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
PROMOTED VIDEO
Life and Style
Suited and booted in the Lanvin show at the Paris menswear collections
fashionParis Fashion Week
Arts and Entertainment
Kara Tointon and Jeremy Piven star in Mr Selfridge
tvActress Kara Tointon on what to expect from Series 3
Voices
Winston Churchill, then prime minister, outside No 10 in June 1943
voicesA C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
News
i100
News
An asteroid is set to pass so close to Earth it will be visible with binoculars
news
Arts and Entertainment
Benedict Cumberbatch has spoken about the lack of opportunities for black British actors in the UK
film
News
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
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

Recruitment Genius: Tax Assistant

Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

Recruitment Genius: Outbound Sales Executive - OTE £25,000

£16000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Java Developer / J2EE Developer - Watford - £45,000 - £47,000

£45000 - £47000 per annum + bonus + benefits: Ashdown Group: Java Developer / ...

Ashdown Group: Marketing Product Manager - (Financial Services) - SW London

£35000 - £38000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Day In a Page

Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore
'I'm gay, and plan to fight military homophobia'

'I'm gay, and plan to fight military homophobia'

Army general planning to come out
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
America: Land of the free, home of the political dynasty

America: Land of the free, home of the political dynasty

These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
A graphic history of US civil rights – in comic book form

A graphic history of US civil rights – in comic book form

A veteran of the Fifties campaigns is inspiring a new generation of activists
Winston Churchill: the enigma of a British hero

Winston Churchill: the enigma of a British hero

A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
Growing mussels: Precious freshwater shellfish are thriving in a unique green project

Growing mussels

Precious freshwater shellfish are thriving in a unique green project