RBS boosted as losses narrow

RBS posted attributable losses of 248m for the first quarter, a sharp improvement on the 765m deficit in the final three months of last year.

The bank, which is 83 per cent owned by the taxpayer after it was bailed out by the Government, said impairments on toxic debts fell 14 per cent from the previous quarter to 2.7bn as the global recovery continued.

It said better bad debt levels meant it was able to post an operating profit of 713m, compared with a loss of 1.4bn at the end of last year.

RBS said impairments on an annualised basis represented 1.8 per cent of loans in the first quarter, compared with 2.1 per cent at the end of last year.

The bank said trends in souring loans "were favourable", mainly in its core UK retail and US retail and commercial businesses.

While bad debts are expected to have peaked in 2009, RBS said impairments are "likely to remain high".

Chief executive Stephen Hester said impairments had fallen "a little faster than we had expected", but warned that there could still be snags ahead.

"We have made good progress but there is still significant work to be done," he said.

"I welcome the market's recognition of our progress to date, but the challenges we still face are real and should not be underestimated."

RBS has seen its share price improve fairly steadily for much of this year - rising above the 50p break-even mark for the taxpayer - but it has slipped back in recent days amid market turmoil sparked by the Greek debt crisis.