Royal Bank of Scotland reported a pre-tax profit of £961m for the third quarter of 2018, up 10.3 per cent on the same period last year.
But the bank saw bad debts rise from £143m in Q3 2017 to £240m in the third quarter of 2018. It also set aside an extra £200m for complaints related to the sale of payment protection insurance, taking its total provision to date to £5.3bn.
The bank saw revenues grow year-on-year, with third quarter income up by 15.4 per cent to £485m, which it attributed to indemnity insurance recoveries and reduced losses from disposals.
RBS noted growth in the popularity of its digital services, with 6.2m customers using is mobile app and digital sales within its personal and business banking division increasing by 22 per cent for the year to the end of September.
In its presentation to analysts, the bank said it would be focussed on growing lending within its target markets in the coming months with a continued focus on digital transformation, innovation and improving customer service.
Friday's results followed an announcement two weeks earlier the bank, which is 62 per cent owned by the government, would restart payment of dividends to shareholders for the first time since 2008.
Chief executive Ross McEwan said it represented a "milestone" in the company’s turnaround.
"We have created a smaller, safer bank that is generating more sustainable profits," he said. "Our capital position is above our target and we are also looking to return any excess capital as soon as possible to shareholders."