RBS, the part state-owed Royal Bank of Scotland, has announced its Interim Management Statement.

As news emerged of a 'hung Parliament' the 84 pct state owned bank reported losses narrowed by £517 million to £248 million this quarter whilst profits improved to £713 million compared with a loss of £1,353 million from Q4 last year.

The news was remarkably good for a bank which had been making substantially higher losses over the course of its recovery and declared that it needed five years to restructure.

Profits at investment banking however were halved from £3.5 billion one year ago.

Shares in the group were down 3.69 pct at 10:01 am BST.

Richard Hunter, Head of UK Equities at Hargreaves Lansdown Stockbrokers, commented "The update has been subsumed into the wider financial sector weakness this morning, itself a result of the ongoing European crisis and a mini-meltdown on Wall Street yesterday.

Even so, there are some grounds for optimism within the statement, notwithstanding the challenges facing the macro economic environment. The overall loss figure has significantly reduced on a comparative basis, whilst impairments have fallen once again. The Global Banking unit continues to contribute strong profits, although sharply down on the previous year where the trading opportunities were described as "exceptional". The bank remained cautious that any wider recovery was still subject to corrections such as the one currently being encountered, whilst in terms of its overall five year plan, it was on track, albeit with much still to be done.

The shares have had a reasonable run of late, rising 49% over the last three months, although this was from a low base. The overhang of the government holding, little prospect for a return to the payment of the dividend and a difficult return to recovery will all continue to weigh on the shares, with there being little likelihood of an improvement to the general market view of a weak hold."

FTSE