Royal Bank of Scotland, which owns Ulster Bank and First Active, has said it is performing well and will deliver earnings growth this year in line with market expectations.

In a trading statement the group said it expects to achieve good growth in income. In addition to organic growth, the bank's high level of efficiency will yield the benefits from recent acquisitions.

RBS group chief executive, Sir Fred Goodwin, added that the bank saw no acquisitions in the near future and raised the prospect of a share buyback.

Speaking to reporters yesterday, Sir Fred, said: "We've fulfilled all of our acquisition priorities . . . as we've been indicating for some time there are no immediate acquisition priorities or opportunities on the landscape."

Sir Fred said as the bank's capital ratio is improving share buybacks were on the cards. "Let's wait till we get to that point, but with every day that passes that option becomes closer," he said.

RBS said it expected its tier 1 capital ratio to exceed 7 per cent at the end of the year, improving from 6.6 per cent at mid-year, reflecting strong capital generation.

RBS has said previously that buybacks are unlikely when the ratio is below 7 per cent, but they are possible at between 7 and 8 per cent and probable above 8 per cent.

In the statement the bank said that Ulster Bank has seen continued strong growth in good market conditions and that the integration of First Active with Ulster Bank remains on track.

Its corporate banking and financial markets divisions continued to perform strongly with good growth across a range of customers and products have boosted income.

Its US bank, Citizens, continues to perform well despite the reduction in margin caused and is making good progress on the integration of Charter One.

RBS Insurance has continued to grow its income in very competitive conditions in motor insurance and has completed the integration of Churchill. The group expects that Churchill's profit in 2005 will be more than double its 2002 profit, its last year before it became part of RBS.

"Whilst market conditions in the UK have clearly changed during 2005, it is pleasing that as a result of our income streams, the group expects to be able to continue to deliver good results," Sir Fred said.