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RBS's first-quarter loss triples

But the bailed-out bank confirms it is on the verge of paying off its government loans.

The bailed-out Royal Bank of Scotland (RBS) Group, which is 83 per cent owned by the taxpayer, has reported a loss of £1.54bn for the first quarter ended 31 March 2012. The group posted net interest income of £3bn (2011: £3.3bn). 

Operating profit before impairment losses came in at £2.5bn (2011: £3.08bn). The group's operating expenses were £3.98bn, a year-on-year decrease of 3 per cent.

Core RBS operating profit rose 46 per cent from the previous quarter to £1,667m, with retail and commercial businesses delivering £903m – down 13 per cent – while markets recovered to a profit of £824m, compared with a loss of £109m in the prior quarter. Non-core losses were £483m.

During the quarter, the group reduced its short-term wholesale funding by £23bn to £80bn, which compares with a liquidity portfolio of £153bn. The group loan:deposit ratio improved to 106 per cent.

Operating profit for UK retail was £447m (2011: £518m); the UK corporate division had £492m (2011: £617m); the wealth division reported £45m (2011: £70m).

International banking and US retail and commercial divisions posted operating profits of £97m (2011: £226m) and £102m (2011: £94m), respectively, while Ulster Bank reported an operating loss of £310m (2011: £365m).

Stephen Hester, group chief executive of RBS, said:

RBS has two jobs. Excellent progress continues in removing "mistakes" of the past. Non-core assets have fallen, again. Liquidity is stronger, again. Next week, the bank will repay the last of the UK government-backed funding support we received during the crisis. We will also recommence paying dividends/coupons on hybrid capital. These are important recovery milestones.

Our second job is running the new RBS well and better. Here the bank also shows continued progress, though held back by economic conditions. In January we announced a restructuring in our wholesale banking activities and this is proceeding well. The markets business rebounded to a 21 per cent ROE in the seasonally strong Q1 whilst allocated resources were reduced. Retail and commercial businesses remain solid - still impacted by subdued income trends and Irish losses, but cash-generative and competitively robust.