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AIB has reported an underlying loss of 2.6bn euros (£2.2bn) for the six months to the end of June, driven by continuing elevated bad debts.
This compares to a loss of 2.1bn euros (£1.85bn) during the same period last year.
The bank said that funding conditions remained highly challenging in volatile markets.
AIB booked a 2.2bn euros (£1.8bn) profit from the sale of its stake in the Polish bank Zachodni.
It also benefited from a once-off debt buyback, where the bank re-purchased bonds from certain holders at a substantial discount and generated a profit on the transaction.
The bank said its customer deposits – excluding those it purchased from Anglo Irish Bank – fell by a further 5bn euros (£4.4bn), but were broadly stable in recent weeks.
Non-performing loans amounted to 34% of customer loans, up from 29% at the end of December, the bank added.
AIB said it has seen an increase in arrears due to the impact of a harsher economic climate on borrowers’ repayment affordability.
It said the pace of increase in total arrears eased in the second half of 2010, but has started to accelerate again this year.
It said the level of loans in arrears for more than 90 days was 7.82% by the end of June, compared with 4.8% at the end of last year.
David Hodgkinson, AIB’s executive chairman, said that the support of the ECB remained critical for the bank.