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Royal Bank of Scotland has drawn a line under a disastrous decade for the bank with its first dividend since its £45bn state bailout in the financial crisis and insisted it can cope even in a chaotic Brexit.

RBS will pay a 2p interim dividend and said it would build this over time to around 40pc of earnings.

Chairman Sir Howard Davies said he agreed with Bank of England Governor Mark Carney's assessment this morning that high street lenders would prove resilient even in a 'no deal' Brexit.

"Yes, banks can cope," he said. However he warned that ongoing Brexit uncertainty had led to "some pause in investment, particularly in larger corporates".

Sir Howard added: "We don't have any knowledge through our own business which tells us there's a disaster on the way, or which tells us there are no problems. We would say people would love to have more clarity and in the meantime they're sitting on their hands a bit."

RBS chief executive Ross McEwan said the dividend milestone came after a "long decade" for the bank. He added that the turnaround was almost "fully complete" after the bank had slimmed down and taken billions of pounds of misconduct charges. RBS shares rose 3pc to 257.6p in afternoon trading.

The company had been keen to reinstate the dividend as soon as possible after resolving a long-standing $4.9bn (£3.7bn) fine with US regulators for past misconduct in May. It was able to announce it after getting approval to do so by Bank of England regulators.

However Mr McEwan warned that a disorderly Brexit could derail plans for a big increase in payouts through a higher dividend or share buyback next year.

Markets Hub - Royal Bank of Scotland Group

"We need to take a look at that before making major capital distributions," he said. "We're eight months away so that is bearing down on the economy, [which] is running at its slowest rate for nine to 10 years and that really is around uncertainty."

Mr McEwan stuck a notably more downbeat note on the economy than his counterpart at Lloyds, Antonio Horta-Osorio, after its results earlier in the week.

He said RBS faced "a more uncertain and highly competitive environment" and expected writedowns on bad customer loans to increase from their current low levels. 

He also said a "very competitive" mortgage market was eating into margins. "You'd expect us to be at the cautious end as opposed to others and we'll remain there.

"We're holding high levels of liquidity, we're holding high levels of capital for any eventuality and that's what I think people should expect from a well-run bank."

RBS posted a 6pc fall in pre-tax profits to £1.8bn in the first-half of the year, down from nearly £2bn the previous year.

Profits were dented by a £1bn top-up to existing provisions to cover the US Department of Justice (DoJ) fine.

The bank said profits on lending decreased marginally over the period due to "competitive margin pressure", particularly in the mortgage market.

Ian Gordon of Investec said RBS's numbers were "excellent" after beating City expectations, adding it was "very encouraging" for prospects of higher payouts.

RBS's outgoing finance chief Ewen Stevenson said the bank would most likely look again at whether to increase payouts through a higher dividend or share buybacks after full-year results next February. The lender also needs to pass Bank of England stress tests later this year.

Mr Stevenson is joining rival bank HSBC as chief financial officer, with a start date still to be announced.

The interim dividend is subject to the bank finalising its penalty with the DoJ.

The reinstatment of a dividend should make RBS a more attractive prospect for investors and help support a further sale of Government-owned stock by the Treasury.

RBS is still 62pc owned by taxpayers, although the Government offloaded a 7.7pc stake in June at a £2bn-plus loss. Taxpayers are unlikely to see a profit on their rescue of RBS as the stock is well down on the 502p level at the bailout.