RBS reports £2bn pre-tax profit

The bank also reported an operating profit of £267m in Q3 compared to the £726m in Q3 2010.

Retail banking revenues were steady at £4.1bn but bad debt charges were cut to £1.5bn, down £728m on the previous quarter.

The third-quarter profits compare with a £678m loss Q2 2011. For the first nine months of the year RBS made pre-tax profits of £1.2bn.

RBS said it had cut its exposure to holdings of sovereign debt from Portugal, Italy, Ireland, Greece and Spain to £772m at the end of September, from £4bn at the start of the year.

Stephen Hester, chief executive of RBS, said: “RBS’s third quarter results show the improved strength and resilience we have built up since 2008.

“They also highlight the external pressures facing banks, and economies more broadly, which are making the road to recovery longer and bumpier than hoped for.”

The UK government owns 84% of RBS after having to rescue the bank with a taxpayer-backed bailout in 2008.