Bank of Ireland has reported an underlying profit before tax of €419m for the first six months of 2022, a decline of 10% from the €465m profit made in the first half of last year.

Despite reduced profitability, the bank said it had performed strongly in H1, making gains net interest income and business income while making progress with its acquisitions of Davy and KBC Bank Ireland's mortgage portfolio.

The lender recorded a net impairment charge of €47m for expected bad loans, and its stock of non-performing exposures decreased €100m to €4.2bn or 5.4% of its total loan book.

Total income rose modestly against H1 2021, exclusive of additional gains, valuation items and acquisitions of -€3m, on the back of higher net interest income and on a 16% improvement in business income, reflecting the post-Covid economic recovery.

Net lending in corporate and retail totalled €1bn, and the bank deleveraged €2bn worth of UK assets in line with its strategy. Operating costs rose 1% due to acquisitions, but on a like-for-like basis, costs were 1% down versus the first six months of last year.

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New account openings more than doubled year on year to 110,000, and a total of 235,000 new products were opened with the bank during the period.

Customer loan volumes at the end of June were €74.6bn, a decrease of €1.7bn versus December 2021, and the bank's loan book grew by €1bn.

New lending was up 7% year-on-year, thanks to a 25% boost in mortgages, business banking and consumer portfolios, while corporate and markets rose 12%, and UK retail fell 19% due to a reduction in mortgages.

The group's liquid assets have risen €1.9bn from December to €51.6bn, driven by a €1.3bn increase in customer deposits (€94.1bn), and wholesale funding fell €100m from December to €21.3bn.

"We delivered a strong business performance in the first half of 2022, while continuing to make clear progress on our National Champion Bank strategy," said Francesca McDonagh, group CEO of Bank of Ireland.

"This includes reaching key milestones on our two transformative acquisitions, and material momentum in attracting new customers as the Irish banking landscape fundamentally restructures.

"Notwithstanding global uncertainty, the step change we’ve delivered in our business model makes Bank of Ireland well positioned to capitalise on the significant opportunities we face, further supported by a rising interest rate environment.”

Looking ahead, Bank of Ireland expects income for the full year to increase year-on-year while costs will fall after absorbing inflation, excluding acquisitions and one-off investment relating to onboarding customers from exiting banks.

The bank will also spend c. €30m to "capture opportunities from exiting banks," and it estimates that it will pay levies and regulatory charges of c. €140m in 2022.

Patrick Kennedy, chairman of Bank of Ireland, said the board is "well advanced" in the process to appoint a successor for McDonagh, who will step down in September, with an interim CEO to be appointed and an announcement to be made "in due course."

"The focus of the board remains on the execution and delivery of the significant commercial opportunities available to the group," he added.