Bank of Ireland has recorded a pre-tax loss of €1.25 billion for the first six months of the year compared to a €556m loss for the same time last year.
The amount of money the bank is setting aside to cover loan losses is higher than this time last year at €941m.
Impairment charges have fallen, however, compared to the second half of last year.
It incurred losses of €206m after the disposal of several businesses which it was required to sell as a condition of Ireland's bailout deal and under the direction of the Central Bank.
Bank of Ireland said it is making progress in weaning itself away from State support to borrow money.
Its reliance on what is known as eligible liability guarantees has fallen by €6 billion to €36 billion.
In today's results statement, Bank of Ireland noted that funding costs are increasing.
Its net interest margin - the gap between what it costs the bank to raise money and what it charges to lend it - is under pressure and has dropped from 1.33% to 1.2%.
On mortgage arrears, Bank of Ireland said the number of customers falling behind on their mortgage repayments has continued to increase.
But it said that due to some stabilisation in the economy and through its own initiatives, the rate of increase reduced during the first half of the year.
The bank said that it expects this trend to continue.
The proportion of its owner occupier mortgages in arrears for over 90 days rose to 7% at the end of June from 5.6% at the end of 2011.
But it remains well below the industry average of 10.2% at the end of March, according to Central Bank statistics.
The level of arrears among properties bought by investors to rent out, the most distressed part of the bank's mortgage books, was 14%, up from 10.8% in December.
Low interest rates offsetting Bank of Ireland's progress
''The first half of 2012 has been a very difficult environment in which to operate,'' commented Bank of Ireland Chief Executive Richie Boucher.
He said that low official interest rates are somewhat offsetting the progress that the bank is making to reduce the cost of money to the group. ''Whilst the Irish economy has begun to stabilise, it remains a challenging environment in which to manage credit costs and sell new products,'' he added.
The bank said its operating profits, before impairment losses, fell to €58m from €164m, while its income for the six-month period dropped to €900m from just over €1m the same time last year.
Bank of Ireland said its retail Ireland division reported operating profits, before impairment charges, of €57m for the first half of the year, down from the figure of €161m in the first half of 2011. Operating profits at its UK division slumped to €9m from €95m the same time last year.
Operating profits at its Corporate and Treasury division dropped to €250m from €277m, but profits at its Bank of Ireland Life operation rose to €36m from a loss of €28m last year.
Bank of Ireland has begun to implement a plan to cut 1,000 of its 13,200 employees, but its operating costs were broadly flat in the first six months, slipping to €842m from €843m a year before.
"The impact of pension costs and the government pension levy has offset somewhat the impact of continued wage restraint and lower staff numbers," CEO Richie Boucher said in today's results statement.
BoI accounts include NAMA 'gain'
Bank of Ireland's first half accounts include one small item that catches the eye - a ‘gain’ of €6m on the sale of assets to NAMA.
But it is not a case of a bank making money selling loans to NAMA – it is just another mundane accounting transaction.
Last year Bank of Ireland transferred a final tranche of property loans to NAMA, but without full due diligence on a loan-by-loan basis, in order to speed up the slow moving NAMA process (the same thing happened to other banks).
An estimated haircut was applied to all these loans, and NAMA was to do a full loan by loan analysis later.
Bank of Ireland took an impairment charge of €43m on these loans.
But when the due diligence was complete it was found that the haircut applied to Bank of Ireland was too severe - so it got €6m back from NAMA, booking it as a gain in the first half accounts.
This, however, is not a profit - just a slightly lower level of loss for the bank on that part of its asset sale to NAMA.
