StockMarketWire.com - Royal Bank of Scotland declared a special dividend after its annual profit more than doubled, putting more distance between the lender and a decade of turmoil that followed the 2008 financial crisis.

On the negative side, RBS warned that its 2020 target of achieving a cost-to-income ratio of less than 50% was 'increasingly challenging' with the risk being to the downside.

It also warned of increased loan impairments amid a gloomier economic outlook.

Pre-tax profit for the year through December was £1.62bn, up from £752m on-year.

Operating profit rose 50% to £3.36bn.

RBS declared a final dividend of 3.5p per share and a special dividend of 7.5p per share.

'2018 was a year of strong progress on our strategy -- we settled our remaining major legacy issues, paid our first dividend in ten years and delivered another full year bottom line profit,' chief executive Ross McEwan said.

'However, while our financial performance is more assured, we know that a significant gap remains to achieving our ambition to be the best bank for customers. We are fully focused on closing this gap.'

Turning to 2019, the bank said it expected to incur strategic costs of around £2.5bn across 2018 and 2019, of with £1.0bn had been booked in 2018.

Operating costs were targeted to fall by £300m, excluding one-off items.

'2018 saw a continuation of the period of benign economic conditions with low defaults and strong cash recoveries,' RBS said.

'However, the potential impact on the real economy of ongoing political uncertainties and geopolitical tensions could affect our credit loss outcome.'

'As a result, impairments are expected to increase in 2019 but remain below our through-the-cycle loss rate assumption of 30-40 basis points.'

'The threat from single name and sector driven events remains.'

Over the medium term, RBS said it remained comfortable with its 2020 target of a return on tangible equity of more than 12%.

'We recognise our 2020 target of a cost:income ratio of less than 50% is increasingly challenging for the business to achieve with the risk being to the downside,' it added.

'This reflects the ongoing economic and political uncertainty and the additional ongoing costs associated with ring-fencing and Brexit.' Story provided by StockMarketWire.com