Half of the 6,600 legal letters sent out by AIB to borrowers in arrears of 90 days or more have resulted in engagement with the bank by the borrowers.
Chairman David Hodgkinson told shareholders at the bank's AGM that none of the 6,600 borrowers had provided financial statements when requested to do so by AIB prior to being threatened with legal action.
He said once borrowers engaged with the bank after receiving legal letters AIB would "roll back" from legal action.
Mr Hodgkinson said a further 10-15% of those 6,600 borrowers in receipt of legal letters had since begun meeting their repayments in full.
Earlier, it emerged that AIB's chief executive David Duffy had signed a permanent contract with the bank as his three year contract with the group was due to expire in December
Mr Duffy, a former senior executive at South Africa's Standard Bank International and Dutch bank ING joined AIB at the end of 2011 on a fixed contract of three years with an option to renew for up to a further three years.
He has overseen a cost-cutting drive that has reduced its workforce by almost 20%, cut salaries by up to 15% and shut branches in a bid to turn it around much earlier than analysts had predicted since its bailout.
Bank executives here are subject to a government-imposed salary cap of €500,000 and Mr Duffy took a pay cut as part of the bank-wide wage reductions, reducing his salary to €425,000 last year.
The AIB chairman told shareholders at today's AGM that 2013 was a year of "significant progress" at the bank as it saw it return to pre-provision operating profit for the year.
Mr Hodgkinson said a number of important milestones had been reached by the bank, including the recent approval of its restructuring plan by the European Commission.
He also said that AIB intends to repay the state, in full, for all financial support received to date. "This bank will repay the €20 billion to the state, over time. That is our intention"," he stated.
The AGM heard that the Irish mortgage market remains a key priority for the bank. It has approved mortgage lending to over 7,200 customers last year and has a 38% market share of mortgage drawdowns.
Mr Hodgkinson noted that mortgage drawdowns were 50% higher during the first three months of this year compared to the same time in 2013, while approvals also increased.
Meanwhile, residential mortgage arrears were "stable" in the first three months of the year, with arrears in its owner occupier book declining.
"We are fully aware of the distress suffered by many customers in financial difficulty and we are making real and tangible inroads into restructuring their borrowings," the AIB chairman stated.
On SMEs, the bank chairman said that AIB had approved €4.3 billion in lending to over 32,000 small and medium sized businesses last year, exceeding the Government's target of €4 billion.
Credit demand from SMEs is increasing, the AGM was told, and lending approvals in the first quarter of 2014 were 25% higher than the same time last year.
"We have made solid progress as we seek to return AIB to a customer centric, sustainable business model but there is a lot more to do. Notwithstanding the challenges and further changes ahead, AIB is moving solidly in the right direction for our customers and shareholders as we implement our strategic priorities," the bank's chairman said.