Royal Bank of Scotland (RBS.L) has reported a £116 million loss for the first quarter of the 2011, which chief executive Stephen Hester labelled as ‘progress’.

The multi-million pound loss comes after Lloyds announced it is setting aside £3.2 billion for claims arising from the sales of payment protection insurance (PPI) after a high court ruling.

However, RBS – which is still 83 per cent owned by the tax payer - claimed it would wait for the British Bankers’ Association decision on whether to appeal the ruling before allocating a set amount for potential claims.

Stephen Hester, group chief executive of RBS, said the strategic goals that the company has set out remain the priority despite the other issues that are facing the lender.

He said, ‘Looking ahead we see the macro environment in which we and our customers operate as constructive, despite the continuing challenges of economic recovery in core markets.

‘The strategic goals we have set out remain our primary focus. There are some headwinds, challenging growth and increasing capital intensity for our industry, that have a shareholder and broader read across. But despite that context RBS expects continued progress.’

Hester stressed that the bank will remain strongly focused on serving customers in an attempt to win market share.

He added, ‘Financial strength and resilience continue to show sharp improvement as core business profitability broadens and non-core risks are reduced.

‘This recovery is also allowing us to absorb higher Irish impairments and substantially increased regulatory demands, and to self-fund other bills from the past such as restructuring, disposals and the cost of APS support.

‘As we work through these items the group's regained strength and core profitability should be the enduring gain, becoming increasingly available to drive shareholder returns.'