Results round-up: RBS, IAG, Pearson, Standard Life

Shares in Royal Bank of Scotland fell on Friday after it said losses widened in the year to 31 December - its ninth consecutive loss - as it was hit by legacy issues.

RBS reported a loss of £6.96bn for 2016, bigger than the £1.98bn loss it posted the year before. Since its government bailout in 2008, it has racked up £58bn in losses.

The bank was faced with litigation and conduct costs of £5.9bn, which include a £3.1bn provision in relation to the mis-selling of mortgage-backed securities in the US in the run-up to the financial crisis. Meanwhile, it also booked £2.1bn in restructuring costs, compared to £2.9bn the year before.

In addition, the bank put aside a £750m provision to avoid having to sell off branches under the Williams & Glyn brand.

RBS, which is 72% owned by the taxpayer, also said that it expects 2017 will be its final year of substantive legacy clean-up with significant one-off costs. Consequently, it expects to be profitable in 2018.

The bank said it plans to reduce adjusted operating expenses by a further £750m in 2017, in addition to the £3.1bn achieved across 2014 to 2016.

Chief executive Ross McEwan said: "In 2016 RBS made an attributable loss of £7bn, mostly reflecting charges for outstanding litigation and conduct, and costs associated with restructuring of the bank.The financial impact of these issues is a difficult but necessary step in working through the bank's legacy issues.

International Consolidated Airlines Group

British Airways and Iberia owner International Consolidated Airlines Group announced a new share buyback as it reported an improved profits in the fourth quarter of last year and guidance for continued improvement in 2017.

Even though IAG's various airline brands carried more than 100m passengers, up 12m from 2015, full year passenger revenues fell 2% to €19.9bn and total revenues slipped 1.3% to €22.57bn, though this was bang in line with analysts consensus forecasts.

In the fourth quarter passenger unit revenue fell down 12.7%, down 4.3% at constant currency, meaning for the full year passenger unit revenue was down 5.4% at constant currencies.

Fourth quarter operating profits jumped 17% to €620m, which lifted 2016 operating profit before exceptional items to €2.54bn, a rise of 8.6% on the previous year.

Full year profit before tax of €2.36bn was up 33%, with diluted earnings per share up 25.7% to 88.5 euro cents.

IAG's cash stood at €6.4bn at the end of December, up €572m over the 12 months, and a final dividend of 12.5 cents means the full year dividend of 23.5 cents per share will be a 17.5% increase on 2015.

For 2017, based on current fuel prices and exchange rates, management expects operating profit for 2017 "to show an improvement year-on-year".

Chief executive Willie Walsh said for the full year it was "a good performance in a challenging environment".

"Our performance was affected by an adverse currency impact of €460 million. In particular, this was due to the weak pound following the UK's EU referendum. However, despite that, we've made good progress and continue to build on all we've achieved in our first five years.

On Friday Walsh also announced a share buyback of €500m during the course of 2017 which he said may be implemented through one or more share buyback programmes.

Pearson

Publishing company Pearson, which delivered a profits warning in January, held its dividend steady as full year pre-tax losses widened to £2.5bn from £433m in 2015 as it booked an impairment of goodwill charge of £2.5bn relating to its US businesses.

Better than expected underlying operating profits were down 21% at £635m due to weaker revenues, the partial reinstatement of incentives and “other operational factors”, Pearson said.

Sales fell 8% to £4.5bn in underlying terms. Good growth in Pearson VUE, US Virtual Schools Online Program Management and Wall Street English in China was more than offset by expected declines in US and UK student assessment and US school courseware, and a much worse than expected decline in North American higher education courseware.

This was partially offset by cost savings from the restructuring plan announced in January 2016, a larger contribution from Penguin Random House, helped in part by modest one-off benefits from the integration programme, and a return to profit in Pearson's growth markets of Brazil, China, India and South Africa.

Net debt rose to £1.1bn from £654m a year earlier. The total dividend was held at 52p a share, but the company said it would rebase it from 2017 onwards.

Pearson in January slashed its profit forecast for 2017 by £180m and abandoned its £800m target for 2018, adding that it planned to sell its stake in publisher, Penguin Random House to shore up its balance sheet.

Standard Life

Standard Life proposed a full year dividend per share of 19.82p, up 8%, as revenue for 2016 grew against a backdrop of volatile investment markets as the insurer aims to increase its exposure to the Indian market.

Fee based revenue rose 5% in 2016 to £1.65bn, which accounts for 95% of Standard Life’s total income, compared to the previous year, with growth channels revenue up 10% to £1.2bn and the average revenue yield maintained at 59 basis points.

Operating profit before tax increased 9% to £723m with diluted operating earnings per share up 13% to 29.5p.

The company reduced the cost/income ratio by one percentage point to 62% and is targeting a reduction below 60% over the medium term.

It increased the assets under administration by 16% to £357.1bn with net outflows of £2.6bn, this represents less than 1% of opening assets, which it said was driven largely by its mature business books.

At the end of last year the company had about £900m in cash after it increasing its stake in Indian insurance firm HDFC Life, and which it aims to combine with New Delhi-based insurer Max Life to create a large private life insurance business in India

Growth channels assets under management grew 20% due to gross inflows of £38.6bn, net inflows of £4.1bn, positive market movements and the May 2016 acquisition of Elevate, Axa’s portfolio service business.

This included an 11% rise in the asset under management from the institutional and Wholesale division to £137.1bn, and a 33% rise in assets under management from the workplace and retail division to over £100bn, which benefitted from net inflows of £5.4bn and the Elevate acquisition.

Underlying cash generation was up 9% to £502m and the company is investing further in its business, including in its investment capabilities and geographic reach as well as the acquisition of Elevate and ongoing buildout of 1825.