The loss is down from £24.3bn in 2008, while many experts had been predicting losses of £5bn for 2009.
Chairman of the bailed-out bank Philip Hampton says the losses were driven by the legacy of actions taken in the past, for which responsibility has been allocated and the relevant people are no longer with the group.
Going forward, group chief executive Stephen Hester says RBS’ progress in 2010 now depends on the pace of economic recovery, prospective regulatory change and the improvement of impairment losses and write-downs.
He adds: “We see the outlook as cautiously encouraging for RBS and the economies we serve, although with clear risks. It looks as if loan impairments may have peaked in 2009 and our net interest margin, despite continued squeeze on liability margins and higher liquidity costs, has now shown two quarters of improvement. Our progress in 2009 gives increased comfort in our ability to execute the restructuring challenges that remain.”
The UK taxpayer owns 84 per cent of RBS after the government bailed out the bank in 2008. Earlier this week, Hester waived his £1.6m bonus.
At 9am the banks’ share price had risen by 4.35 per cent from its opening price to 37.7 pence a share.