Part-nationalized Royal Bank of Scotland said on Thursday it had moved closer to being in a position for the government to start selling its 82 percent stake in the bank.
RBS made an operating profit of 3.5 billion pounds ($5.24 billion), up from 1.8 billion the year before and the highest since its bailout in 2008.
"It (the bank) is much closer now to being in the good financial health that would allow shareholders to receive a dividend and the government to start to sell its stake," Chairman Philip Hampton said in a statement.
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The bank said it had set aside a further 450 million pounds to compensate customers mis-sold insurance on loans and mortgages taking its total provision to 2.2 billion pounds. Some 1.3 billion pounds has already been paid out.
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RBS has also set aside 700 million pounds to compensate small businesses mis-sold complex interest rate hedging products.
The bank made a pretax loss of 5.2 billion pounds, hit by a 4.6 billion charge for losses on the value of its own debt.