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
Arts and Entertainment
musicOfficial chart could be moved to accommodate Friday international release day
Sport
Wes Brown is sent-off
football
News
i100
Sport
Italy celebrate scoring their second try
six nations
Sport
Glenn Murray celebrates scoring against West Ham
footballWest Ham 1 Crystal Palace 3
Arts and Entertainment
Drake continues to tease ahead of the release of his new album
music
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

SThree: HR Benefits Manager

£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

Recruitment Genius: Office Manager / Financial Services

£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...

Jemma Gent: Year End Accountant

£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...

Jemma Gent: Management Accountant

£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...

Day In a Page

The Last Word: For the good of the game: why on earth don’t we leave Fifa?

Michael Calvin's Last Word

For the good of the game: why on earth don’t we leave Fifa?
HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

Scientists hail daily pill that protects against HIV infection

Breakthrough in battle against global scourge – but will the NHS pay for it?
How we must adjust our lifestyles to nature: Welcome to the 'Anthropocene', the human epoch

Time to play God

Welcome to the 'Anthropocene', the human epoch where we may need to redefine nature itself
MacGyver returns, but with a difference: Handyman hero of classic 1980s TV series to be recast as a woman

MacGyver returns, but with a difference

Handyman hero of classic 1980s TV series to be recast as a woman
Tunnel renaissance: Why cities are hiding roads down in the ground

Tunnel renaissance

Why cities are hiding roads underground
'Backstreet Boys - Show 'Em What You're Made Of': An affectionate look at five middle-aged men

Boys to men

The Backstreet Boys might be middle-aged, married and have dodgy knees, but a heartfelt documentary reveals they’re not going gently into pop’s good night
Crufts 2015: Should foreign dogs be allowed to compete?

Crufts 2015

Should foreign dogs be allowed to compete?
10 best projectors

How to make your home cinema more cinematic: 10 best projectors

Want to recreate the big-screen experience in your sitting room? IndyBest sizes up gadgets to form your film-watching
Manchester City 1 Barcelona 2 player ratings: Luis Suarez? Lionel Messi? Joe Hart? Who was the star man?

Manchester City vs Barcelona player ratings

Luis Suarez? Lionel Messi? Joe Hart? Who was the star man at the Etihad?
Arsenal vs Monaco: Monaco - the making of Gunners' manager Arsene Wenger

Monaco: the making of Wenger

Jack Pitt-Brooke speaks to former players and learns the Frenchman’s man-management has always been one of his best skills
Cricket World Cup 2015: Chris Gayle - the West Indies' enigma lives up to his reputation

Chris Gayle: The West Indies' enigma

Some said the game's eternal rebel was washed up. As ever, he proved he writes the scripts by producing a blistering World Cup innings
In Ukraine a dark world of hybrid warfare and murky loyalties prevails

In Ukraine a dark world of hybrid warfare

This war in the shadows has been going on since the fall of Mr Yanukovych
'Birdman' and 'Bullets Over Broadway': Homage or plagiarism?

Homage or plagiarism?

'Birdman' shares much DNA with Woody Allen's 'Bullets Over Broadway'
Broadchurch ends as damp squib not even David Tennant can revive

A damp squib not even David Tennant can revive

Broadchurch, Series 2 finale, review
A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower: inside the mansion of Germany's 'Bishop of Bling'

Inside the mansion of Germany's 'Bishop of Bling'

A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower