Bank of Ireland today announced pre-tax losses of €190m for last year.
The figures are a huge improvement on 2010 results when losses topped €950m.
Chief executive Richie Boucher said trading conditions remain challenging as the bank also reported impairment charges of €1.939bn, with impairment charges on residential mortgages at €469m.
“Operating income remains under pressure and our loan losses continue to be at an elevated level,” he said.
Mr Boucher said the banking environment remained difficult, particularly in Ireland, where he cited a range of problems from recession and unemployment to businesses going bust and the shattered housing market.
“We expect the impairment charges to reduce from this level trending over time towards a more normalised impairment charge as the Irish economy recovers,” he said.
“The pace of the reduction will be particularly dependent on the future performance of our Irish Residential mortgage book and commercial real estate markets.”
The bank said the number of its mortgages in arrears has increased because of speculation about the introduction of a debt forgiveness scheme.
More than 9,300 of its mortgages are now in some form of restructuring and most these are owner-occupiers.
Mr Boucher said any debt forgiveness scheme would have to take people's personal debt into account.