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Updated from 2:25 a.m. EST

EDINBURGH, Scotland (


) --

Royal Bank of Scotland

(RBS) - Get Royal Bank of Scotland Group Plc Report

, the U.K. bank 84%-owned by the government, narrowed its 2009 loss to 3.6 billion pounds ($5.52 billion) from a year-earlier loss of 24.3 billion pounds.

RBS said its 2009 operating loss narrowed to 6.2 billion pounds from a year-earlier loss of 6.9 billion pounds.

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RBS said impairments rose sharply to 13.9 billion pounds from 7.4 billion pounds in 2008, "but now appear likely to have peaked." Fourth-quarter impairments were 5% lower than the third quarter and "risk elements in lending" at the end of 2009 were unchanged from 35 billion pounds at the end of September.

The bank's core Tier 1 capital ratio improved to 11%.

The bank's fourth-quarter loss was 765 million pounds, narrower than a loss of 1.8 billion pounds in the third quarter.

-- Reported by Joseph Woelfel in New York.

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