Royal Bank of Scotland is struggling to maintain market confidence after reporting an underlying first quarter profit of £421million, barely half analysts’ forecasts of £800m, and worrying uncertainties over the demerger of the Williams and Glyn network.

The shares slid by another six per cent, after a two per cent slide on Thursday when the bank revealed in advance that the divestment would not complete by the end of 2017 as required by the European Commission.

Ross McEwan, chief executive, said yesterday: “This is the most incredibly complicated project that I have seen in banking anywhere in the world.”

Mr McEwan said: “This is another year of heavy lifting and there will continue to be a lot of noise in our results, but underneath that noise you will see that we are on track and delivering on our plan.

“We are building a solidly performing, profitable bank doing great things for customers and returning value to shareholders.”

But analyst Gary Greenwood at Shore Capital said: “We cannot hide our disappointment with both the results and the announcement of the ongoing delay to the divestment and separation of Williams & Glyn, which has frankly now become farcical.

“Our positive recommendation had been predicated on the group overcoming most of the issues to allow a resumption of capital returns and dividend payments to shareholders during 2016, including addressing Williams & Glyn and settling outstanding RMBS (mortgage securities) claims in the US. With the timeframe having significantly slipped, our enthusiasm for a positive stance on the shares has been severely tested.”

Richard Hunter, head of research at Wilson King Investment Management, said the divestment had become the latest fly in the ointment and “unfortunately the ‘to- do’ list at RBS continues to grow”. Analysts at Bernstein said there was “no option but to trust the management’s view” on Williams & Glyn and they preferred selling the shares.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said the divestment crisis had “totally overshadowed” the results, adding: “It kicks dividend payments into the long grass, and probably means investors will have endured a decade-long dividend drought before the bank starts making payments again.”

Mr McEwan said 50 to 80 per cent of the Williams & Glyn business functions were operational, but IT was the problem. The project cost another £158m in the first quarter after a £630m bill last year.

Mr McEwan said he was investigating “alternative means” of divesting the network, but would not be drawn further. He said discussions had not yet started with the government or the EC on possible sanctions for missing the deadline, or on extending it.

The RBS pre-tax figure showed losses more than doubling from £459m a year ago to £968m, as it ploughed £1.2billion into redeeming from the government the Dividend Access Share which prevented it from resuming dividends.

Income fell by 13 per cent to £3.06bn, though by only three per cent in the core retail bank, and 36 per cent in the corporate and investment bank due to volatile markets. Operating costs dropped by a third to £2.4bn, largely because of a fall in litigation costs, enabling core profit to rise more than tenfold from £37m to £421m.

RBS said its income was “stable” in its core retail and small business banking units which will make up the vast majority of the bank once restructuring is over.

There were no new provisions for repaying customers mis-sold payment protection insurance (PPI) but the bank warned that the bill for restructuring this year would top £1bn, on top of still unknown penalties from the US authorities for mis-selling mortgage securities. The total provision for charges and liabilities remains steady at £7.36bn.

RBS also disclosed that the Swiss government had opened an investigation into transactions at Coutts International, the private banking arm which it sold a year ago.

The admissions follow last year’s revelations that German prosecutors were investigating current and former staff of Coutts’ Zurich and Geneva offices, and the more recent Malaysian parliamentary investigation into a multi-billion dollar scandal that has embroiled the country’s prime minister.

The shares fell 14.8p to 230p.