RBS First-Quarter Losses Widen To £968m

State-backed Royal Bank of Scotland has posted a loss of £968m for the first quarter of 2016.

The loss compares to a shortfall of £459m in the same period last year and includes payment of £1.2bn to the Government to cancel its Dividend Access Share (DAS) - which acted as a block on pay-outs to ordinary shareholders.

Stripping this and other smaller charges out, the lender - which includes NatWest - reported a pre-tax operating profit of £421m, up from just £37m in the first quarter of 2015. Shares fell more than 4%.

RBS remains 73% owned by the taxpayer after its £45bn bail out during the financial crisis.

The payment of the DAS, which has already been announced, marks the latest step in the lengthy process of trying to return the lender to being a fully private sector business - which can pay dividends to its shareholders. It had not paid a dividend since 2008.

RBS chief executive Ross McEwan said: "Today's results show the strength and resilience of the bank we are fast becoming.

"This bank has great brands and great market positions and, piece by piece, we are building a solidly performing, profitable bank doing great things for customers and returning value for shareholders."

The results come a day after the group confirmed a Sky News report that it might miss a deadline for selling more than 300 branches that it is spinning off under the Williams & Glyn brand, under state aid rules.

Missing the end of 2017 deadline could mean big financial penalties.

Laith Khalaf, senior analyst at Hargreaves Lansdown stockbrokers, said the Williams & Glyn announcement "totally overshadows the bank's results".

He said: "The delay of the spin-off kicks dividend payments into the long grass, and probably means investors will have endured a decade-long dividend drought before the bank starts making payments again."

In February, RBS posted a £2bn annual loss for 2015 - its eighth consecutive year in the red.

Two weeks ago, RBS-owned NatWest said it was axing around 600 jobs as it shuts 32 branches, meaning RBS has axed 1,500 roles so far this year as it looks to trim costs and stem losses.

For the latest quarter, the group saw litigation and conduct costs at £31m, sharply lower than the £2.1bn seen in the last three months of 2015 and the £856m in the first quarter of 2015.

The bank has been putting aside large sums to cover issues from previous years such as the mis-selling of payment protection insurance (PPI), mortgage-linked investments in the US and litigation over the foreign exchange rigging scandal.

Restructuring at the lender cost £238m over the quarter and the bank warned these costs were on course to remain high over the full year, totalling more than £1bn.

Meanwhile, RBS said that though it was hampered by tough market conditions in the quarter it remained on track in its plans to run down its remaining toxic assets left over from the crisis.