A strong performance in its new retail financial services pushed profits up above all expectations.

Despite the glowing report, the bank that the shaky outlook for the UK economy would have a knock-on effect on its future performance.

The bank raised its dividend by 15% to 24.6p per share for the year to September 30.

Shares in the bank were trading 4p higher at 874, bucking the downward trend in the banking sector.

Analysts agreed that the bank's across-the-board performance was very robust.

Phone insurance ringing profits

At Citizens, the US bank which is now wholly owned by Royal Bank of Scotland following the acquisition of the Bank of Ireland stake, pre-tax profits rose by 31% to £247m.

The Edinburgh-based bank warns of hard times ahead

Underlying profits in Direct Line, the bank's telephone insurance operations, rose to £64m, beating the highest expectations.

But one analyst warned of the unsustainability of Direct Line's profits.

"There is no doubt that Direct Line had a storming performance. But there must be some question about how sustainable this is going forward."

Despite the glowing reports, the bank cautioned that the outloook for the UK economy remains shaky, which would affect lending policy, credit quality and bad debt levels.