Ulster Bank has reported a first half operating loss of €387m for the six months to the end of June, down from a loss of €675m the same time last year.
Impairment losses in the six month period fell by 30% to €591m from €782m, which the bank said was due to lower mortgage impairments.
It said this reflected an improvement in the the performance of underlying credit metrics and economic conditions.
It noted that the number of customers in arrears for over 90 days declined in the second quarter of the year from the first - the first quarterly fall since June 2008.
But the bank added that it continues to see ''large'' numbers of customers who are not engaging with it.
''Our core objective remains to keep as many co-operating customers in their homes as possible and we encourage customers in financial difficulty to engage with us to find the right solution. We expect to see an increase in legal activity where the customer still does not engage,'' commented Ulster Bank's chief executive Jim Brown.
Ulster Bank, which is owned by Royal Bank of Scotland, said that its total income over the six month period rose from €511m to €529m.
Customer deposit balances increased by 8% on a constant currency basis, the bank said, as it continued to strengthen its balance sheet. Loan balances fell by 5% on the back of limited new lending due to low levels of demand.
The bank said its net interest margin - a key metric that shows how profitable its lending is - was steady at 1.85% as product replacing initiatives and the benefit of a reduced stock of liquid assets offset higher deposit costs.
“Ulster Bank continues to demonstrate good progress on the restructuring of our core bank, with an increase in total income, significant decrease in operating loss and impairments, a sustained increase in customer deposits, an improvement in loan to deposit ratio and a stable net interest margin,'' Mr Brown said in today's results statement.
''We continue to remain focused on the recovery of our business - supporting the communities in which we operate and serving the needs of our 1.9 million customers across the island of Ireland,'' he added.