RBS shares opened almost 3.5 per cent higher as it reported a huge jump in profits in the third quarter, raising the possibility that the government’s 80 per cent share in the bank could be sold sooner than expected.
Profit before tax for the three months to the end of September came in at £1.27bn, up from £1bn in quarter two and a loss of £634m for the third quarter last year.
However, the bank added it had set aside £400m to cover "potential costs following investigations into the foreign exchange market". It has also put aside another £100m for PPI compensation, after complaints rose more than expected during the third quarter.
The bank has been benefiting from the continued recoveries of both the UK and Ireland, but it indicated it expects that effect to “moderate” in the mid-term.
RBS has been trying to restructure, reduce cost, and place more focus on its British retail operations.
Ross McEwan, chief executive, said:
In February I placed trust at the heart of my new strategy for our bank. We have taken the first steps towards that goal, with early progress in making RBS simpler, clearer and fairer.
We are reducing costs, and are on track to achieve our capital targets.
UK and Ireland are showing signs of growth, and impairment trends are significantly better than we had anticipated at the start of the year.
RBS has been one of the better performers this year, outperforming rivals in the stock market.