The private banking unit of RBS has reported an operating profit of £84m for the third quarter of 2018, an increase of 27% compared to £66m in the corresponding quarter of 2017.

The unit’s total income for the quarter ended 30 September 2018 stood at £195m, up 17% from £166m in the same period last year.

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Operating expenses at the private banking arm were £110m, up 7% on a year-on-year basis. The private banking arm is part of the group’s Commercial & Private Banking unit, which includes its Coutts UK brand.

Brexit contingency

RBS Commercial & Private Banking also announced it had set aside £2bn to help small businesses deal with uncertainties surrounding Brexit.

Earlier in the year the bank pledged £1bn to deal with such “growth funding”, of which £900m has already been spent.

Chief executive of the commercial and private banking unit, Alison Rose said, “The on-going Brexit process will also require businesses to think strategically and tactically about how to navigate what is still an uncertain period ahead.”

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On Thursday Bank of England Deputy Governor Sam Woods said that banks must build sufficient liquidity to withstand any Brexit-related disruption to financial markets.

Less positive results for parent group

The private banking division of RBS accounts for a fraction of the overall group’s £13bn revenue. RBS Group’s total income increased 15% to £3.64bn compared with last year, while net interest income dipped 6% to £2.15bn.

However, the profits were less than analysts had expected causing the share price to drop 5% in early trading.

The bank also said that it was setting aside a further £200m for PPI claims following what it called “greater than predicted complaints volumes”.

The group’s litigation and conduct costs increased to £389m from £125m a year earlier. Operating expenses increased 14% year-on-year to £2.44bn.

The banking group reported a common equity tier 1 ratio of 16.7% at the end of September 2018.