Challenging economic conditions continue to affect Ulster Bank's financial performance, its parent group Royal Bank of Scotland said today.

Ulster Bank today reported an operating loss of €372m for the first three months of the year.

Provisions for bad loans increased to €472m due to the rising level of arrears and the continued deterioration in asset values as property prices declined further.

That was up compared to the final three months of last year but down on the impairment charge for the first three months in 2011. 

Ulster Bank said that 4.3% if its homeloans are now categorised as impaired.

It said it was continuing to work with its customers who are in financial difficulty by offering a range of support initiatives.

Before the impairment charge, Ulster Bank said its operating profits came in at €101m. 

Its income fell by £12m during the three month period due to increased funding costs.

Ulster Bank also said that after a periood of consultation and mediation, it is now implementing the proposed restructuring plans which it announced in January.

RBS first quarter loss triples to £1.52 billion

Ulster Bank's parent Royal Bank of Scotland today announced a first quarter net loss of €1.52 billion (€1.87 billion) almost three times the amount posted a year earlier.

RBS, 82% owned by the British government after a massive bail-out in the global the financial crisis, posted a 2011 first quarter net loss of £528m. The lender said losses soared due to an increase in the value of its outstanding debt to £2.46 billion.

"As RBS's credit spreads tightened during the quarter, a charge of £2.456 billion was booked for own credit adjustments," RBS said in a statement. But the bank's underlying performance was brighter, with RBS posting first quarter operating profit of £1.18 billion.

RBS meanwhile confirmed that it would repay the last of emergency state loans totalling £163 billion.

"The start of 2012 has shown pleasing progress at RBS within the context of a flat economic environment," chief executive Stephen Hester said in the statement.

"Excellent progress continues in removing 'mistakes' of the past. Non-core assets have fallen, again. Liquidity is stronger, again. Next week the bank will repay the last of the UK government-backed funding support we received during the crisis," he added.

At the height of the financial crisis, the British taxpayer stumped up £111 billion to provide emergency liquidity assistance, while the US Federal Reserve loaned around £52 billion. However, RBS shares are currently trading at about half the 50 pence a share that the government paid.

Amid public anger over a raft of poor results, Hester waived his latest annual bonus of shares worth £963,000, which had been due on top of his £1.2m salary for his work in 2011.

RBS also revealed today that it had set aside a further £125m to compensate clients who were mis-sold insurance, bringing the total expected outlay on this count to £1.2 billion.

Last year, Britain's banks lost a high court appeal against tighter regulation of PPI, which provides insurance for consumers if they fail to meet repayments on a credit product such as loans, mortgages or credit cards.

PPI became controversial after it was revealed that many consumers had been sold the insurance without understanding that the cost was being added to their loan repayments.

"The bank continues to inch its way out of intensive care," said Keith Bowman, an equities analyst at Hargreaves Lansdown Stockbrokers in London.

"A move back into profitability has been made by its investment bank division, whilst its retail and commercial businesses are now firmly back in the black. The lifting of EU punishment restrictions is allowing it to recommence a preference share dividend, while the government's emergency loan is finally being repaid,' he added.

"On the downside, Ireland remains a headache, with Ulster Bank still loss-making. In all, life support is being removed, with the bank's near failure now being consigned to another chapter in its history," Bowman added.