The loss is significantly down from the €1.32 billion loss seen in the same period last year and that decline was driven by a 22% drop in first-half impairment charges to cover under-performing loans.
Total impairment charges for the period amounted to €842m, down from a charge of just over €1.08bn for the first half of 2010.
“Impairment charges on our non-NAMA portfolios remain elevated, but within our expectations.
“We maintain our expectation that impairments peaked in 2009, reduced in 2010 with anticipated reductions in 2011 and subsequent years,” Bank of Ireland’s chief executive Richie Boucher said on the back of the results.
Operating profit — before impairment charges and losses from NAMA sales — fell from €479m to €163m.
Management added that trading conditions remain “challenging” — chief financial officer John O’Donovan saying the group has entered “a stage of significant transition”.
The bank’s total loan book has continued to reduce; something which has been ongoing since the end of 2009, with demand for new lending still muted. The loan book is still dominated by residential mortgages and the impairment charge for that book (combining Irish and British mortgages) amounted to €159m for the first half of this year.
Corporate and SME lending takes up around 25% of the loan book and the bank said that it remains committed to meeting its €3bn lending requirement to small business and that it is approving around 80% of all loan applications at present. It added that the current impairment charge — of €251m — for the corporate and SME sector remains “elevated” but is down from €356m for the corresponding period last year.
Reports emanating from the US, yesterday morning, also suggested that Bank of Ireland has reached agreement to sell its American commercial loan book to Wells Fargo for $1.4bn. While Mr Boucher declined to comment on the specifics of any deal, he remarked that “good progress” was being made on the sale.