Tim McLaughlin reports in the Boston Business Journal that delinquencies in Citizens Financial Group’s home equity and mortgage portfolio are steadily rising, forcing the parent of Citizens Bank to pump a significant amount of money into operations that manage problem debts.
That financial narrative was given by the Royal Bank of Scotland Group Plc on Friday when it released its midyear results. RBS is the parent of Citizens Financial, whose Citizens Bank operations rank No. 2 in Massachusetts behind Bank of America Corp., based on in-state deposits.
At the end of June, 2.7 percent of home equity loans and 3.7 percent of mortgages at Citizens Financial were one payment or more past due, RBS said. That compares with 1.5 percent and 1.7 percent, respectively, at the end of December.
“Significant investment has been made in problem debt management capability,” RBS said in its financial release. “Loan modification options are being used where appropriate to support troubled customers, including government-sponsored programs.”
Royal Bank of Scotland said its first-half net loss widened to $1.74 billion on a surging amount of bad-debt charges. And the bank said significant improvement might not come until 2011. Shares of RBS in New York (NYSE: RBS) fell 12 percent to $16.06 in early morning trading.
RBS said overall U.S. retail and commercial operations, which consists mostly of Citizens Financial, posted an operating loss of $76 million during the first half of 2009. That compared with an operating profit of $577 million in the year-ago period. Results were hurt by loan-impairment losses of $551 during the first six months of this year. That was more than double the amount in the year-earlier period, RBS said.
Corporate and commercial loans accounted for $253 million worth of the 2009 impairment losses. That’s more than triple the amount in the year-ago period, RBS said. Residential mortgage and home equity impairments also more than doubled during the first half of this year, RBS said.