ROYAL Bank of Scotland chief Ross McEwan has left the door open to yet more branch closures as the state-backed lender reported a third consecutive quarterly profit for the first time since 2014.

But he refused to be drawn on whether the bank would support an increase in interest rates.

Mr McEwan’s comments came as the bank, 71 per cent-owned by UK taxpayers, made a bottom line profit of £392 million for the quarter ended September 30, having lost £2.5 billion at the same stage last year. The bank remains on track to record what would be its first annual profit in more than a decade in 2018. Provisions for an expected multi-billion dollar fine in the US over the sale of residential mortgage-backed securities make that an unlikely prospect this year.

Responding to a question about branch closures, New Zealander McEwan told reporters that while branches were the main point of contact a decade ago, more than one million customers now use the bank’s digital app. And NatWest customers can now apply for a completely “paperless mortgage”.

Mr McEwan said: “Our customers are changing the way they interact with the bank.

“We’ve seen that over the last, probably even four years accelerating, with less and less people needing physical attention through the branch network.” He added: “Branch usage is down 40 per cent since 2014… so we are reshaping the branch network and will continue to do so.”

Speculation has been mounting in recent weeks that the Bank of England’s Monetary Policy Committee will vote to increase interest rates for the first time since before the global financial crash when it meets next month. This has come as concerns grow over the surge in inflation sparked by the fall in the pound following the Brexit vote. But while Lloyds Banking Group chief executive Antonio Horta-Osorio backed calls for a rate rise earlier this week, Mr McEwan said: “We’ll leave that to the Bank of England.”

Observing that he has been “pleasantly surprised” at the resilience of the economy against a backdrop of uncertainty, he added: “Whilst we have a bank view, we do run all our numbers through an economic consensus. And the last time we looked, there was probably a 60 per cent or 70 per cent chance of a rate rise. It will be first rate rise in over 10 years, and I think we have got be very sensitive to that when do rates start rising it is going to be very good for those who have suffered quite badly from deposit rates and savings rates being so low for so long, and that it does start to impact those have borrowings. Remembering, though, that 88 per cent of our mortgage customers are on a fixed rate.”

Asked whether small business customers were turning away from the bank following the latest criticisms levelled at its Global Restructuring Group, Mr McEwan said the bank now has a robust complaint-handling system in place, headed by an independent High Court judge. He said this addressed one of the main concerns raised by the two reports on GRG by the City watchdog.

“We are the biggest backer of business in the UK and we want to continue doing that,” he said.

Meanwhile, as concern grows over rising levels of consumer debt, Mr McEwan said the bank has stepped back from the credit card market to focus more on secured lending. “When you are seeing 10 per cent growth in an unsecured credit card market, with wage growth of two per cent, at some point in time it needs to slow down,” he said.

Elsewhere, Mr McEwan said there was no further update on its moves to settle claims over the sale residential mortgage-backed securities with the US Department of Justice, beyond signalling his confidence that an agreement will be reached before the end of the year.

And he confirmed that the European Commission had formally approved its package of remedies over its Williams & Glyn branch network, which will see the bank take steps to boost competition in the banking market for SMEs instead of selling off the 300 branches. The bank had been ordered to offload the network as a condition of its bailout by the UK Government.

On cost cuts, Mr McEwan said the bank has so far taken out £708m of costs this year, and is on track to remove costs by £750m for a fourth consecutive year. He said the lender also remains on schedule to close Capital Resolution, its so-called bad bank, by the end of the year, “with an £11 billion risk weighted asset reduction year to date”.

Meanwhile, Mr McEwan said the allegations of sexual harassment at the bank which emerged this week were “absolutely appalling – that will not be tolerated at this organisation”. He noted that the bank has established a whistle-blower service to handle such claims independently.

Separately, he refused to comment when asked if he had been approached to take the top job at National Australia Bank. “I’m happy doing what I’m doing here,” he said.