* UKAR repays last of 48.7 bln stg loans
* State-run firm set up to house assets from failed lenders
* Still set for loss from bailouts due to RBS slump (Adds results, details on PPI provisions)
June 5 (Reuters) - The 'bad bank' set up by Britain to manage more than 100 billion pounds ($127 billion) of assets from two lenders that collapsed during the financial crisis has repaid the last of the 48.7 billion pounds used to fund the bailouts.
UK Asset Resolution (UKAR), owned by Britain's Treasury, said on Wednesday it had fully repaid the loan, several years earlier than expected.
The assets consist mainly of loans from mortgage lender Bradford & Bingley and bank Northern Rock.
"Looking forward, we are focused on the disposal of the remaining Government investments in NRAM and B&B," UKAR Chief Executive Ian Hares said.
The repayment marks one of the last remaining milestones in the British government's interventions during the financial crisis, with only its stake in Royal Bank of Scotland remaining among the major bailouts it undertook.
Britain is still set to take an overall loss on its rescue of banks during that period, thanks mainly to the slump in RBS's value since.
UKAR, a state-run loan firm that does not take on new business, said it has increased provisions for mis-selling of payment protection insurance (PPI) by 64 million pounds, as payments during the year had been higher than expected.
Partly owing to that, UKAR's statutory profit slumped to 340.3 million pounds for the year ended March 31, from 583.2 million pounds a year earlier.
Between UKAR's creation in 2010 and March 31 this year, its balance sheet shrank by 104.4 billion pounds, including 43.5 billion pounds of customer loan repayments and 37.4 billion pounds of asset sales, UKAR said.
($1 = 0.7863 pounds) (Reporting by Lawrence White in London, additional reporting by Muvija M in Bangalore; Editing by Saumyadeb Chakrabarty and John Stonestreet)
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