Pretax losses at Danske Bank’s Irish arm fell to €8.8 million in the first quarter of 2013, as impairment charges narrowed compared with the previous quarter.

That compared with a loss of €15 million in the final quarter of 2012.

The financial group said loan losses at Danske Bank Ireland shrank to €5.5 million, from €15.7 million in the preceding three-month period. However, the bank also booked a loss of €3.3 million before loan impairment charges were taken into account, compared with a profit of €700,000 in the preceding quarter.

Although underlying costs were 5 per cent lower, Danske Bank Ireland saw overall costs rise to €17.9 million as the impact of the reorganisation of its retail business announced last year was felt.

Country manager Terry Browne said the performance was in line with expectations, and reflected the rebranded core business in Ireland.

“ While costs remain elevated, the underlying costs trend is moving in the right direction as is the case with impairments which continue their downward trajectory as previously guide,” he said. “ Non interest income and deposits have both performed well on the back of key business wins within our Corporate and Institutional businesses.”

Total income was slightly higher at €14.6 million, with non interest income up 12 per cent as customer deposits rose to €3.4 billion. The bank has a total loan book of €3.2 billion.