Royal Bank of Scotland (RBS) has set aside a further £780m to cover the costs of conduct issues, including the PPI mis-selling scandal.
The news was released alongside its third-quarter results which demonstrated that the bank's recovery was continuing to build despite the burden of extra provisions for past mistakes.
RBS said it was taking a £400m charge in anticipation of regulatory action over the alleged manipulation of foreign exchange markets - following a similar move by rival Barclays 24-hours earlier.
It added £100m to its bill for PPI - taking the total to £3.3bn - citing "higher than expected reactive complaint volumes."
The bank, which is 80% owned by the taxpayer after its rescue during the financial crisis, said its profits for the third quarter were up to £1.27bn, compared with a loss of £634m in the same period last year.
It is the first time the bank has reported a profit for three quarters in a row since its bailout.
RBS also confirmed it was retaining Ulster Bank following a strategic review of the business.
Chief executive Ross McEwan said: "In February I placed trust at the heart of my new strategy for our bank.
"We have taken the first steps towards that goal, with early progress in making RBS simpler, clearer and fairer.
"We are reducing costs, and are on track to achieve our capital targets.
"UK and Ireland are showing signs of growth, and impairment trends are significantly better than we had anticipated at the start of the year.
"We have confirmed today that Ulster Bank remains a core part of our bank. We have a good market position and believe that, with investment, Ulster Bank can deliver attractive shareholder returns in the future.
"But we know we still have a long list of conduct and litigation issues to deal with and much, much more to do to restore our customers' trust in us."
The RBS share price rose 3% in early trading on the FTSE 100 in the wake of the update.
