RBS sees profits rise to £9.2bn

RBS is the UK's second-largest banking group behind HSBC

The Royal Bank of Scotland (RBS) has reported a pre-tax profit of £9.2bn for 2006 - 16% up on the previous year.

RBS, which also owns both NatWest and Churchill Insurance, is the UK's second-largest banking group.

The bank said its retail arm had done well in the UK and Europe with moves into the US also progressing.

Like other UK banks who have reported large profit rises, RBS said much of its gains had come from its investment and corporate banking division.

It added that 42% of its operating profit came from outside the UK.

Criticism

One of the strongest performances came in corporate banking, with profits up 20% to £5.55bn.

The UK retail division, which includes its NatWest and RBS High Street businesses, saw profits rise 2% to £2.29bn.

But amid criticism of the UK banking sector for charging unreasonable fees and penalty charges, RBS said that only £1 in every £33 of its profit growth was made in retail banking.

The amount of bad debt the banking group wrote off rose 15% to £1.34bn, with losses lower in the second half.

Credit card debts had stabilised and the growth in arrears on unsecured personal loans was slowing, it added.

RBS is the latest major UK bank to report a strong rise in profits for 2006.

On Wednesday, HBOS, the bank formed by a merger of Halifax and Bank of Scotland, reported a 19% rise in annual pre-tax profit to £5.71bn.

Barclays announced a 35% rise in pre-tax profits to £7.14bn for 2006, while Lloyds TSB's profits were up 11% to £4.25bn.

"With these numbers, RBS has made its own contribution to what has so far been a mostly glittering performance from the banks," said head of UK Equities at Hargreaves Lansdown Stockbrokers, Richard Hunter.