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NatWest profits have rocketed SIXFOLD in the past year following savage cuts and a sharp fall in bad debts.

Owner Royal Bank of Scotland, which is 83% owned by taxpayers, said its high street business made £398million in the past three months – up from £64m in the same period last year.

The surge follows more than 1,100 job cuts in the period, part of a cull of 21,000 RBS staff since the start of financial crisis.

It also fattened margins by charging more for loans and credit cards, despite the Bank of England freezing interest rates at a record low of 0.5%. Despite that, it benefitted as fewer customers struggled to repay loans.

The bank still kissed goodbye to £251m in bad debts in the quarter but this was down from more than £400m in the same period last year.

Stephen Hester, RBS chief executive, told Your Money bad debts were lower than expected because unemployment had not risen as sharply as was feared. Record low interest rates also meant fewer families were struggling with mortgages.

Hester said: “People have also pulled their horns in, reducing debts where they can and, whenever possible, we’ve helped those in hardship.”

RBS courted controversy by setting aside £2.1billion to cover pay and bonuses for staff in its investment arm.

But this is 6% less than a year ago. Hester stressed “pay will follow performance”, which will mean many wheeler dealers can expect to enjoy much smaller bonuses this year.

“We have to strike a delicate balance between looking after taxpayers’ interests while paying enough to stop good people leaving,” the RBS chief added.

When the rest of the sprawling RBS empire is included, operating profits in the third quarter jumped by £526m to £726m. But that turned into a £1.4bn loss after its contribution to the Government’s Asset Protection Scheme and accounting changes to the value of its debts were taken into consideration.