Royal Bank of Scotland loss shrinks, calls bad debt peak

Royal Bank of Scotland shrank its 2009 operating loss to £6.2 billion, still one of the largest European banking losses for the year, despite a jump in bad debts which the bank says may now have peaked.                                           

That compares to a loss of £6.9 billion a year ago.                     

The bank, which had struck a cautious tone at the half-year, gave investors more room for hope on Thursday, signalling a "cautiously encouraging" outlook for the bank, though it said 2010 would be "a year of hard slog".                                           

Part-nationalised RBS said impairments rose sharply to 13.9 billion, from 7.4 billion a year ago, but appear to have peaked. Fourth quarter impairments fell 5% on the third quarter.

RBS posted a net loss attributable to shareholders of £3.6 billion, from 24.3 billion a year ago, the largest ever UK corporate loss. Analysts polled by Thomson Reuters IBES had expected a bottom line loss of 5.7 billion.                                           

RBS, 84% state-owned, has been a lightning rod for public anger over bank excesses and pay, but the bank said it had received government consent for a pared-down bonus pool and confirmed chief executive Stephen Hester would waive his bonus.             

Global Banking and Markets, RBS's investment bank arm, provided a rare bright spot for the bank at the half year and did the same again for the 12 months, swinging out of the red with an operating profit of 5.7 billion, compared to a year-ago loss of 1.8 billion, despite a "normalisation" of market conditions in the second half after a bumper start to the year.