Royal Bank of Scotland bucked the trend in the banking sector today after seeing half-year profits rise.

The lift came despite a sharp increase in the amount set aside to cover bad debts.

The charge for bad debt provisions soared 66 percentage points above a year ago to £611 million in the first half of the year, due to "a number of specific corporate situations" and an increase in lending.

But chairman Sir George Mathewson said overall credit quality at the bank was strong. He said RBS had benefited from a strong increase in income growth and the benefits of its takeover of NatWest two years ago.

The bank, which also owns the Direct Line insurance business, said the integration of NatWest's operations led to savings of £618 million in the first half.

Pre-tax profits before one-off and integration costs increased 15 per cent to £3.15 billion. Bottom-line pre-tax profits rose 12 per cent to £2.33 billion.

Shares in the major banks have tumbled recently on concern about the impact of the economic turbulence in Latin America and the collapse of corporate giants such as Enron on bad debt charges.