(RTTNews) - Royal Bank of Scotland Group Plc (RBS: News ,RBS.L: News ), the U.K.'s largest government-controlled bank, reported Friday a net loss for the third quarter, compared to a profit in the same period last year. The results reflected hefty impairments and credit market write-downs, amid the difficult economic environment.

For the third quarter, the company's loss before taxation from continuing operations was GBP 2.17 billion compared with a profit of GBP 2.20 billion in the prior-year quarter.

Loss for the period attributable to shareholders was GBP 1.80 billion versus a profit of GBP 871 million last year. Loss from continuing operations was GBP 1.57 billion compared with a profit of GBP 1.41 billion last year.

Edinburgh-based RBS has been one of the hardest hit European banks in the prevailing financial crisis, due to its increased exposure to sub-prime loans and its expensive buyout of ABN Amro Holding NV in March 2007, three months before the credit crisis began. Late last year, the British Government took control of RBS with 70% stake in the bank, saving it from going haywire. The U.K. government pumped in GBP 20 billion or US$32.8 billion of rescue funds.

In late 2007, RFS Holdings B.V., a company jointly owned by RBS, Fortis Bank Nederland (Holding) N.V. and Banco Santander S.A., completed the acquisition of ABN Amro. Proforma results include only those business units of ABN Amro that will be retained by RBS.

On a proforma basis, loss before taxation from continuing operations was GBP 2.08 billion compared with a profit of GBP 1.90 billion in the corresponding period last year year. RBS reported an attributable loss of GBP 1.80 billion versus a profit of GBP 871 million in the third quarter of fiscal 2008. Pro forma loss from continuing operations for the quarter was GBP 1.50 billion as against a profit of GBP 1.18 billion in the year ago quarter.
For the three-month period, net interest income decreased to GBP 3.86 billion from GBP 4.79 billion in the third quarter of fiscal 2008. The company's non-interest income was GBP 4.22 billion versus GBP 5.17 billion in the 2008-year period.

Group net interest margin in the quarter was 1.75%, better than the company's own forecasts. This compares to 1.70% in the second quarter and 2.05% in the third quarter of 2008.

Total impairment losses incurred by RBS during the quarter were substantially higher at GBP 3.49 billion compared to GBP 1.40 billion in the same quarter last year. Impairments and credit market write-downs remain concentrated in non-core division, though Ulster bank particularly and Citizens are still experiencing increased impairment losses, reflecting the difficult economic environments they operate in, the company said.

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