Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Royal Bank of Scotland Group plc (ADR) (RBS): Is This Your Last Chance to Buy?

LONDON — In one month’s time, Royal Bank of Scotland Group plc (ADR) (NYSE:RBS) will announce its results for the first three months of 2013. I expect that this announcement will be an important milestone in the bank’s turnaround.

Royal Bank of Scotland Group plc (ADR) (NYSE:RBS)

RBS shares have take a battering in the last month, falling 13%. After a great 2012, they are down a total of 16% so far this year.

RBS shares have suffered in the aftermath of the crisis in Cyprus. This was followed by the banking regulator announcing that it wants the sector to raise more capital by the end of the year. Bearish sentiments increased further this week as it was announced that investors would be suing the bank regarding a fundraising that it underwent in 2008.

Back in February, shares in Royal Bank of Scotland Group plc (ADR) (NYSE:RBS) changed hands for more than 350 pence. I believe that a series of events is about to play out that could see RBS shares return to that level in May.

On 3 May, RBS will announce its Q1 results. I believe this could inspire new confidence in the bank and its ability to generate profits.

In 2012, Royal Bank of Scotland Group plc (ADR) (NYSE:RBS) reported a 5.6 billion-pound loss from ongoing operations. This was a result of 5.3 billion pounds of impairment losses, 1.5 billion pounds paying for misdeeds and a 4.6 billion-pound accounting charge (ironically resulting from RBS’s perceived rehabilitation).

If Royal Bank of Scotland Group plc (ADR) (NYSE:RBS) can avoid further fines in 2013 and impairments continue to reduce at a similar rate, the company could report an operating profit for the full year of around 2.5 billion pounds.

At the end of 2012, RBS announced a tangible net asset value of 446 pence per share. That’s a long way ahead of today’s share price.

I believe profitable companies should not trade at a discount to their asset value. If RBS can convince the market that it will be profitable again, I expect that discount will narrow.

Furthermore, a profitable bank will likely be increasing its asset value. Royal Bank of Scotland Group plc (ADR) (NYSE:RBS)’s May statement could demonstrate that the bank’s shares are currently too cheap by half.

The article Is This Your Last Chance to Buy Royal Bank of Scotland? originally appeared on is written by David O’Hara.

David owns shares in Royal Bank of Scotland.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.