Bank of Ireland has said it continues to trade in line with expectations as asset quality across its loan portfolios continues to improve.

In an interim management statement, Bank of Ireland also reported an increase in customer loan volumes for the first quarter of the year. 

At €79.1 billion, the figure was up €2.1 billion, or 3%, on the end of last year.

It said its market share of new mortgage lending in Ireland averaged about 23% in the first three months of 2019 with mortgage applications and drawdowns increasing during the quarter. 

The bank, the country's largest bank by assets, also said that it had seen increasing activity, confidence and credit demand in the first quarter among its SME customers. 

Its operating expenses fell 3.5% year-on-year in the three months from January to March and Bank of Ireland said it plans to reduce its cost income ratio to 50% by 2021 from around 65% at the end of 2017.

Bank of Ireland said its net interest margin - the difference between the average rate at which it funds itself and lends on to customers - dipped to 2.16% for the three months to the end of March from 2.2% at the end of last year.

But its net interest income and other income were all in line with expectations, the bank added. 

Management remains comfortable with NIM guidance of 2.16% for the remainder of 2019, Davy Stockbrokers said in a note. 

Analysts at Davy also said signs of weaker Irish mortgage lending in the quarter should be rectified as the year progresses with pricing action not required for now. 

"The mortgage market share for Q1 2019 was weak at 23%, but activity levels on drawdowns and approvals increased as the quarter progressed, indicating that a recovery back to the target share range of 25-30% should occur over the remainder of the year," they said in a note.

"Signs that SME activity levels are increasing should also be welcomed," the stockbrokers added.