Pre-tax profit at Permanent TSB jumped by a third to €57m for the first six months of the year, when compared with the same period last year.

New lending at the bank saw a 50% increase to €585m, while PTSB's level of non-performing loans fell by €200m to €5.1 billion.

Permanent TSB's sales of its controversial Project Glas loan portfolio to Start Mortgages - an affiliate of the so-called vulture fund Lone Star - for around €1.3 billion in July is not reflected in the half-year results.

However, when this sale is completed - which is expected to be in the last three months of the year - PTSB's ratio of non-performing loans will fall by 9% to 16%.

The bank's Chief Executive Jeremy Masding said the results very "very positive" and they show the bank is "succeeding and is a strong competitor in the Irish retail and SME banking market".

Last month Permanent TSB sold 7,400 owner-occupier mortgages to a unit of the vulture fund Lone Star at a significant discount as part of the Project Glas portfolio.

This has dramatically reduced the level of bad loans on PTSB's books.

Mr Masding said the "NPL ratio in Permanent TSB a number of years ago was nearly 30% - that is not good for the bank. It makes the bank not as safe as it should be, so therefore in accordance with also the regulator's requirement we set about reducing that ratio.

"The sale has taken it down to 16% so that is material positive movement for the bank."

Shortly after the Project Glas loan sale it emerged 1,050 mortgages on family homes included in the sale were performing loans or ones that were meeting the terms of an agreed restructuring.

In response to this, the PTSB head said "all customers included in the Glas sale are classified as non-performing under the definitions as created by the European Banking Authority and European Central Bank.

"That's whether it's a standalone PDH, a standalone buy-to-let, or where one or more of loans are non-performing in a group of connected loans. I.e., there could be a performing loan and a non-performing loan but it's the connection that's defined as non-performing.

"Structuring the sale in this manner delivered the best outcome for the State and our other shareholders."

Mr Masding said PTSB is not putting profits ahead of customers.

"I'm guided by my job and that's to implement the right option for the taxpayer and our other shareholders that satisfy both the board and our regulatory requirements," the lender's head said, adding the sale allows PTSB to "compete on better terms, it will enable us to provide more mortgages to the next generation of homebuyers, and it makes the bank less risky".

In the results PTSB says it is committed to reducing its ratio of non-performing loans to single digits in the medium term. 

Mr Masding said he did not want to speculate on future loan sales, however, he said: "The point of principle is to meet our regulators' and the board's requirements for a safer bank. We are required to reduce our level of NPLs to single digits."