The Royal Bank of Scotland has revealed record profits of £7.9billion, up 21% on last year’s results.

The bank said it had benefited from strong corporate lending and from good consumer banking results – particularly in its US business – leading to the large increase in its profits.

The bank said it had problems with bad consumer debts, and this had led it to set aside funds of £1.17bn in total to cover the debts. The bank claimed its problems with the debts could be easing off, although its unsecured personal lending increased by 10% to £13.3bn in 2005.

Nick White, Head of Personal Finance at uSwitch.com, said: “Once again, we are seeing the impact of the ‘consumer credit boom’ of the last few years on the balance sheet of the second largest bank in the UK.”

However he added: “We must not forget that behind the numbers on the balance sheet lie the lives of thousands of people who are struggling to cope with the ever-increasing burden of debt. With consumer debt escalating to over £1.1 trillion in the UK, and the latest figures for credit card debt alone standing at £68.4 billion, there is an urgent need for a review of the lending practices employed by the high street banks.”