New Zealander Ross McEwan was confirmed as boss of Royal Bank of Scotland today and immediately tasked with recovering British taxpayers' cash from one of the biggest casualties of the credit crunch.

McEwan, 56, whose promotion comes less than a year after he arrived to run RBS's retail arm, will take over in October.

He had been widely tipped to get the job after predecessor Stephen Hester was forced out by the UK government in June.

He will have the job of completing RBS's restructuring, ensuring its shares rise above the government's break-even price so the stake can be sold.

Finance Minister George Osborne welcomed the appointment and said McEwan had impressed with his vision of RBS "as a strong, UK-centred corporate bank", focused on supporting the British economy.

McEwan was appointed as RBS said it made a pretax profit of £1.4 billion sterling in the six months to the end of June, compared with a loss of £1.7 billion in the first half of 2012.

The bank made its first two consecutive quarters of profit since 2008, when it needed a £46 billion bailout from the taxpayer which left the UK government with an 81% stake. RBS said it expects its restructuring to be largely done by the end of 2014.

McEwan joined RBS as chief for its UK retail operations in September from Commonwealth Bank of Australia and is considered a safe, politically acceptable choice who will increase the bank's focus on retail and commercial banking. He is expected to continue slimming down its investment bank, as wanted by many politicians and regulators.

"It's really important for the UK economy to have this bank back up and running," McEwan said. "It's a major responsibility for me to guide this organistion to focus very strongly back on our customers and I'm looking forward to that opportunity."

He will be paid an annual salary of £1m, less than the £1.2 million Hester received. McEwan said he did not want to be considered for an annual bonus for the remainder of 2013 or for 2014.

RBS shares are still well below the price the government paid for them and which are valued at 407 pence on its books. A sale of its shares are seen as at least a year away, unlike Lloyds Banking Group, where the government is set to start selling its shares soon.

RBS said its capital strength continues to improve and expects to reach a core capital ratio under full Basel rules of more than 9% by the end of this year. It took an extra £185m provision to compensate customers for the mis-selling of payment protection insurance, taking its total bill to £2.4 billion.

In today's results statement, RBS said earnings at its investment banking business more than halved to £371m in the first six months of the year, from £1.1 billion a year earlier, as it continued to shrink the division. Revenues in the markets arm also dropped 21% quarter on quarter in the three months to June 30.

Its Ulster Bank business saw bad debts fall by 30% while the island of Ireland-based bank also narrowed interim losses.

The wider group cut losses on loans turned sour by 21% to £569m.

RBS also updated on plans to offload its 315 branches following the collapse of the sale to Santander. It plans to create a separate bank under the Williams & Glyn's brand by early 2015 and is currently seeking bids from private equity and institutional investors to invest as partners ahead of a likely flotation.

Despite access to cheap finance from the state's Funding for Lending Scheme, RBS said core net lending to small businesses fell 3% to £34.1 billion in the half-year, although net mortgage lending edged 0.2% higher to £98.1 billion.

It has already commissioned a review of its lending to small businesses and said it had written to 1,400 firms offering more than £1.4 billion of finance, with plans to extend this to all eligible SME customers by the end of the year.