The figures for the six months to 31 August are well ahead of analysts' expectations and prompted some to upgrade forecasts for the full year.
Peter Burt, the BoS chief executive who stunned the City on Friday when he launched a hostile pounds 22bn bid for NatWest, said he was particularly pleased by the 22 per cent rise in loan growth in the first half. "We say we can grow our business. These figures show that we can," he said.
Costs were up 6 per cent but revenues grew faster bringing the cost-to- income ratio, a key measure of banking efficient, down from 49.9 per cent to 48.2 per cent compared with the first-half of the year before.
Sir David Rowland, the NatWest chairman, broke five days of silence to attack the BoS figures, accusing the bank of "buying market share" and "storing up problems for the future."
NatWest highlighted the fall in interest margin for the clearing bank from 2.08 per cent to 1.89 per cent, although for the bank as a whole BoS held its interest margin at 2.85 per cent. Bad debt provisions were up 30 per cent at pounds 151m. BoS said this was in line with expectations.
However, BoS pointed out that on all the key measures of performance BoS was well ahead of NatWest. NatWest's reported cost income ratio was 66 per cent in the first half while its return on capital was 18.8 per cent against 21 per cent for NatWest.
Mr Burt said he was astonished by the enthusiasm with which the bid has been greeted by Bank of Scotland staff and even within NatWest. He reiterated his desire to work with the NatWest staff, insisting that his plan to make NatWest more customer focused could not succeed without their support.
The bank is about to roll out its new "Banking in a Box" concept which will enable it to offer customers many of the services currently offered through branches but through a low-cost format suited for premises such as offices, factories and supermarkets.
The bank is launching an Internet bank in Holland and is close to signing up a new banking partner in the US.
"It is ideas such as these which reinforce our confidence that not only can the proposed combination with NatWest be achieved without large scale compulsory redundancies but it will yield significant benefits for the customers and staff of both banks as well as for their shareholders," Mr Burt said.Reuse content