The State-owned  Allied Irish Banks (AIB) returned to profit in H1 2014 reporting a pre-tax profit of €437m compared with an €838m loss the same period in 2013 - - charges for bad loans plunged to €92m from €738m in the first half of 2013.

AIB said total operating income increased by 36% to €1.24bn during the first half with operating expenses dipping 9% to €686m.

The bank approved a total of c.€5.6bn in lending in H1 2014, a c.33% increase vs. the same period in 2013 of which c. €4.6bn was lending approvals to the Irish economy.

It said total impaired loans fell by c.€2.9bn or 10% since December 2013 and the total number of accounts in arrears in the Irish residential mortgage portfolio declined by 6% in H1 2014 with total accounts in arrears for owner occupier mortgages down 9%.

Commenting on the results David Duffy CEO said:  “AIB has achieved its stated aim of returning to sustainable profitability on a post provision basis in 2014 with our half year results reflecting strong improvements in margins, funding position and capital ratios. The Group has demonstrated its capacity to support economic recovery with loan approvals, including the UK, of c.€5.6bn, up 33% year on year. Our mortgage arrears and overall levels of impaired loans are reducing and our performance in the first half of the year saw a material reduction in provision charges. As the Irish economy and the bank recovers, we remain focused on growth and maximising value for the Irish State, as 99.8% shareholder, and all other stakeholders over time.”