RBS reports first quarter operating profit of £713m

Royal Bank of Scotland has reported operating profits of £713m in the first three months of 2010, up from a £1.35bn loss for the same quarter last year.

The profit came after what the bank called "one of the most significant corporate restructuring" ever made.

After one-off costs, including £500m paid into a government-backed insurance scheme for bad debts, RBS reported a pre-tax loss of £21m.

The UK taxpayer owns 84% of RBS after it was bailed out at the end of 2008.

RBS said that bad debts fell 14% from the previous quarter to £2.7bn as the global recovery continued.

Mr Hester said: "Economic recovery is benefiting our customers and thereby ourselves."

But he warned about the risks of fall-out from the Greek debt crisis spreading to other countries.

And he added: "Certain sectors, like real estate, also face a longer term work-out and there are ongoing losses for banks to absorb."

On track

Mr Hester is implementing a five-year plan to restore the part-nationalised bank to normality.

He said: "Today we show that we remain on track for delivery of that plan. We have made good progress but there is still significant work to be done."

Profits from RBS's global banking and markets arm more than halved to £1.47bn from £3.47bn a year ago, when a sudden rebound in the capital markets lifted profits across the sector.

RBS said that disposals forced on it by European Commission regulators, including the sale of 318 branches and its card payment processing business WorldPay, were on track.

Last week Lloyds Banking Group, 43%-owned by the UK taxpayer, announced an unexpected return to profit in the first quarter, due in part to reductions in bad debts.