AIB has reported a loss of €700 million for the first six months of this year, having set aside €1.2 billion to cover potential loan losses due to Covid-19.
The bank's net interest income reduced 8% during the first half of the year, falling to €967m.
That came as new lending reduced by €1.6 billion (27%) to €4.4 billion, while retail banking new lending fell by 13%.
AIB CEO Colin Hunt said the results have been shaped by the impact of the pandemic.
"Against the backdrop of this sudden and ongoing emergency, the bank has taken a €1.2 billion expected credit loss charge in H1 2020 which represents the significant majority of the FY 2020 anticipated ECL charge. The strength of our capital base allows us to take this conservative, forward looking and comprehensive approach," he said.
Mr Hunt said the bank is considering the future shape of the business, as it adapts to the challenges presented by Covid-19.
"Our strong funding and capital position help us to underpin Ireland's economic recovery by assisting and sustaining individual customers, families and SMEs through these times of extraordinary stress," he said. "While our strategic priorities and medium-term financial targets remain unchanged, the challenge to achieve these is greater.
"We are actively considering the future shape of our business and our ways of working, adjusting to the challenges presented by the Covid-19 crisis so that AIB maintains a strong and resilient balance sheet, generates sustainable profits and returns capital to our shareholders," he said.