However, the bank, which includes the NatWest and Ulster Bank brands, increased its personal and business banking (PBB) mortgage lending by £1.5bn over the last year.
In a sign that the competitive market was beginning to bite, its 2018 net interest margin of 1.98% was down by 15 basis points compared with 2017.
RBS acknowledged that it had “maintained a prudent approach to risk and pricing in a very competitive market”.
The lender has also focused on its digital capability with 61% of mortgage switching done digitally, compared with 51% in 2017.
Sales increasingly online
PBB now has 6.4 million regular mobile app users, 16% higher than 2017, with 72% of active current account customers being regular digital users, RBS reported.
Total digital sales increased by 19% representing 45% of all sales – four years ago this figure would have been 26%, it added.
It’s AI chat bot, launched in partnership with IBM Watson, now handles an average of 83,000 queries a week and has been rolled out to commercial banking.
And the lender is piloting Bó and Mettle as two standalone digital banks.
Bó is a digital personal bank targeted at helping people to manage their money better, while Mettle is a digital bank for business customers.
Pre-tax profit up
Overall, pre-tax profit was up to £3.36bn from £2.24bn in 2017, and almost £1bn in dividends was returned to HM Treasury which still owns 62.4% of the bank.
Speaking to BBC’s Today programme, RBS chief executive Ross McEwan refused to confirm or deny reports that Treasury representatives had been responsible for making decisions within its GRG arm which has faced legal action for its mis-treatment of customers.