RBS heads back into the black - just

Part-nationalised Royal Bank of Scotland fuelled recovery hopes for the sector today as it steadied the ship with a return to profit for the first half of 2010.

The bank's slim £9 million surplus - against a £1.04 billion loss a year earlier - came after improving bad-debt losses as it moved from a £248 million loss in the first quarter to a £257 million profit between April and June.

Chief executive Stephen Hester said turnaround plans for RBS were on track, but said the task ahead was a "marathon not a sprint". The recovery would not be steady and there was "plenty left to do", he warned.

RBS is the last of the UK's "big four" banks to report results this week. The break-even performance comes after stripping out factors such as one-off gains on its own debt.

HSBC and Barclays have been the strongest performers this week with profits of £7 billion and £3.9 billion respectively - as banks benefit from lower bad debts - although Lloyds also produced better-than-expected profits of £1.6 billion.

Mr Hester flagged up further staff culls ahead after 2,600 jobs losses at its insurance and retail banking arm already this year, bringing total cuts at the business since the crisis began to 22,600.

He warned: "It is absolutely inescapable in the modern world that we have got to be at the forefront of efficiency," he said.

The chief executive is also in the process of selling 318 branches to Santander as well as its credit card processing arm as it seeks to appease European competition concerns.

Hargreaves Lansdown head of equities Richard Hunter said RBS had ended the bank reporting season in "quietly confident" fashion.

Mr Hunter said: "The company has crept back into the black, further asset disposals should help focus future strategy and the new management team are well aware of the length of time any potential recovery may take."

Shares in the bank rose 2% - giving the taxpayer a £3 billion profit on its stake - although when the public sector will begin selling shares is still uncertain.

Mr Hester said the timing of sales was a matter for the Government. "We are trying as hard as we can to put them in a position where they can profitably sell," he said.

RBS's retail banking arm, which owns NatWest and now has 12.9 million current accounts, boosted operating profits to £416 million during the first half, helped by wider margins on lending.

The net interest margin - the gap between what it pays in interest and what it charges in loans - rose to 3.77% from 3.57% a year earlier at its retail arm. Bad-debt losses fell to £687 million from £824 million in the first half of last year.

"Widening asset margins across all products and an increasing number of mortgage customers choosing to remain on standard variable rate were the key drivers," the bank said.

The bank remains on course to meet its £8 billion mortgage lending target for the year to February 2011, although RBS saw signs of weakness in the second quarter with a 21% fall in application volumes.

The group lent a gross £12.7 billion to businesses between April and June - 27% above a year earlier - but said "overall activity levels remain somewhat subdued", with many businesses looking to cut debt and paying back a net £1.4 billion over the quarter.

The group's investment banking arm had a "more difficult" quarter thanks to the sovereign debt crisis which struck markets in April.

Revenues dipped 31% between April and June after a strong first quarter and operating profits fell to £2.5 billion over the first half of 2010, down 44% on a year earlier.

RBS bought Dutch bank ABN Amro before the credit crunch struck in 2007, but the disastrous deal weakened its balance sheet and the Government was forced to pump in £45 billion to keep the bank afloat.

Start your day with The Independent, sign up for daily news emails
general electionThis quiz matches undecided voters with the best party for them
Arts and Entertainment
Keira Knightley and Matthew Macfadyen starred in the big screen adaptation of Austen's novel in 2005
tvStar says studios are forcing actors to get buff for period roles
Prince William and his wife Catherine, Duchess of Cambridge show their newly-born daughter, their second child, to the media outside the Lindo Wing at St Mary's Hospital in central London, on 2 May 2015.
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Trainee Consultant - Surrey/ South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Ashdown Group: Trainee Consultant - Surrey / South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before