LONDON -- Taxpayer-backed Royal Bank of Scotland (LSE: RBS ) (NYSE: RBS ) is due to report its first-quarter results on Friday, the bank's first update since announcing an incredible 6 billion-pound loss for 2012.
RBS investors have grown accustomed to wild share-price fluctuations in recent years, and so far, 2013 has been no different.
After surging 55% last year, RBS shares rallied a further 10% during January, then crashed 27% by the end of March, only to recover 15% during April. You'd be forgiven for thinking this was a penny-share oil explorer rather than an 18 billion-pound bank.
While it might be un-Foolish to focus too much on share-price fluctuations, the wild price swings show how speculative and uncertain the bank's future earning power appears from one month to the next.
With this in mind, what should we expect from this Friday's results?
From the horse's mouth
Here's what chief executive Stephen Hester said within February's full-year results:
Our target is for 2013 to be the last big year of restructuring. There will be important work still to do, but an increasingly sound base from which to work.
We expect the economic and regulatory challenges present in 2011 and 2012 to continue into 2013. Markets-related income is, as ever, difficult to forecast but we expect lower income in 2013 as a result of reduced balance sheet and associated restructuring.
The complexity of the bank's restructuring -- and lack of transparency in the sector generally -- make it difficult to analyse earning power at RBS.
According to data from Capital IQ, analysts are completely divided, with 2013 full-year profit estimates ranging from 12 pence to 40 pence per share. For the first quarter alone, analysts are looking for profits anywhere between 100 million pounds and 800 million pounds, depending on your preferred adjustments. Revenue estimates for the quarter range from 5.8 billion pounds to 6.6 billion pounds.
Too speculative to analyse?
If highly regarded professional analysts are so divided over RBS's future earnings, is the business too speculative for us ordinary investors to invest in?
Well, banks have become far more complex over the years and, depending on your point of view, that lack of transparency could make modern banks impossible to analyse for many Foolish punters.
On the other hand, RBS is currently valued at around half its stated book value, equivalent to one-third of the bank's historical average rating. If an investor felt confident that RBS's government-backing and importance to the U.K. economy makes the bank 'too big to fail', an argument could be made for a deep-value investment.
The bottom line
Whether you're confident of the long-term story at RBS, or cannot bear the lack of transparency at modern banks, we're brought back to the original question. What can we expect from RBS's results this Friday, or even this year?
Where 2013 is concerned at least, judging by the lack of consensus, perhaps investors should continue to 'expect anything' in the short-term results. While the bank restructures, it might be impossible to say how RBS's results will appear from one quarter to the next.
Evaluating the long-term future earning power of RBS, if possible at all, is surely the key to coming to a rational investment decision. This may be something you, personally, have to determine for yourself.
Foolish final thought
Finally, if you already own RBS shares and are looking for an alternative buying opportunity away from the uncertain banking sector, you may wish to know that ace investor Warren Buffett last year invested almost $1 billion in one of the U.K.'s best-known blue-chip brands.
The FTSE 100 giant in question, in which Buffett now has a 5% stake, boasts a phenomenal dividend record and currently offers a yield of 4% -- potentially making the share a very attractive long-term investment for income-seekers.
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