Britain's state-rescued Royal Bank of Scotland on Friday announced a 43-per cent reduction in annual net losses to around ￡2.0 billion (S$3.9 billion).
The loss after tax stood at ￡1.979 billion last year compared with a net loss of ￡3.47 billion in 2014, RBS said in an earnings statement.
RBS, bailed out at the height of the financial crisis in 2008, continued to be hit by hefty costs linked to legal action it is facing over US mortgage-backed securities and to compensation due for mis-selling an insurance product.
Total litigation and conduct costs increased to almost ￡3.57 billion last year, while the bank warned of possible further financial hits.
"We continue to deal with a range of uncertainties," RBS said in its outlook, noting that "substantial incremental provisions" may be added to the group's balance sheet in 2016.
It pointed also to uncertainties surrounding the June referendum on Britain's EU membership.
RBS is around 73-per cent owned by the British government after the vast state-rescue.