More job losses could be on the way after the Royal Bank of Scotland posted third quarter losses of £1.53 billion.
The results show slim improvements on earlier in the year, when the bank lost £3.53 billion in just three months.
The level of bad debt has also fallen by 30% since the April to June period and now stands at £3.28 billion.
However, the narrowing losses came largely from non-core parts of the RBS business, which are now expected to be sold off.
The bank's cost-cutting programme is likely to deliver further cash savings, but RBS warned that would mean more job losses, as it adapts to "changed market realities".
The company announced another 3,700 job losses this week.
And on Tuesday, bosses agreed a deal which will see up to £33.5 billion in taxpayer funds pumped into the ailing bank, taking the public stake to 84%.
Chief executive Stephen Hester said he was "upbeat, though realistic" over the "tough job" ahead in restoring the bank's fortunes.
The bank said bad debts were "plateauing" but Mr Hester warned: "We owe it to everyone to be realistic and transparent."
He said: "Economic recovery is likely to be slow and the pain of economic adjustment will take years to subside. Our business will reflect these issues.
"Profitability in our core businesses will recover fully only when our own actions are also complemented by more normal interest rates and bad debt experience."
RBS is placing £282 billion in toxic debts into a taxpayer-backed insurance scheme. In return, the firm is being forced to sell off its Churchill and Direct Line insurance businesses, more than 300 branches and parts of its investment banking business.
Those businesses generated around £1.1 billion in operating profits for RBS last year.
