ADAM & Company, the RBS-owned private bank employing 90 in Edinburgh, has reported a 45 per cent hike in pre-tax profits to £16.5million.

The bank's return to robust health saw bad debts fall from £7m to £1m last year and enabled it to pay a £25m dividend to its taxpayer-owned parent.

That came on the back of major investments which saw Adam slash operating costs and catch up with the digital age by offering full transactional banking.

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Graham Storrie, managing director, said 56 per cent of clients had tried the online offering and almost four-fifths of those were active users. "If you go back two and a half years, we had a very archaic look-up-only online offering. Now we have got a very modern proposition."

Adam's clients must have £250,000 of investable assets to dodge a £40-a-month fee but can access financial planning and investment management as well as banking. Former Adam chairman Ray Entwistle is launching Hampden, Scotland's first new bank since the financial crash, later this summer but it will offer a purely banking service, while law firm Anderson Strathearn has recently poached Adam's former investment chief Harry Morgan to grow an asset management arm. Mr Storrie said: "It is a very competitive market-place."

Adam's big sister bank Coutts last month revealed it is having to warn clients of a 'suitability review' of any investments sold before November 2012 — but the review is said not to apply to Adam & Co, which employs a further 80 in London.

Mr Storrie said the bank had won several fund management awards in the past year.

The bank's loan book fell from £749m to £681m while customer deposits slipped from £2 billion to £1.7bn because of clients paying down debt. Net interest income fell from £34m to £30.4m and fee income from £16.6m to £15.3m.

Of the £80m commercial property loan book, more than a quarter is still "non-performing". Mr Storrie said this was due to "one or two large historical cases".