Britain's second-largest banking group recorded the largest ever profits for a UK bank of Â£7.9 billion, up 21 per cent from the previous year.
RBS reported income of Â£25.6 billion over the year, up 14 per cent year-on-year, and announced that it would be returning up to Â£1 billion to shareholders, raising its dividend to 72.5p a share.
Strong performance in the US drove its retail markets to a four per cent profit increase over the year.
However, the record figures came largely from the success of the bank's corporate banking performance, with its corporate operations reporting a 24 per cent profit increase to Â£5.2 billion. .
"We are particularly pleased with the geographic mix of our profits, 42 per cent of which come from our international operations," commented RBS group chief executive, Sir Fred Goodwin.
He added: "We believe that we have built a successful platform for future growth with a diverse range of opportunities in a number of geographies, and taken together with our strong capital base, continuing good credit metrics, and firm cost control, we remain optimistic about the future prospects of the group."
RBS is the third major UK bank to announce a profit rise over the past seven days, with Barclays announcing record profits of Â£5.28 billion and Lloyds TSB also reporting a four per cent profit rise to Â£3.47 billion.