Bank of Ireland has posted pre-tax losses of more than €1.246 billion in the six months to June, up from €668 million in the same period last year.
The country's largest lender had a €466 million loss on loans transferred to the National Asset Management Agency (Nama) and made provisions for a further €466 million on assets due to be transferred to the agency.
It reported an impairment charge of €893 million on loans to customers it does not expected to transfer to Nama.
Despite the loss, analysts said the bank had exceeded expectations in an "epic" first half of the year. Stock in the bank was trading down 2.6 per cent at 3pm at €0.82 on reasonable volumes.
Bank of Ireland said its first half operating profit was €553 million before impairments, down 32 per cent on the same period last year. It said significant progress was made in the first six months of the year in stabilising the group. Bank of Ireland raised €4.6 billion in funding in that period.
Chief executive Richie Boucher said the bank has the "capability" to move off reliance on the Government guarantee in a "measured, prudent" way. He said the bank is "keen" to move on refinancing.
"With the recapitalisation we've done, the EU endorsement of our (restructuring) plan, us passing the stress tests leaves us with the capability to seek to get off the guarantee," he said.
Bank of Ireland said it aimed gradually to pay back the state's €1.7 billion worth of preference shares in the next three years, although it said it had no control over the 36 percent stake the government owns in ordinary shares.
Mr Boucher said he "broadly" agrees with analysts' forecasts for pre-impairment operating profit in 2010, without detailing a figure. "We feel we have a significant degree of control over our own destiny".
“We are confident that the steps that we have taken in the first half of 2010 to strengthen the Group will enable us to successfully meet the many challenges ahead and position us well to capitalise on the opportunities that arise through a recovery in the economic conditions in our key operating markets in Ireland and the UK," he added.
Mr Boucher said he believed loan losses would reduce progressively in 2011 and 2012 and normalise in 2013. He also said Bank of Ireland does not expect to sell its New Ireland and ICS Building Society units this year.
In a briefing note, Davy Stockbrokers said it had been an epic six months for the Bank of Ireland group and that the results were a positive sign that management was on top of the factors within the group's control, such as pension restructuring, the successful renegotiation of outsourcing contracts and plans to reduce staff numbers.
NCB switched its outlook for Bank of Ireland to buy, saying its interim pre-provision profits remained resilient.
"Encouragingly margins remained relatively robust in the period, which was encouraging given the difficult funding environment," NCB said in a briefing note. "Overall these results are broadly in line with expectation. In common with peers the trend of margin erosion remains prevalent."
It said the interim margin of 1.41 per cent was above its estimates and pre-provision profits were €100m stronger. "We await further details as to the group’s ability to issue term funding in the near future, with a potential unguaranteed deal likely to be a key catalyst for the stock."
