RBS Posts $1.3B Loss as Impairments Rise

Updated from 2:51 a.m. EDT

Royal Bank of Scotland (RBS Quote) reported a first-quarter loss of 857 million pounds ($1.29 billion), a reversal from year-earlier profit of 245 million pounds, as the bank recorded impairment losses and credit market writedowns of 4.9 billion pounds.

Profit before the impairment losses rose 42% to 4.1 billion pounds.

CEO Stephen Hester, in a statement Friday, said the results "demonstrate the challenging conditions we face and that we expect to continue. Our core customer franchises are facing the reality of a sharp recession following a year in which the credit markets crisis caused our worst ever performance."

Revenue in the quarter rose 26% to 9.7 billion pounds. and operating expenses rose 20% to 4.66 billion pounds.

RBS reported a pretax loss of 44 million pounds, compared with profit of 479 million pounds in the first quarter of 2008.

"Some commentators are beginning to talk about economic recovery; we remain cautious and continue to plan and manage our businesses in the full expectation that both 2009 and 2010 will be very tough years for RBS," Hester said.

The first-quarter loss followed the bank's disastrous results in 2008, when it lost 24.1 billion pounds, a record for a British company.