The Royal Bank of Scotland has announced losses of Stg 3.6 billion for 2009.
The BBC reports the loss was lower than the Stg 5 billion many experts were expecting and is well below the Stg 24 billion it lost in 2008.
However, the level of bad debts rose sharply to almost Stg 13.9 billion, up from Stg 7.4 billion in 2008, although the bank says it thinks these have now peaked.
Despite the result, the bank is expected to pay bonuses totalling Stg1.3 billion to its staff and reignite a controversy over bankers' pay.
The British taxpayer owns 84% of RBS after the government bailed out the bank at the end of 2008.
RBS has shrunk massively in size over the past year. In 2008 its assets stood at Stg 2.1 trillion. They are now worth Stg1.5 trillion.