The 81% state-owned lender revealed the outcome of a four-month review into its future as it said operating profits more than halved to £438 million in the third quarter on a year earlier.
RBS avoided a threatened carve-up and nationalisation of its problem loans, and will instead run down the assets at a faster rate.
New chief executive Ross McEwan has also started a full review of the lender which will report back in February, and is to speed up the sale of its Citizens US banking subsidiary, with a partial flotation next year.
Mr McEwan said the plan will "create a bank that can reward the faith of UK taxpayers and all our investors".
Chancellor George Osborne said RBS's new focus will see it being a "boost to the British economy instead of a burden".
RBS will make a substantial loss this year as the faster run-down of assets in the internal bad bank will cause an accounting write-down of up to £4.5 billion.