Part-nationalised Royal Bank of Scotland edged back into the black today with a £15 million profit for the first half of 2009.
The profit at the bank, which is 70 per cent owned by the taxpayer after a £20 billion bailout, came despite bad debts and writedowns soaring to £7.5 billion.
Chief executive Stephen Hester, who has been charged with the turnaround of the troubled bank, said it had been a "momentous" six months for the business.
He added: "There will be no miracle cures. Our task is no less than one of the largest bank restructurings ever done, in the face of strong economic headwinds.
"Overall results may not substantially improve until 2011 and full recovery will take time."
The group was helped into the black at the pre-tax level through a £3.8 billion gain on the falling value of the bank's own debt.
But after tax and other payouts such as dividends on the preference shares which were held by the Government, RBS slid to a net loss of £1 billion.
The RBS boss added: "There is every sign that our financial performance over the next two years, at a group level, will be poor due to the severe economic downturn in 2008 and 2009 and consequent impact on impairments and funding costs."
Mr Hester said he had shrunk the size of RBS by 26 per cent or £574 billion so far this year to put the bank on a firmer footing.
The chief executive is splitting RBS into unwanted parts which would be wound up or sold, and those businesses which would be kept on.
The "core" bank made operating profits of £6.3 billion in the first half of the year, Mr Hester said, helped by a "creditable rebound" in the group's investment banking business.
RBS - which made lending commitments in return for financial support - has made new loans totalling £36 billion to UK homeowners and businesses in the first half, including 100,000 business loans with an 85 per cent acceptance rate among smaller firms.
But the chief executive also warned that the mega-practices of the banking sector were not going away, although RBS has reformed its own bonus system.
"For right or for wrong, in all walks of life, the pay levels people are offered for doing similar jobs elsewhere are a key benchmark.
"We know to our cost, having suffered significant resignations of valuable staff members this year, that we cannot ignore competitor pay practices or we will fail as a business," he said.Reuse content