Bank of Ireland has reported an underlying profit of €500 million euro for the first six months of 2018 - up 1.6% year-on-year.  

In interim results this morning the lender said its lending reached €7.7 billion in the six month period, which is up 16% compared to the same period of 2017. 

Group CEO, Francesca McDonagh, described it as a strong set of results, which sees Bank of Ireland continuing to be the largest lender in the economy, while it makes progress delivering its transformation and growth strategy.

Ms McDonagh said Bank of Ireland is taking steps to improve customer service and it is working hard on changing culture, many aspects of which, she said, is strong with a rich history and heritage. "We also acknowledge that we need to be more customer focussed and increase accountability. Culture doesn't change overnight but it is an area that we are making progress on."

Mortgage lending is up by 30% in the first six months of this year. Ms McDonagh was asked on Morning Ireland about the bank's handling of the tracker mortgage controversy, and how many customers, including staff, were deemed by the bank not to have been impacted by the issue even though they say their mortgage accounts were altered in 2008 when they should have rolled into tracker rates.

"I took personal accountability to fully address trackers with my team from my first month on the job back in October and I feel that's exacty what we've done. We have contacted a 100% of impacted customers; we've been successful in making a full offer of redress and compensation to 99%. Nine out of 10 customers have accepted that offer, and we are still trying to trace 66 customers who have moved out of the country," she said. "We have no new customers or provisions that are being revealed in our results today. We believe we have identified every customer impacted by the tracker mortgage issue. There's no group of customers that are the subject of discussion between us and the Central Bank at this point. I think we've done exactly what we said we were going to do to resolve this as quickly as possible. It's been a very difficult situation for customers, and one that we are keen to fully resolve."

The Central Bank published a report which was critical of how Irish banks treated its customers. The report on culture and behaviour in banks, stated that banks have a long way to travel to become more customer focussed.

The Bank of Ireland chief said the bank has been really focussed on what culture means. She said the bank did a major reset of what its culture stands for, and the values it wants to role model within the bank. "Culture is more than just words on a poster in a staff canteen," she said. "We are trying to really bring those to life."

The bank has had more than 6,000 staff attend road shows up and down the country, to talk about and discuss what does changing culture mean for their jobs. "I hold regular, what I call Open Door sessions, with colleagues across the organisation, and we've listened to our customers also," Ms McDonagh explained. "We've increased full service branches by 160%. We've decided to have 15% additional resourced colleagues on the front line to better serve our customers and that's in response to direct customer feedback that I've received. 

She said culture doesn't change overnight but the bank now measures it. "We did our first survey in a decade in November, to understand how people felt about our culture. In every quarter, we track that and we are seeing gradual improvement but we recognise there's more to do."

Bank of Ireland has embarked on a cost reduction programme, and Ms McDonagh said that doesn't mean job cuts. "We have not agreed to reduce any jobs. I've been very explicit about the need to be more efficient as a bank. We've been very specific about reducing our costs by €200 million between now and 2021. In the first six months of this year, we've reduced costs by 3% which I think is positive."

She said the majority of those cost savings are from better deals with outsourcing partners and suppliers. There has been a reduction of 6% in the number of employees over the last 12 months. Ms McDonagh said the majority of that is about getting smarter in how we manage vacancies, so we don't have a specific target for reducing jobs. "I don't wake up in the morning and think how can I reduce jobs. I wake up thinking how can I grow and transform Bank of Ireland with the support of a very talented team."

She said Bank of Ireland is "very explicit in our commitment to our branch network". The bank has increased the proportion of branches that have full service. "I've spent time with customers; I listen to calls, I meet customers and I meet our colleagues in the front line, and I know that even though people are engaging more with digital channels, they still want that face to face personal contact, so we've been very committed to investing in our branch network, and to our people in the front line."

The bank outlined its strategy six weeks ago between now and 2021, to increase its total loan book by 20%, which includes some growth in the UK. "We knew about Brexit then," she said. "We feel confident that with targetted and disciplined approach, which we've always had in the UK, that that growth is achievable. We've seen good growth coming through in the first six months. We stay close to the economic outlook. In the UK, we see no signs of deterioration on our lending book. If anything unemployment is at a 42 year low now in the UK, but we stay close to the Brexit reality, and let's see how that pans out."