The bank, which is still 73% owned by the taxpayer following its bailout at the height of the financial crisis, said losses for 2015 totalled £2bn – an improvement on the £3.5bn reported the previous year.
RBS confirmed it had booked £3.6bn in conduct charges – announced last month – including £2.1bn to cover legal action in the US relating to the sale of mortgage products.
There was also £600m more in provisions for the payment protection insurance mis-selling scandal.
Restructuring costs came in at almost £3bn.
Sky News reported on Thursday how chief executive Ross McEwan was to sacrifice personal pay awards again in the wake of the performance.
He confirmed he would not take up a £1m “role-based” incentive and would give half the award to charity in the current financial year.
The bank’s total bonus pool was slashed by 11% to £373m and it warned of possible further financial hits ahead.
“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.
However, RBS said it was making progress in shoring up the bank’s business – with almost £1bn of costs taken out – as it continues efforts to become a UK-focussed lender to consumers and businesses.
It reported a 10% rise in net mortgage lending, with £9.3bn of new loans.
Net lending in the commercial bank totalled £1.4bn.
