Net profits were £257m in Q2 2010 compared with a loss of £248m in Q1, making attributable profit of £9m in the first half, compared with a loss of £1bn a year earlier.
The bank also increased its net UK mortgage balances by up 20% in Q2 2010 to £2.4bn as it returned to profit.
Gross new lending was £4.9bn and in Q2 RBS helped more than 10,000 first time buyers, 52% more than in the corresponding period of 2009.
With net lending of £3.2bn between March and June 2010, RBS remains on course to achieve its £8bn mortgage lending target for the March 2010 to February 2011 period.
But it reported the mortgage market as showing some signs of weakness in Q2, with application volumes 21% lower than a year earlier, although acceptance rates remain high at around 90%.
Redemptions have increased, reflecting the roll-off of a large number of customers from fixed term mortgage deals, as well as greater competition in the market.
Stephen Hester, chief executive at RBS, says: “RBS Q2 results show that the bank remains on track to meet the far-reaching goals of our five year restructuring plan which commenced last year. We are making good progress with disposals and overall business restructuring. Our customer base is solid and I believe that the future potential of RBS for all its constituencies becomes increasingly visible.
“The rebuilding of RBS is a marathon and not a sprint. I am pleased with the steady momentum in our core customer-facing businesses. However, our path to the sustainable profitability and other improvements we target will not be linear, given the scale of management action in our core businesses, continuing risk reduction in non-core and the impact on both of a changeable economic and regulatory environment.”
The Group’s core tier one capital ratio stood at 10.5% at June 30.
RBS recently passed the EU-wide stress tests which confirmed the bank remains well capitalised.