Permanent TSB has today reported improved trading conditions in the third quarter compared to the second quarter.
However, it has increased its provision for loan losses by a further €17m, on top of the €70m already announced for the first half of the year.
The bank said its mortgage applications and approvals in September were the highest so far this year.
In a trading update for the third quarter to the end of September, Permanent TSB reported total new lending of €0.9 billion - down 23% on the same time last year.
It said its market share of new mortgage lending stood at 14.9%, down from 15.2% at the end of June.
But it added that a strong lending performance in the third quarter saw new lending increasing by about 30% quarter on quarter.
Permanent TSB said it had approved a total number of 10,700 Covid-19 mortgage payment breaks - or 10% of total gross loans.
The bank said the majority of those approved mortgage payment breaks had returned to original payment terms by the end of October, and about 13%, or 917 customers, remained on an active payment break.
It said it continues to support and engage with customers on their payment breaks, adding that a significant majority of those customers who have come off payment breaks have resumed capital and interest repayments.
"The duration of the Covid-19 pandemic and its impact on the economy remains unpredictable, the recent government announcement, placing further restrictions on the country presents continued uncertainty," the bank's chief executive Eamonn Crowley said.
"However, I am confident of the bank's ability to remain resilient, to continue to build trust with our customers and compete in our core markets of personal mortgages, personal lending and SME lending," the CEO added.
Permanent TSB said today that its new lending will not fall as much as anticipated this year.
It initially thought new lending would be 40-50% lower than the €1.7 billion it lent in 2019, revising that to 40% in July when it saw signs of recovery from the Covid-19 crisis.
In today's trading update, it said it now anticipated a 30% decline.
It said new lending rose 30% in the third quarter compared to the second, meaning lending was down 23% and net interest income 6% lower so far this year compared to the same time last year.
PTSB, which is 75% state-owned, said its fully loaded core Tier 1 capital ratio - a key measure of financial strength - stood at 14.3% at the end of September. Its net interest margin was 1.73%.
Last month Permanent TSB agreed the sale of a portfolio of performing Buy-To-Let mortgages, worth about €1.2 billion, to Citibank London, the UK branch of US-based Citibank.
The deal involved the sale of a pool of about 3,700 Buy-To-Let loan accounts, which had an average balance of €375,00, were classified as performing from a regulatory perspective and had an average remaining term of 10 years.
No loan accounts that received a payment moratorium due to Covid-19 were included in the deal.
Shares in the bank moved higher in Dublin trade today.