeed, RBS‘s underlying profit reached 3 billion pounds during 2012, almost double that of 2011. However, RBS was forced to take an accounting charge relating to the value of its own debt, which pushed the company into a loss for the year.
Nonetheless, RBS has made progress in other areas, especially the restructuring of its balance sheet. Indeed, the company’s Tier 1 capital ratio is now at 10.3%, while loans as a percentage of capital have come down to a sustainable level of 100% to indicate all of RBS‘s loans are now covered by customer deposits.
Furthermore, RBS continues to sell off non-core assets in order to pay down debt and strengthen its balance sheet. Indeed, RBS recently spun off insurer Direct Line and is planning to sell part of its stake in U.S. retail bank Citizens Financial.
In addition, management believes that 2013 will be the bank’s …read more
Source: FULL ARTICLE at DailyFinance
By Business Wirevia The Motley Fool
Filed under: Investing
CBRE Group, Inc. Announces Completion of Offering of $800 Million of 5.00% Senior Unsecured Notes Due 2023
LOS ANGELES–(BUSINESS WIRE)– CBRE Group, Inc. (NYS: CBG) today announced the completion of the offering of $800 million in aggregate principal amount of 5.00% Senior Notes due 2023 (the “Notes”). The Notes have an interest rate of 5.00% per annum and were issued at a price equal to 100% of their face value. The Notes were issued by the Company’s wholly-owned subsidiary, CBRE Services, Inc., and guaranteed by the Company and its subsidiaries that guarantee its senior secured credit facility, on a full and unconditional basis.
The Company estimates that the net proceeds from the offering will be approximately $785.2 million, after deducting the underwriters’ discounts and estimated offering expenses. The Company intends to use the net proceeds from such offering of the Notes to repay a portion of its outstanding indebtedness under its senior secured credit facilities.
BofA Merrill Lynch, J.P. Morgan, Credit Suisse, Wells Fargo Securities, HSBC, Scotiabank, Barclays Capital and RBS acted as joint book-running managers for the offering of the Notes. The offering of the Notes was made only by means of a prospectus supplement and accompanying base prospectus, which may be obtained for free by visiting EDGAR on the SEC‘s website at www.sec.gov. Alternatively, copies may be obtained from: BofA Merrill Lynch, 222 Broadway, 11th Floor, New York, NY 10038, Attention: Prospectus Department, or email: dg.prospectus_requests@baml.com.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Notes, in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
“Safe Harbor” Statement Under the Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include, but are not limited to, statements related to the offering of the Notes and the anticipated use of proceeds therefrom. These forward-looking statements involve known and unknown risks, uncertainties and other factors discussed in the Company’s filings with the Securities and Exchange Commission (the “SEC“). Any forward-looking statements speak only as of the date of the press releases and, except to the extent …read more
Source: FULL ARTICLE at DailyFinance
By Maynard Paton, The Motley Fool
Filed under: Investing
LONDON — You only have a few weeks to use your tax-efficient ISA allowance before the April 5 deadline. ISAs are issued on a use ’em or lose ’em basis, so don’t fluff it. You can save up to 11,280 pounds in the current tax year, and put the lot of it into stocks and shares. To find out more, click here. But which stocks should you buy? How about Lloyds Banking Group ?
Failures or safe?
Loathe them or loathe them, the major U.K. high street banks are too big to fail. The taxpayer knows this, to their cost. Politicians know it, and feel helpless. The Bank of England knows it, and sets monetary policy accordingly. Does this make Lloyds a failsafe investment for your ISA?
Up, up, up
The big banks have enjoyed a share-price resurgence over the past twelve months.
Royal Bank of Scotland is up 18%, Barclays is up 32%, but Lloyds has trumped them both with a 48% rise. That compares to a return of around 7% from the FTSE 100.
The banks have been the major beneficiaries of the central-banker policy of flushing markets with loose money and liquidity. Lloyds did particularly well out of the Bank of England‘s Funding for Lending Scheme, picking up 22 billion pounds to fund cheap loans, compared to just 9 billion pounds for Barclays.
Lloyds has also been working hard to mend its broken business and simplify its sprawling operations, off-loading everything from private-equity assets to Irish property loans, and selling 632 branches to the Co-operative Bank. Lloyds has also pulled out of ten territories, and is now focused mostly on the U.K.
Cutting its losses
Lloyds’ full-year results for 2012 showed a dramatic slowdown in the rate at which it is losing money.
Losses fell to 570 million pounds, down from a massive 3.5 billion pounds in 2011. The 2012 figure included 1.9 billion pounds set aside for mis-selling payment protection insurance (PPI) and interest rate swaps. Excluding mis-selling claims, the bank’s underlying group profit actually rose to 2.6 billion pounds, up from 638 million pounds in 2011.
Compare that to the 5.2 billion pounds pre-tax loss posted by RBS, and Lloyds starts to look positively healthy.
Lloyds also plumped up its financial cushion, or core tier 1 ratio, by another 12%, and cut group costs by 5% to 10 billion pounds, two years ahead of schedule. Management now plans another 9.8 billion pounds of cost cutting in 2013.
And the bank continues to raise money by off-loading assets, scooping 520 million pounds from institutional investors by selling a 20% stake in financial advisor St James’s Place. Lloyds still has a 37% holding, but won’t sell any more shares for at least a year. Every little helps.
One scandal after another
If you’re considering Lloyds for your ISA, you also have to be aware of every scrap of potential downside.
We’re all victims of the banks, but the banks are their own worst enemies. The PPI mis-selling scandal has so far cost …read more
Source: FULL ARTICLE at DailyFinance
By Maynard Paton, The Motley Fool
Filed under: Investing
LONDON — The shares of Royal Bank of Scotland slipped 1 pence to 305 pence during early London trade this morning after the bank announced late last night that it would sell more shares in Direct Line Insurance .
RBS confirmed it would offer 229.4 million shares — equivalent to 15.3% of Direct Line‘s share capital — to institutions via an ‘accelerated bookbuild’ process.
Direct Line‘s shares fell 4 pence, or 2%, to 206 pence during early trading, indicating RBS could raise about 470 million pounds from the disposal. The sale would take RBS‘s remaining stake in Direct Line to just below 50%.
RBS said the process could involve selling a further 22.9 million shares depending on sufficient institutional demand.
RBS is essentially a forced seller of Direct Line, having agreed to dispose of the insurer as part of the commitment made to the European Commission following the bank’s taxpayer-funded bailout.
RBS sold 35% of Direct Line at 175 pence a share last year via a flotation and must sell the remainder before the end of 2014.
Within its annual results last month, Direct Line declared a maiden 8 pence per share dividend and implied the payout could have been 12 pence per share had the business operated separately from RBS throughout all of 2012.
Direct Line‘s results also showed underlying net earned premiums falling 5% to 3.7 billion pounds and underlying operating profits advancing 9% to 461 million pounds.
Based on those results, Direct Line is valued at less than 10 times profits and offers a possible 5.8% dividend income.
Of course, whether that 5.8% income, RBS‘s decision to sell more shares — as well as the general outlook for the insurance industry — actually combine to make Direct Line a buy remains your decision.
However, if you already own Direct Line shares and are looking for another dividend opportunity, this exclusive in-depth report reviews a solid income possibility within the FTSE 100.
Indeed, the blue chip in question offers a 5.7% income, might be worth 850 pence versus around 700 pence now — and has just been declared the “Motley Fool’s Top Income Stock For 2013!”
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The article Royal Bank of Scotland to Sell 15% of Direct Line Insurance originally appeared on Fool.com.
Maynard does not own any share mentioned in this article.
The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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Source: FULL ARTICLE at DailyFinance
By Tony Reading, The Motley Fool
Filed under: Investing
LONDON — There’s been a distinct change of mood music about prospects for sale of the government‘s holdings in Lloyds and RBS . Twelve months ago, the chances of any sale were downplayed. Now both are being openly speculated about.
A sale of some of the government‘s shares should be a big boost for the shares. When might we see some action, and what form might it take?
Tell Sid
It seem pretty clear that David Cameron wants to do something concrete before the 2015 General Election. It would show that the financial crisis is finally being solved, and free the government from the headaches of bank ownership.
All kinds of scenarios have been bandied about. A plan to distribute shares in both banks to all holders of national insurance numbers has apparently been discussed in the Treasury. The complexities of adding 40m-plus investors to the share register would dwarf the logistics of the famous British Gas “Tell Sid” mass privatizations of the 1980s, and to my mind make it a non-runner.
But with politics driving the privatization, there’s a good chance there’ll be some form of public subscription. It would help the government to fudge how much tax-payers lost on the whole bail-out debacle. And it might even serve as a form of “helicopter money,” one of the more extreme options that have been floated for getting the economy moving.
Institutions
For the banks and their existing shareholders, institutional appetite is more significant. Institutions would probably buy new shares, strengthening the banks’ capital. Under its present governor, at least, the Bank of England is still keen to see higher capital levels.
Both Lloyds and RBS have made good progress on restructuring. Last year Lloyds shed $40bn of distressed assets against a plan of $25bn, while RBS is predicting that this will be the last year of substantial restructuring. With PPI and LIBOR settlements largely behind them and hints of resumed dividend payments, the banks are starting to look more attractive to institutions.
RBS: the political football
RBS is the bigger political football, with the government owning a controlling 82% interest.
Management has been swift to respond to the owner’s new rhetoric. Chairman Sir Philip Hampton has said he hopes a sell-off could start as early as 2014, and CEO Stephen Hester has made similar bullish remarks.
Perhaps they perceive that if there’s a political imperative to do something next year, it’s better to be making the running themselves. The government would find it much harder to interfere in RBS‘s business once further shares had been sold.
Lloyds: moving the goalposts
If the government and management are playing political football at RBS, they’ve moved the goalposts at 40% state-owned Lloyds.
CEO Antonio Horta-Osorio’s bonus will pay out if the government sells a third of its shares at more than 61 pence. That’s well below the 74 pence the government paid. But arcane accounting means that 61 pence, the level Lloyds was trading at when it was bailed-out, is the price at which the …read more
Source: FULL ARTICLE at DailyFinance
