AIB has reported a full year loss before tax of €1.687 billion for 2013, down 55% from the €3.729 billion loss in the previous year.
The bank said it remains focused on sustainable growth and returning to profitability during this year. It also said that it is more optimistic for the outlook of both the bank and the Irish economy.
AIB said its pre-provision operating profits rose to €445m in 2012, while its total operating income rose by 34% to €1.9 billion. Operating expenses fell by 16% to €1.470 billion while its staff numbers decreased by 15% to 11,431.
The bank said the pace of increase in Irish residential mortgages in arrears decreased in the second half of last year. Its total impaired loans decreased by about €1 billion.
It said that 11.1% of its owner-occupier mortgages were more than 90 days in arrears at the end of December, while 24% of its buy-to-let mortgages were over 90 days in arrears.
AIB said it had met its targets in relation to the restructuring of mortgage and SME arrears, adding that the resolution of arrears was its "number one priority".
David Duffy, the bank's chief executive, described today's results as continued evidence of the positive impact of the bank's revised strategy on operating performance.
He said that a number of the bank's "important milestones" were reached last year and the fundamentals of AIB's performance are now trending more positively both from an operational and economic perspective.
The bank said its was reviewing its options in relation to its capital structure and would provide further guidance during the course of 2014 following talks with the Department of Finance.
AIB also said it is aiming at keeping its core Tier 1 capital ratio above 10% complying with more demanding Basel III capital rules due to be phased in by 2019.
The lender said its loan to deposit ratio fell by 15% from the end of 2012 due to lower net loans and increased customer accounts.
Mr Duffy said that while the bank had made "continuous and steady progress" during 2013, a number of challenges remain as it seeks to return the bank to "fully normalised operations".
"The bank's operating performance will be influenced by the continued stabilisation in the economic environment in Ireland, the UK and the euro zone, sustained recovery in business and consumer confidence, continued reductions in unemployment levels and an increased in credit demand," he added.