The Edinburgh-headquartered bank plans to change its parent company name to NatWest Group later this year, from RBS Group, pointing out that 80 per cent of its customer base falls under the NatWest remit.
While customers will continue to be served through the existing high street brands, including Royal Bank of Scotland, which has existed since 1727, the decision to drop the RBS Group name could prove controversial with some observers north of the Border, given NatWest is predominantly an English-focused brand.
The bank stressed that the name change would have no impact on jobs.
Chairman Howard Davies said: “The board has decided that it is the right time to align the parent name with the brand under which the great majority of our business is delivered.
“Customers will see no change to products or services as a result of this change and will continue to be served through the brands they recognise today.”
He added that the registered office will remain in Edinburgh, with no plans for "unscrewing any brass plaques at this point". Although a second independence referendum in Scotland could change this, he said.
RBS posted an operating profit before tax of £4.2bn for 2019, up 26 per cent on the year before. It banked an attributable profit of £3.1bn, an increase of 93 per cent, year-on-year.
The lender is proposing a dividend payment for 2019 of 8p a share, comprising 3p a share in a final dividend and 5p in a special payment.
The UK government still owns 62 per cent of the bank, making the payment to Treasury coffers around £600m. With the interim dividend paid out earlier this year, it means the taxpayer has been handed £1.7bn so far this year.
RBS chief executive Alison Rose, who was overseeing her first set of full-year results, said: “Today marks the start of a new era for our bank as we announce our new purpose – to champion potential, helping people, families and businesses to thrive.
“These results are a reminder of the strong foundations we have built. Our profits are up, our capital position remains strong and this year we will have returned a further £2.7bn to our shareholders.
“But our performance doesn’t yet match the potential that exists in this bank. We can deliver so much more.
“The way people live their lives has changed. And their expectations of companies are changing too; looking for us to deliver not only financial performance but a positive contribution to society; benefiting customers and communities as well as shareholders. The future of this bank depends on us successfully delivering on both.
“I am hugely excited about the opportunities that lie ahead of us.”
Rose also announced cost cuts of £250m, following the closure of 215 branches over the year.
Donald Brown, senior investment manager at Brewin Dolphin, said: "Since turning a corner last year, it has been steady as she goes for RBS – today’s results are a continuation of that story and shareholders will welcome the Valentine’s gift of a 5p special dividend.
"An increase in profits is good news for investors, but employees will be fearful of yet further job cuts in the investment banking division while re-branding the parent company to NatWest is clearly another way of making a break with the past.
"The net interest margin, however, remains under pressure and there is a distinctly cautious tone from management about the outlook for the year ahead. A very different bank to what it once was, RBS remains on the road to recovery but the government’s stake will likely continue to hang over the share price."
Richard Hunter, head of markets at Interactive Investor, noted: "The constant and necessary reinvention which has plagued RBS over the last decade shows no signs of abating as the new chief executive takes the reins.
"The newly proposed measures are far-reaching and range from the intangible – a transformation to a 'purpose-led' bank and the re-emergence of the NatWest name for the group, 20 years after the hostile takeover by RBS – to the tangible, such as the large scaling down of the NatWest Markets business and a committed focus on cost reduction.
"On a positive note, some of the heavy lifting has already been done."
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: "An imminent name change means recently installed CEO Alison Rose has been quick to stamp her mark on RBS. However, some pretty gloomy guidance suggests she’ll have her work cut out.
"Currency gains are flattering these results, and beneath the surface the numbers are less easy on the eye. Bad loans have spiked and the bank reckons that could get worse. Meanwhile a highly competitive mortgage market is squeezing the turn the bank can make on lending and some fairly impressive loan growth is failing to make up the shortfall. Restructuring costs remains substantial as well and look set to stay so.
"The good news is the bank looks to have room for significant cost savings going forwards, boosting profits, and remains awash with capital despite a substantial increase in dividends paid to shareholders. Despite the competitive backdrop the group continues to grow its share of the key mortgage market, while plans to streamline NatWest Markets have the potential to boost returns in the investment bank, which has been a serial laggard in recent years.
"The bank Rose has inherited certainly isn’t a finished article, and there’s still the issue of the government’s sizeable stake to negotiate. However, RBS does have potential, and with the emergency surgery complete the challenge is one of incremental improvement rather than wholesale transformation."
Russ Mould, AJ Bell investment director, said: "Not even the combination of a name change to NatWest Group, a meaty increase in the dividend and a laudable attempt to do its bit for the move toward a carbon-zero world can conceal how Royal Bank of Scotland’s profit outlook is a cautious one as the bank joins rival Barclays in pushing back when it hopes to meet its long-term profit goals."