RBS has returned to profit in the first-half of the year, despite a big one-off charge due to a US legal case.
It made a profit of £939m in the first six months of the year, a big turnaround from the £2bn loss in the same period of 2016.
The bank incurred legal costs of £396m, largely related to a settlement over mis-sold US mortgage products.
RBS also said it was talking to Dutch authorities about locating its European headquarters in Amsterdam after Brexit.
The operation would require about 150 staff, with some relocated from London and others hired locally.
RBS already has a licence to operate in the Netherlands, which is a legacy of its purchase of the Dutch bank ABN Amro in 2007.
The move would be unlikely to have any significant impact on the company's corporate headquarters in Edinburgh.
Chief executive Ross McEwan described the results as "encouraging" and told the BBC's Wake up to Money programme that "the government is getting a much better bank... the core of the bank is delivering".
The government still holds a 73% stake in RBS.
On the UK economy, Mr McEwan said he saw signs of strength, with net lending growing 4% in the first half of the year.
He said UK retail customers were still spending, but big business customers were being more cautious about making investments.
Last month, RBS agreed to a £3.65bn settlement for its role in the sale of risky mortgage products in the US before the financial crisis.
The settlement was with the US Federal Housing Finance Agency, and part of the cost of that deal is reflected in the latest results.
A separate deal with the Department of Justice is expected later this year.
The cost of that settlement is likely to push RBS into a loss for the full-year.
Adding to the loss will be costs incurred from boosting its financial reserves and further charges related to reorganising the business.
In its latest results, RBS said the Financial Conduct Authority was investigating money laundering at the bank. RBS did not give any further details.
Investors welcomed the latest figures from RBS, and sent shares more than 3% higher.
"Cost cutting is doing the job, while fewer conduct charges is helping a lot," said Neil Wilson, senior market analyst at ETX Capital.
"A looming fine for mis-selling mortgage backed securities in the US casts a long shadow but the omens are looking a lot more promising for a return to private ownership. Based on these figures the return to genuine sustained profitability in 2018 appears a lot more realistic."
Ian Gordon, banking analyst at Investec was more cautious: "For all the welcome progress, we believe that RBS very much remains a multi-year recovery story."
He noted that the expected annual loss this year will be the 10th in a row.