LONDON (AP) — Taxpayer-owned Royal Bank of Scotland is reporting a third consecutive quarterly profit after it increased lending and cut costs.

RBS, bailed out by the British government during the 2008 financial crisis, on Friday posted third-quarter net income of 392 million pounds ($514 million). This compared to a loss of 469 million pounds in the year earlier period.

The bank says net lending increased by 3.4 percent for the year. Operating expenses fell 26 percent to 2.1 billion pounds as RBS reduced spending on reorganization and set aside less to cover past conduct issues.

CEO Ross McEwan says RBS is on track to meet its annual financial targets after it has "grown income, reduced costs, made better use of our capital and continued to make progress on our legacy conduct issues."