Ulster Bank has reported a significant improvement in loan losses, according to quarterly results published by its parent Royal Bank of Scotland.

RBS, 81% owned by the British government, said impaired loans at Ulster Bank are down 80% compared to the first quarter of 2013.

Impairments fell from €292m to €57m year-on-year. Ulster Bank also reported its first quarterly operating profit, €21m, since 2009.

Ulster Bank said its net interest margin improved to 2.36% in the three months to the end of March, while income has remained "broadly stable". 

Ulster Bank's chief executive Jim Brown said that its operating profits was driven by stable revenues, a reduction of underlying expenses and an improvement in impairment losses. 

"Improving customer demand, our ongoing focus on underlying expenses and the benefits of our work in helping our customers in mortgage arrears will continue to drive the momentum in the recovery of our business," Mr Brown added.

He said that while the bank's underlying expenses have reduced, headline expenses remain elevated after the creation of the new RBS Capital Resolution (bad bank) division and the impact of the new bank levy here.

But he said the bank expects to see continued reduction in underlying expenses as its addresses its costs across the business.

"We are focused on sustaining the recovery of our business which must be built around providing the best customer service on the island of Ireland," the Ulster Bank CEO said.

RBS has had to inject just over £14 billion into Ulster Bank so far to compensate for massive losses on commercial property, business and mortgage loans.