Royal Bank of Scotland reported a 12 per cent rise in annual profits that met forecasts and said it was well-placed to cope with an uncertain economic outlook.
Britain's second-biggest bank raised its 2002 dividend by 15 per cent to 43.7 pence, counter to a number of dividend cuts in recent days.
Royal Bank has reaped the benefits of its takeover of NatWest bank in 2000, which produced significant cost cuts and boosted income.
Pre-tax profits, before exceptional items, for the year ended December 2002 rose to £6.45 billion sterling, from £5.78 billion a year ago.
Royal Bank of Scotland's bad-debt provisions rose to £1.29 billion from £984 million a year earlier, but the group said its credit quality remained sound.
Royal Bank shares closed down 0.8 per cent at 1,399 pence on yesterday. It has outperformed the DJ Stoxx European bank sector by about 8 per cent over the last year.