The bank, which is 84% state-owned, says it has turned itself around through “one of the most significant corporate restructuring” ever made.
RBS reported a pre-tax loss of £21m, after one-off costs, including £500m paid into a government-backed insurance scheme for bad debts.
However, the global recession recovery has seen those bad debts fall by 14% from the previous quarter to £2.7bn.
RBS chief executive Steven Hester says: “Economic recovery is benefiting our customers and thereby ourselves. Certain sectors, like real estate face a longer term work-out and there are ongoing losses for banks to absorb.”
The bank is currently implementing a five-year plan to restore it to “normality”.
Hester says: “Today we show that we remain on track for delivery of that plan. We have made good progress but there is still significant work to be done.”
Profits from RBS’s global banking and markets arm more than halved to £1.47bn from £3.47bn a year ago, partly due to disposals forced on it by European Commission regulators, including the sale of 318 branches and its card payment processing business WorldPay.
Last week Lloyds Banking Group, 43%-owned by the UK taxpayer, announced an unexpected return to profit in the first quarter, due in part to reductions in bad debts.