LONDON -- RBS
The costs related to the computer system crash were also easier to stomach as the 125 million pound provision set aside for the incident was a modest amount compared to the reported 1.8 billion pound operating profit through the first half of the year.
If we ignore the 1.4 billion pounds in operating losses from what RBS has classified as non-core assets (all 72 billion pounds of them), operating profits from core operations were 3.2 billion pounds, down 19% from a year ago despite lower insurance claims and loan impairment costs. Part of the problem comes from the investment banking operations -- which RBS calls its markets division -- which are suffering because of the dreadful conditions in European financial markets. Fair enough, this will likely bounce back eventually.
The other drag was the U.K. retail banking segment, which reported a 13% drop in operating profit as a result of an 11% drop in income. RBS, like Lloyds
Of course, neither are talks about fully nationalizing the bank, which I think miss the point of what is plaguing the U.K. (and European) banking markets. But that is a topic for another article.
RBS' management faces significant challenges in re-establishing the bank's reputation -- and recent revelations about industry peers don't help -- and while declining loan impairments and rising capital levels show things are improving RBS has a long way to go. If I was daring enough to look for exposure to the financial sector, I think I'd look elsewhere.
However, if the financial sector holds no appeal, you can find some of The Motley Fool's favorite opportunities in other sectors in its free "Top Sectors for 2012" report. Download the free report now by clicking here.
Are you looking to profit from this uncertain economy? "10 Steps To Making A Million In The Market" is the very latest Motley Fool guide to help Britain invest. Better. We urge you to read the report today -- it's free.
Further Motley Fool investment opportunities:
Nate does not own any shares discussed above. 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.