Royal Bank of Scotland plunged back into a loss during the third quarter owing to charges linked to its massive state bailout, the bank said.

RBS posted a net loss of £1.146 billion (€1.311 billion) in June-September, it said in an earnings update.

That contrasted with a profit of £257 million in the second quarter, although the amount was smaller than a loss of £1.8 billion during the third quarter of 2009.

The bank, which is about 80 per cent owned by the state, said that much of the latest loss could be explained by an exceptional charge of £825 million RBS said that its operating profit, excluding exceptional items, switched into a profit of £726 million after a loss of £1.042 billion s in the third quarter of last year.

Group chief executive officer Stephen Hester said the underlying results showed the bank continued “to make good progress” on the road to recovery.

“The core bank is becoming stronger. As we focus on serving customers better, profitability is also improving and rebalancing towards a more sustainable mix of business contributions.

“At the same time, the legacy risks and losses in non-core are being worked out effectively and our ambitious restructuring efforts continue apace.”