RBS profits double to £1.6bn

"The current share price is about half the level needed by the government to break even, which leaves the taxpayer facing a multi-billion pound loss on the bailout."

This is the bank's second consecutive year of profitability since 2007 and its performance will allow it to pay a better than expected dividend, with £977m returning to the Treasury.

The bank will pay a final ordinary dividend of 3.5p per share, and a 7.5p special dividend.

RBS recently announced plans to accelerate privatisation of the bank, which remains 62% state owned. However its shares, at 242p, remain well below the 502p paid by the government in 2008.

Despite Chancellor Philip Hammond announcing that the government hopes to cease ownership of the bank by 2024, a Treasury spokesperson confirmed that it will "only sell RBS shares when it represents value for money to do so".

Recent research from Positive Money found that fewer than one in 10 Britons believe that the UK Government should sell its stake in RBS within the near future.

Over a third of respondents said the Government should hold on to its stake in RBS, in the hope that the value of the shares in the bank recover, and then they can sell it for a higher price later on. A further third believe the Government should hold on to its stake in RBS for the foreseeable future and run it as a nationalised bank.

Asked whether RBS would be run in the interests of the public if it returns to private ownership, just 12% said they think it would.

Fran Boait, executive director of Positive Money, commented: "Another dividend payout should cast even further doubt on the government’s plans to sell the public’s majority stake in RBS at a loss.

"It’s beyond clear that an RBS fire sale is not in the public interest. The government must rethink the sell-off and consider how a publicly owned bank can best benefit the whole country."

Laith Khalaf, senior analyst at Hargreaves Lansdown, added: "RBS is pulling all the levers within its reach, but political and economic conditions leave sentiment towards the bank at a low ebb.

"Low interest rates continue to be a headwind for the core business, and with economic growth slowing, the prospect of some relief from tighter monetary policy has receded.

"RBS will continue to strip out costs, partly through digitalisation, but there’s only so far this can take the bank’s profitability. Indeed RBS has warned that thanks to low economic growth and ongoing political uncertainty, it may not meet its 2020 target of getting costs below 50% of its income.

"Brexit of course casts a shadow over a bank like RBS, which is deeply plugged into the UK economy, and therefore sensitive to any shocks which mean customers can’t pay back their loans. The volatile political situation is particularly keenly felt by the RBS share price because the Labour party has proposed breaking the bank up to create a number of local public banks.

"RBS has made great strides forward in recent years, but its transformation from an ugly duckling into a beautiful swan won’t be complete until economic conditions improve, and the government stake in the bank is eliminated.

"To that end RBS may now start to use its excess capital to buy shares back from the Exchequer, though the ball is in the Treasury’s court. The current share price is about half the level needed by the government to break even, which leaves the taxpayer facing a multi-billion pound loss on the bailout."