RBS has announced an operating profit before tax of £2.7 billion for the first half of the year, up almost 50 per cent.

Attributable profit was £2bn, up from £888 million this time last year.

Return on tangible equity was 12.1%, compared to 5.3% a year ago.

In the second quarter, operating pre-tax profits reached £1.7bn, while attributable profit was £1.3bn.

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The bank has announced a special dividend of 12p per share, in addition to an ordinary interim payment of 2p per share.

An estimated £1bn of the £1.7bn payout will be returned to the UK taxpayer, owing to the Government's stake in the bank.

The bank said the results had been positively affected by the merger of Alawwal Bank and Saudi British Bank.

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Chief executive Ross McEwan said: "This is a solid set of results in challenging market conditions.

"We have delivered our largest half-year profit in more than a decade and have announced a further £1.7 billion in dividends to shareholders, of which more than £1 billion will go directly to the UK taxpayer.

"Given the uncertain and competitive environment, we are focused on the areas we can control; costs are down, capital and liquidity are strong and we continue to grow lending to the real economy."