State-backed AIB has reported profit after tax of €274m for the first half of this year, a swing on the loss after tax of €700m in the corresponding period last year.

The profit for the six months to June 30 a included a net credit impairment writeback of €103m and exceptional items of €191m, according to interim results from the bank.

Last year the bank recorded a €1.2bn charge due to what it expected would be the impact of Covid on its loan books. 

Income for the first six months of this year was €1.2bn, while the bank recorded operating profit of €373m.

AIB said the results benefitted from “solid income performance and focused cost management.”

The bank’s net interest income – the different between the revenue a bank generates and its expenses – was €881m for the first half of this year, a 9pc decline on last year. AIB said its next interest income is on track for a “moderate decline” for the full year.

In the first half of the year the impact of the lower interest rates, lower loan volumes and excess liquidity remained, the bank said.

Meanwhile, momentum continued on its negative deposit pricing strategy.

The group’s performing loan book was “broadly stable” at €54.9bn compared to €55.2bn at December 31 last year.

Total new lending in the first half of this year increased 3pc to €4.5bn.

AIB said the impact of Covid-19 restrictions continued to weigh on consumer credit demand and contributed to a 6pc decline in new Republic of Ireland personal lending. Credit card debt and overdrafts also declined.

Customer deposits of €88.3bn increased 8pc from €82bn at December 2020, as Covid related savings continued.

The bank – which recently announced the closure of a further 15 branches – said its costs reduced 1pc in the first six months of this year.

Colin Hunt, AIB chief executive, said: “These results, coupled with our strong customer franchise and digital leadership, position us well for the future, as we continue to tightly manage costs and execute our strategy at pace.”

During the period AIB announced the purchase of around €4.2bn Ulster Bank corporate and commercial loans and the acquisition of Goodbody.

It also agreed a joint venture with Great-West LifeCo.

Looking to the medium-term, AIB plans to deliver shareholder returns of more than 9pc by 2023, up from its previous guidance of 8pc.