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Royal Bank of Scotland has reported a nine per cent rise in operating profit for 2007 to £10.298 billion, despite being buffeted by subprime winds.

The result is in line with analysts' expectations of £10.3 billion, according to a consensus forecast supplied by the company.

The US subprime crisis in addition to "goodwill payments" to customers claiming back overdraft fees led to a £1.163 billion writedown for the bank over the year, the bank said.

But the losses were offset by strong performances in UK corporate banking, retail, Ulster and wealth management.

Sir Fred Goodwin, chief executive, said: "Whilst the future seems as difficult as ever to predict, it is clear that we enter 2008 with real momentum behind our organic growth, and with our product range, distribution capabilities and customer franchises materially enhanced."

Royal Bank of Scotland (RBS) added its October 2007 acquisition of Dutch bank ABN Amro with Fortis and Spain's Banco Santander was a success so far, with the integration of ABN Amro's business units in North America, Europe and Asia progressing well.

RBS said it now expected to achieve cost savings totalling €1.596 billion (£1.21 billion) in three years, 21 per cent more than the bank had originally hoped.

The bank, Britain's second largest, has announced a total dividend increase of ten per cent, to 33.2p.

Shares in RBS were up 0.61 per cent in morning trading to £4.12 on the London Stock Exchange.