Royal Bank of Scotland Group has returned to profit in the first quarter of 2013, a first since 2011 as impairment charges on bad loans declined due to the bank's restructuring.
RBS reported a pre-tax profit of £826m ($1.3bn, €978m) for the January-March period, the highest since the third quarter of 2011, compared to a loss of £1.51bn a year ago.
Attributable profit for the quarter was £393m, compared to a loss of £1.54bn last year.
Impairments in the first quarter have declined to £1bn from £1.5bn in the fourth quarter of 2012 and from £1.3bn in the year-ago quarter. RBS noted that it reduced non-core assets by 79% since it began restructuring in the wake of the financial crisis.
The bank, which suffered from the global financial crisis, has been disposing its bad assets. As at the end of the first quarter, core tier 1 ratio, which measures the ratio of a bank's core equity capital to its total risk-weighted assets, was 10.8%, up from 10.3% at the end of the fourth quarter.
"These results show pleasing progress in delivering a strong and valuable RBS for all our stakeholders. We expect to substantially complete the Bank's restructuring phase during 2014," CEO Stephen Hester said in a statement.
"We are seeing the start of a pick-up in loan demand and have a strong surplus of funds ready and available to fully support economic recovery. Across the Group we are working hard to improve what we do for customers and to better position the Bank for future growth."
Separately, RBS chairman Sir Philip Hampton said in a video statement that the bank will be ready to return to the private sector in 2014. Hampton noted that the government, which owns an 81% stake in the bank, will start selling shares from the middle of next year and hopes to complete the restructuring in 2014.