LONDON (AP) — Royal Bank of Scotland Group PLC reported an 18-percent rise in full year net profit yesterday as gains from the sale of non-key assets outweighed the impact of sub-prime-related asset write-downs, which the bank also raised further.

RBS, Britain's second-largest bank by market capitalisation, posted net profit of £7.3 billion ($14.5 billion) for 2007 — including ABN Amro Holding NV, the Dutch bank which RBS acquired in mid-October — compared with £6.2 billion in 2006.

Revenue rose 11 percent to £31.1 billion ($61.8 billion), boosted by gains from the sale of its stake in Southern Water Capital Ltd.

That offset an increase in the banks write-downs due to the impact of the US sub-prime housing crisis to £1.6 billion ($3.2 billion), up from a previous forecast of £1.2 billion ($2.4 billion) to the end of November.

The higher charge is largely due to a £456 million ($904 million) write-down on its exposure to US bond insurers after they suffered rating downgrades.

ABN Amro booked separate writedowns of £900 million ($1.8 billion). On a positive note, the bank raised its expected benefits from its purchase of the Dutch Bank to $3.5 billion due to higher cost and revenue benefits.

"We have secured a whole additional range of options for ourselves this year that will serve us well in 2008 and beyond," said chief executive Fred Goodwin. "We feel that we are well placed to deal with a broad range of market scenarios."

However, the mixed nature of the report was reflected in RBS's share price, which fluctuated between gains and losses after the announcement. The stock closed down 1.95 percent at 402 pence ($7.99).

Collins Stewart analyst Alex Potter said the results were "OK ... but risks remain."

Potter said the extent of the write-downs "appears reasonable in a sector context but clearly this is a highly subjective area".

Richard Hunter, an analyst at Hargreaves Lansdown Stockbrokers, said market sentiment toward RBS is likely to remain neutral.

"Bears of RBS will want to hear that the write-downs have finally been put to bed, which cannot yet be definitely confirmed," Hunter said. "Further out, the market will want to understand the full earnings impact and synergies from the successful ABN Amro acquisition."

A European consortium led by RBS and including Belgian-Dutch group Fortis and Spain's Banco Santander bought ABN Amro for $100 billion last year with the aim of breaking up the Dutch giant.

Goodwin said that RBS' portion of ABN Amro cost it $21.7 billion rather than the $24.5 billion it originally forecast, helped by the sale of ABN Amro's Brazil investment banking unit to Santander for $1.14 billion.

Overall, the bank said that earnings growth was driven by the bank's corporate banking business in its British home market, where operating profit rose 11 percent. Retail, especially savings and investment products, delivered 10 percent operating profit growth, while the investment banking business saw a two-percent decline in operating profit as a result of market conditions.