RBS creeps into profit

Royal Bank of Scotland Group announced this morning that it went back into the black in the first half of the year, making £15m in the first six months, helped by strong investment banking gains

The bank, 70 per cent-owned by the UK taxpayer after its bail-out by the government, wrote down £7.5bn in the period, five times more than a year ago. As a result of which it in fact made a net loss of £1bn against a £827m deficit a year ago. Revenues rose by a half to £21.84bn.

Like other banks this week, its chief executive Stephen Hester made positive noises about the future for the bank, saying "We are now confident we can rebuild RBS." However, he did admit the results were "poor" and a solid improvement would "take time".

The bank's better performance came from its investment banking arm, which made £4.9bn operating profit in the half. However it warned that this was unlikely to be replicated in the second half. It also made £3.8bn after buying back its debt at cheaper levels in the downturn. The retail and corporate banking performance of the group, which owns Nat West, was disappointing.

There was some good news for the taxpayer. Shares in RBS closed up around ten per cent at 53.45p yesterday – higher than the 50.5p price the government paid for its share in the troubled group.

WHAT THEY ARE SAYING:Damian Reece in the Daily Telegraph

"The fact that the taxpayer is now in profit on its RBS stake, and analysts believe Lloyds could even escape the state's toxic debt scheme, caps an extraordinary week for the banks. Stephen Hester, RBS chief executive, is fond of saying that banks are a mirror on the economy. The reflection is a little brighter."

Simon Maughan, an analyst at MF Global Securities Ltd, on Bloomberg

"RBS is a reality check on the optimism that Lloyds have given us this week. I don’t think he is kitchen sinking it. I think he is telling it the way that it is."

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