KBC Bank Ireland has recorded a €69m loss after tax and charges for impaired loans over the three months to the end of June. That is down from €96m the same time last year.
The bank said its loan loss impairments fell to €88m in the second quarter of this year from €136m in the second quarter of 2012.
KBC said it continues to see a "mild increase" in arrears, adding that the majority of its customers continue to repay their loans in full.
It said it is working ''efficiently'' to increase the number of customers availing of restructuring initiatives offered by the bank.
''Conditions remain challenging in the Irish market, but our year on year losses have decreased and our retail business continues to grow at an encouraging rate,'' commented KBC Bank Ireland's chief executive John Reynolds.
The bank said that total retail deposits now stand at €2.7 billion while over 11,000 new customers were added in the first half of the year. It also said it is seeing improved demand for mortgage products - from a low base - as evidence of a stable housing market emerges.
During the year, the bank continued its retail expansion and opened a new office in Cork city. It plans more new offices for Limerick and Galway later this year.
Mr Reynolds said that conditions for many of the bank's customers remain extremely tough. He said the bank will continue to work with its customers in a ''compassionate and caring manner'' to find solutions for people falling behind on their mortgages where possible.
Meanwhile, the bank's Belgian parent KBC Group reported a better than expected net result in the second quarter of 2013, helped by a boost in the value of derivatives it holds in its Belgian unit.
In Belgium, the group said its net result rose by more than two thirds compared to last year, boosted by a 21% increase in fee and commission income and the sharply improved value of its financial instruments.
In the Czech Republic, the group said its net result slightly fell compared to last year, mainly due to lower net interest income.
Overall, net income in the second quarter was €517m, higher than the €372m expected by analysts. The group had posted a loss in the same period last year.