Royal Bank of Scotland, which this week completed Europe’s largest ever rights issue, said trading in the first half of the year has been in line with previous guidance but sees no immediate end to the credit crunch.

Sir Fred Goodwin, chief executive, said; “It’s difficult to see it will take less than 12 months to work its way through. There's still more bad news than good news".

RBS, which raised £12 billion earlier this week, said writedowns “are expected to remain within the estimates indicated” and that its loan portfolio remains “robust”. In April, RBS forecast a £5.9 billion pre-tax hit from its credit market exposures this year

Writedowns on UK personal loans have continued to fall, but impairment charges on a troubled portfolio of US retail loans made through its Citizens subsidiary have kept on rising. The portfolio of broker-originated loans made at higher than usual loan-to-value ratios is around $8 billion, or 8 per cent of Citizen’s loan book.

“We are open for business, but it’s not business as usual. It’s clear that things are changing out there,” said Sir Fred, adding that a UK housing market downturn is likely to take at least a year to work through. However, he noted there were“chinks of light” coming through in some of RBS's capital markets businesses, such as interest rates, currencies and commodities.

RBS did not provide any further details on the sale of its insurance operations, which include Direct Line and Churchill, which were put up for auction in April with an expected £7 billion price tag as aprt of its efforts to rebuild its capital base. “We’re in discussions with a variety of potential purchasers", said Sir Fred. "There are a number of people who would all ostensibly be good owners and capable of paying the price that we’re looking for. We had a price in our minds that we were looking for at the start of the process and that hasn’t changed. Its the type of business that doesn’t come on to the market very often".

The bank is also selling Angel Trains, the railway leasing business acquired last year from ABN Amro.

On the integration of the Dutch bank, Sir Fred said that cost and revenue synergies were “marginally ahead” of the guidance it gave at its April 22 trading update.

Shares in RBS fell 2.75p to 230.5p.

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