RBS on 'path to recover' as it pays off bail-out loans The part-nationalised lender, which is 82pc state-owned following a £45bn taxpayer bailout, will complete the loan repayments next week and resume paying dividends on preference shares. At the core operating level, profit rose 4pc to £1.18bn, compared with the same quarter last year. The bank would have reported a pre-tax profits except for rules forcing it to account of any adjustment to its own credit. This led to a £2.46bn charge that pushed RBS to a £1.4bn pre-tax loss. In the same period last year the bank reported losses of £116m pre-tax. RBS also set aside an extra £125m to cover compensation for mis-sold payment protection insurance (PPI) policies. It has already made provisions of £850m to pay for claims. "We are happy with progress in the first quarter though the economic and regulatory backdrop remains tough," said Stephen, the chief executive. RBS continues, markedly, to regain strength and resilience. Mr Hester said the bank had made "excellent progress continues in removing 'mistakes' of the past." The group reduced short-term wholesale funding by £23bn to £80bn, the loan-to-deposit ratio improved to 106pc and non-core funded assets are down £11bn to £83bn. RBS received £75bn from the Treasury's credit guarantee scheme and the Bank of England's special liquidity scheme. It was also handed £36.6bn in emergency liquidity assistance from the Bank and about $84.5bn (£52.2bn) from the US Federal Reserve. The bank said it has paid the Treasury more than £1.5bn in fees to use the credit guarantee scheme. RBS shares have risen by almost 20pc so far this year and analysts at Credit Suisse have suggested speculation around the timing of the Government's exit from the company could support further growth. "We see speculation around a partial sale disposal to Middle East Investors as the main near-term catalyst for the shares," they said in a note. However, Mr Hester told Reuters on Friday he believed the government had no desire to sell its stake a current share prices. RBS shares rose 0.9pc to 24.7pc in early trading.