JPMorgan cuts RBS target, stays 'neutral'

27th Feb 2015 10:30

RBS' share price was spending another day in the red on Friday as analysts reacted to the bank's worse-than-expected 2014 results, with JPMorgan Cazenove cutting its price target on the stock from 400p to 385p.The broker, which retained a 'neutral' rating on the shares, said upside was limited with the stock trading in line with its tangible net asset value (TNAV).'Clean' pre-tax profit for the fourth quarter came in at £1.35bn, compared with a loss of nearly £5bn the year before but below JPMorgan's £1.6bn forecast.RBS set new targets for 2019, by which time it intends to be a low-cost business with a reduced risk profile and smaller geographical footprint for its corporate and institutional banking business.The company also intends to move towards a common-equity tier one capital target of 13% and will distribute excess capital above this level to shareholders once its reaches certain milestones. As such, JPMorgan is expecting a £10bn buyback from the bank by 2018.JPMorgan said that the restructuring will transform RBS into a significantly smaller bank but with higher return on equity and cash returns."Overall, we believe that management have chosen a strategy that provides a clear path to returning cash to shareholders over time; however this is discounted at current levels (1x price/TNAV) with litigation risk."The stock was 2.7% lower at 376.06 by 11:24.