Broker snap: Operating environment still tough for RBS, says Nomura

Nomura has maintained its reduce rating and 26p target price for part-nationalised lender Royal Bank of Scotland, but acknowledges that the first-quarter results were in line and 'modestly better than Lloyds'.Group operating pre-tax profit came in at £1,184m, in line with Nomura's £1,185m assumption and up from £1,133m the year before. However, core profits came in slightly below estimates with higher losses continuing at Ulster."The RBS Q1 results were similar to our expectations and we thus expect limited movement in current-year profit expectations," the broker said. It added that RBS's balance sheet restructuring has happened faster than it had expected."We therefore expect limited changes to investor perceptions towards the group on the back of these results. RBS appears to be further advanced in its restructuring than Lloyds."However, Nomura has maintained its negative view on the stock saying that both RBS and Lloyds will "find it difficult" to generate sustainable long-term value in a difficult operating environment whilst still needing to further restructure their balance sheets.Shares were trading 2.48% higher at 25.16p by 10:39 on Friday morning.BC