After RBS caution Banking sector drops
Traders took profits out of the banking sector Fri. as the Royal Bank of Scotland offered up a decidedly more gloomy view on impairment levels than Lloyds Banking Group did earlier in the week.
Rbs / quotes / nls / rbs ( RBS 15.69, -0.09, -0.57% ) slumped 12.1% after the bank asserted its first-half net loss dilated to 1.04 bln pounds ( $1.74 billion ) due to surging bad-debt charges and also warned that results may not improve noticeably till 2011. The bank’s loss widened from an 827-million-pound hole a year before and was not as good as anticipated, driven by a five-fold increase in total impairments charges to 7.52 bill pounds.
It didn’t stay unseen that RBS declared impairments will remain high, while Lloyds Banking Group stated that they had topped. “With book price set to fall further and the shares trading at 1.2 times book, our first reaction is negative for the shares themselves and for the sector as a whole.
I:ukx ( UK:UKX 4,714, -41.49, -0.87% ) to 0.9%, to 4,731.56, following data showing fewer US job losses than anticipated and a falling unemployment rate. Bp / quotes / nls / bp ( BP 50.43, -0.25, -0.49% ) each got a lift from the data, with Vodafone up 2.8% and BP rising 2.1%. 435.00, -3.10, -0.71% ) underperformed the wider index, up just 0.1%, as Goldman Sachs cut its rating to sell from neutral, asserting that even though it believes the civil aerospace downturn will be less grim than many backers expect, Rolls Royce shares now trade at a major premium to its peers.
The broker spotted that it’s been the top performing stock in the civil aerospace sector not only in 2009 but over the last 4 years.
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