AIB has reported profits before tax of €1.3bn for the six months to the end of June, an increase of 8% on the same period last year.
The bank's income in the period was €2.4bn which represents an increase of around €340m.
Of that €1.3bn profit, the bank's activities in Ireland provided €534m, an 18% increase on the first six months of 2006.
However, the bank's chief executive, Eugene Sheehy, said applications for mortgages were down 25% which he described as 'very significant'.
The slowdown comes after several years of extraordinary growth in the mortgage market.
Mr Sheehy said the bank was expecting the rate of house building to be between 50,000 and 60,000 units per year into the future.
In relation to the economy, the AIB expects economic growth in 2008 to be 3.3%, with unemployment increasing to above 5%.
