The Royal Bank of Scotland has announced an unexpected return to profit in the first three months of 2010.

The bailed-out bank, which is 83 per cent owned by the taxpayer, was able to post an operating profit of £713 million, compared with £179m this time last year.

According to RBS, first-quarter results were boosted by impairments on bad debts falling 14 per cent from the previous quarter to £2.7 billion, as the global recovery continued. Its investment banking arm remained the biggest driver of operating profit

Stephen Hester, group chief executive said the profit is a result of a five year plan to ‘turn RBS from a problem into an opportunity’ and ‘one of the most significant corporate restructurings ever undertaken’.

“The year has begun for RBS broadly as we had expected. Economic recovery is benefiting our customers and thereby ourselves. However, we remain conscious of the economic imbalances still to
be tackled globally and of the risk of specific events (such as those affecting Greece), with the associated danger of contagion.

Although he added a word of caution, noting that there is still a lot of work to be done.

“So, as 2010 unfolds we remain optimistic for RBS and the prospects of achieving the Plans laid out and our vision to restore RBS to an admired and high performing institution. Progress to date should
give encouragement, but there is no complacency within RBS as we continue the work across our businesses.”

However, despite the bank reporting its first quarterly operating profit for a year, shares fell by more than 5 per cent this morning.

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