The bank posted a pre-tax loss of €1.255 billion (£988 million) for the six months to June, up from €556 million (£438 million) during the equivalent period in 2011.
Richie Boucher, the chief executive, expressed hope that the bank has now emerged from the worst of the crisis.
‘While the Irish economy remains challenged and our impairment charges remain elevated, we expect the impairment charges to reduce from this level, trending to a more normalised level as the Irish economy recovers. The pace of the reduction will be particularly dependent on the future performance of our Irish residential mortgage book and commercial property markets, as well as our own credit-management initiatives’.
One other initiative being undertaken by the troubled bank is large-scale cost cutting. It has already reduced its staff levels by nearly 500, bringing staff costs down by €4 million (£3.15 million).
But Boucher wants to go further. ‘As we restructure and reshape our group and further improve efficiencies, regrettably, the number of people we employ will reduce’.
The bank faces two challenges to its profitability: bad loans and low interest rates.
Bad loans cost the group €941 million (£741 million) in the first half, as 7 per cent of its Irish owner-occupier mortgages were three months or more in arrears at the end of June. The figure stood at 5.6 per cent in December 2011. Similarly, buy-to-let arrears crept up from 11 per cent to 14 per cent over the period.
Boucher noted too that ‘the very low level of official interest rates has adversely impacted on our earnings rates and therefore on income’. The bank has experienced a €14 billion reduction in its average interest-earning assets since January.
The bank’s share price fell 6 per cent, to €0.09 (7p), on the news.