Royal Bank of Scotland boss Stephen Hester said Thursday there was 'important work still to do' after the company posted an annual pre-tax loss amid a LIBOR scandal.
The bank lost £5.2bn,compared to a deficit of £1.19bn in 2011, blaming "legacy issues".
RBS was hit by fresh provision of £450m to compensate customers who were mi-sold payment protection insurance and a £381m settlement with US and UK regulars over its involvement in LIBOR rigging.
Despite the loss, the group paid out more than £600m in bonuses with £215m handed to investment bankers.
Excluding the mis-selling and other charges, the bank posted an operating profit of £3.46bn, up from £1.82bn in 2011, buoyed by core growth and a 32% reduction in non-core losses.
Core operating profits beat analysts' expectations as it reached £6.3bn for 2012, up 5.0% from the year before, with retail and commercial down 6.0% but markets improving by 68%. Nomura had pegged core profits at £6.1bn.
Non-Core operating losses came to £2.8bn, £1.3bn lower than 2011, mainly due to a significant fall in impairments in the company's commercial subsidiary, Ulster Bank, and other real estate portfolios.
The bank has been undergoing a massive restructuring as it tries to rework its image following the LIBOR incident.
In an effort to cut costs after being bailed out by the government in 2008, the bank is being forced to sell more than 300 branches to private equity firms and institutional investors.
RBS has made an informal request to the European Commission for more time to carry out the disposal.
The bank also confirmed it planned to carry out a partial flotation of US retail arm Citizens, to strengthen its balance sheet. As much as 25% could be sold to US investors over the next two years.
Chancellor George Osborne welcomed the move as a sign of a greater focus on the UK.
"I have been very clear that I want to see RBS as a British-based bank, focused on serving British businesses and consumers, with a smaller international investment bank to support that activity, rather than to rival it," he said.
Chief Executive Officer, Hester, warned of another "choppy year ahead" but said the bank was taking the right steps towards improvement.
"RBS is four years into its recovery plan and good progress has been made," he said.
"We are a much smaller, more focused and stronger bank. Our target is for 2013 to be the last big year of restructuring. There will be important work still to do, but an increasingly sound base from which to work. As the spotlight shifts to the 'new RBS' post restructuring, we are determined that it will show a leading UK bank striving to be a really good bank. By serving customers well RBS can become one of the most respected, valued and stable of banks. That is our goal."
Shares plunged 3.86% to 333.40p at 11:37.