Royal Bank of
The 10% rise in the shares - adding pounds 3bn to the value of the taxpayer's stake - took place after it was forced to issue its figures a week early because of the bigger than expected improvement in profits to pounds 2.6bn for the first six months of the year.
A year ago, when
"Let me sound a note of caution. We are actively managing down a slate of significant legacy issues that will likely hit profits going forward."
RBS put aside a further pounds 150m to cover the cost of payment protection insurance claims and also faces potential bills from other issues such as legal action brought by investors relating to a cash call it conducted in 2008, just before its bailout.
Despite the rise in the share price to 360p, it is less than the 500p at which the taxpayer pumped in pounds 45bn to prevent the bank from collapsing during the 2008 crisis.
Another sign of the improving conditions was the move by the bank - the first in more than a decade - to write back provisions made for bad loans.
An impressive pounds 1.8bn fall in losses on bad debts to pounds 269m fuelled the profit rise.
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