Permanent TSB shares have fallen more than 12% in Dublin after the lender said the number of non-performing loans on its books remains "unsustainably high".

PTSB said it now intends to use a number of strategies - including portfolio sales, foreclosures and higher repayment requirements - to reduce that level over the medium term.

It comes as the lender today reported a profit before tax of €43m for the first half of the year, which is down by 60% on the same period in 2016.

PTSB shares are trading 12.4% lower at €2.19 in Dublin trade.

The level of PTSB's bad loans, at €5.8 billion, have reduced by over 50% from the peak in 2013.

More than half of the bank's bad loans are in some form of long-term restructuring or forbearance.

PTSB Chief Executive Jeremy Masding said: "We have a high NPL ratio of 28% ten years after the financial crisis. We now need to think about how we shrink that ratio down because in the long term it is not a signal of a bank's strength."

The bank said it added 20,000 new accounts in the first six months of 2017, while its new mortgage lending rose by 62% year on year.

It also reduced its operating expenses by €8m compared with the same period a year ago.

However, in its interim results Permanent TSB also reported a €6m impairment charge, which compares with impairment write-backs seen in the past 12 months.

PTSB CEO Jeremy Masding discusses the lender's results on RTÉ's Morning Ireland

Mr Masding added: "The business is in great shape and growing strongly.

"In the first half, we continued to generate profits and our competitive performance was excellent, with new lending growth outperforming the market and our new Explore current account exceeding our expectations.

"Whilst acknowledging there are legacy challenges, which we are addressing robustly, we are well placed to take advantage of the opportunities presented by Ireland's fast-growing economy.

"We will do this by competing vigorously, innovating continuously and delivering more of what our customers want."