Royal Bank of Scotland will book lower bad debt charges than expected this year, helped by Ireland's improving economy, the bank has announced.

RBS said in a trading update that it "now expects to significantly outperform its previous guidance" of charges for setbacks totalling about £1 billion (€1.3 billion) for 2014.

"Previously disclosed uncertainties remain, particularly relating to conduct and litigation matters," it added however.

The bank said provisions set aside for impairment charges would be cut by about £800m in the third quarter, with £300m having been set aside for bad debt charges released from its Irish unit, Ulster Bank.

The Royal Bank of Scotland will release also £500m from RBS Capital Resolution, or its 'bad bank' created to dispose of unwanted assets.

The third quarter, or three months to the end of September, "has seen continued improvement in economic conditions and asset prices in our key markets, including Ireland", RBS said in today's statement.

"This has supported a further quarter of strong operating performance by RBS Capital Resolution," it added.

Exact figures will be announced on 31 October when RBS publishes its full third-quarter earnings.

The Edinburgh-based bank is 81% UK-state-owned after it was rescued with £45.5 billion of British taxpayers' cash during the 2008 global financial crisis, making it the world's biggest ever banking bailout.