StockMarketWire.com - Royal Bank of Scotland today reported group operating profit of £1.892bn in the year to end-December, up 11% on the prior year. The group made a pre-tax loss of £766m after charges for PPI and Greece.

Core RBS 2011 operating profit was £6.095bn, with return on tangible equity 10.5%.

Retail and Commercial (ex Ulster Bank) operating profit was up 9%, with a return on equity of 16.6%

RBS said it made further progress in rebuilding its financial resilience during 2011. The Group's key priority has been to strengthen its balance sheet and reduce risks in the face of difficult economic and financial market conditions as it works through the restructuring plan embarked on in 2009.

The Group's funded balance sheet decreased by £49bn to £977bn while risk-weighted assets pre-APS were reduced by £63bn, or 11%. In Non-Core RBS exceeded run-off targets, accelerating the derisking programme and thereby bringing forward losses on some positions. The Core Tier 1 ratio of 10.6% and tangible net asset value per share (TNAV) of 50.1p were broadly stable over the year, in spite of derisking costs and regulatory impacts. Liquidity metrics improved further, as short-term wholesale funding declined by 21% to £102bn and the loan:deposit ratio improved to 108%.

RBS showed a 22% increase in new loans and facilities to UK corporates, exceeding its Merlin 'stretch' lending targets. RBS new lending accounted for 48% of all SME lending reported by the Merlin banks, substantially above its customer market share.

Over the last three years RBS said it has sustained its Core customer franchises and rebuilt its financial resilience. Core pre-impairment operating profits have totalled £34bn, including £11.5bn from Global Banking & Markets (GBM).

Stephen Hester, Group CEO, said: "We have three jobs at RBS - to support our customers, to defuse our legacy risks and to rebuild a successful profitable bank. In 2011 we showed results across all three goals, though with much still to do."

"RBS Core profits - the ongoing bank - were £6 billion, comparing well with others and representing a return on equity of 10.5%. The reduction in our balance sheet since 2008 now exceeds £700bn with all other 'safety' measures improving strongly. And we provided service to more than 30 million customers worldwide. In UK lending support specifically, we provided £94bn gross lending to corporates (£41bn to SMEs) exceeding our targets and far exceeding any competitor bank."

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