The Royal Bank of Scotland (RBS) is expected to make waves Thursday as it releases its full-year results amid a LIBOR scandal and plans to cut back on its branches.
Nomura reiterated its 'reduce' rating and 300p target price for the UK lender ahead of the interim statement.
The broker expects core profits of £6.1bn for 2012, dropping to £5.2bn if excluding mandated sales.
The analyst predicts core earnings per share of 38p, which means that RBS is trading at nine times 2012 earnings, improving to 8.5 times on 2013 estimates.
However, non-core is expected to make a loss of £2.6bn for 2012.
One-offs are anticipated to total £7.7bn, £2.0bn of which came from the fourth quarter. It includes £400m for PPI redress, £390m for LIBOR-rigging fines and £800m for interest-rate hedging products, according to Nomura.
The bank has been undergoing a massive restructuring as it tries to find ways to pay back the government, which bailed it out in 2008.
The rumoured sale of its US retail arm Citizens could partially offset its debts, according to Nomura, "but a rushed sale is not the best option, and it remains to be seen if the group can resist external pressure to do so".
The state-owned lender is also said to be considering a hybrid sale of more than 300 branches to private equity firms and institutional investors.
"We believe the group still faces material uncertainties with respect to deleveraging, asset quality and the future shape of operations, and remain cautiously positioned on the name," Nomura said.
The results come in the wake of the company's agreement to pay penalties to regulators in relation to LIBOR rigging. It paid £87.5m, $325m, and $150m to the Financial Services Authority (FSA), Commodity Futures Trading Commission (CFTC) and Department of Justice (DOJ), respectively.
Shares were up 1.18% to 343.50p at 15:59 Wednesday.
Thursday February 28
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