AIB has reported an underlying loss of €2.6 billion for the six months to the end of June, driven by continuing high levels of bad debts. This compares to a loss of €2.1 billion the same time last year.
The bank set aside almost €3 billion to cope with potential loan losses.
AIB booked a €2.2 billion profit from the sale of its stake in the Polish bank Zachodni and a once-off benefit from a debt buyback where the bank bought back bonds from certain holders at a substantial discount and generated a profit on the transaction. When these were included, there was a profit of €2.2 billion for the six months.
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The bank said that funding conditions remain 'highly challenging' in volatile markets.
AIB said its customer deposits - excluding those it purchased from Anglo Irish Bank - fell by a further €5 billion but were broadly stable in recent weeks. Non-performing loans amounted to 34% of customer loans, up from 29% at the end of December, the bank added.
AIB said it had seen an increase in arrears due to the impact of a harsher economic climate on borrowers' repayment affordability. It said the pace of increase in total arrears eased in the second half of 2010 but has started to accelerate again this year.
It said the level of loans in arrears for more than 90 days was 7.82% by the end of June, compared with 4.8% at the end of last year.
AIB has announced plans to cut over 2,000 jobs during 2011 and 2012 on a phased basis out of a staff of over 14,000 in Ireland and the UK.
David Hodgkinson, AIB's executive chairman, told RTÉ Radio that the bank has had positive discussions with investors and hopes to be in a position to get new funds next year when it has completed the bulk of its provisioning. He says that ECB support remains critical for the bank.
On the search for a new chief executive for the bank, Mr Hodgkinson says that it is progressing well and a shortlist of candidates has been created.
