Bank of Ireland has announced losses before tax of €950m for last year, compared to a loss of €2.2bn in 2009.

The bank lost over €2.2bn in the sale of its property and land development loans to the National Asset Management Agency, and reports impairment on its remaining loans of €1.8bn.

Bank of Ireland's annual report and results, published this morning, describe a challenging and difficult year.

The bank says that in 2010 it was hit by the severe economic downturn in Ireland.

It made progress on its main priorities but was badly hit by sovereign debt concerns about Ireland in the later part of the year.

Bank of Ireland says that losses on the sale of loans to NAMA were higher than expected at €2.2bn, but it says losses on other loans peaked in 2009, reduced last year and will reduce further over this year and next.

Since March 2008 its staff numbers have fallen by 2,200 and the bank continues to work on its costs.

However, it says trading this year remains challenging because of higher funding costs.

The bank said that 4.17% of residential mortgages across the bank were more than 90 days behind with repayments, an increase from 2.76% a year earlier.

The bank said that the ongoing economic slowdown in Ireland, including lower levels of employment, reduced disposable income and falling house prices, continued to affect the level of mortgage arrears, which increased significantly in 2010.

It said that the housing market in Ireland is now not expected to stabilise until at least late 2012 and added that it now expects house prices to slump by 55% from their peak levels in 2006.

Boucher not keen on debt forgiveness

Bank of Ireland's chief executive Richie Boucher has said the bank would work with individual customers who were in mortgage arrears, but appeared to rule out any form of 'debt forgiveness', as mooted by AIB earlier in the week.

Speaking in RTÉ's Morning Ireland, he said the bank has a responsibility to all of its customers, including those who are repaying their loans in full.

He said that 4% of its residential customers are in arrears, which means that 96% are making full repayments.

The bank boss advised customers who are finding it difficult to repay their mortgage to contact the bank early and says a plan will be worked out on an individualised basis.

He says that since 2009, 9,500 customers have gone through a 'modification' on their mortgages.

On the €2.2bn loss on sales of its loans to NAMA, Mr Boucher said the figure was higher than expected but said the bank's other loan losses were in accordance with expectations.

He said that NAMA has got a big job ahead of it, adding that the job is an important one for the country. He said the agency will make money out of the assets it sells and added that he wished it good luck.

He said the bank has made good progress on its costs over the last two years, with costs lowered by €360m last year. The bank is making money on the sale of some of its assets, including BIAM which sold earlier this year for €56m. He also said that the deficit in the bank's pension scheme is being dealt with.

He said the bank has embedded new cost structures and continues to review all its future plans.

On the culture in the bank, Mr Boucher said that he wants Bank of Ireland staff to respect each other and their customers. He said he wants the bank staff to focus on their jobs to the best of their abilities and states that is what he is doing.

He said the bank has moved from a survival mode to the stabilisation stage. He said the bank is now focused on its relationship with its customers.