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Bank of Ireland has announced pre-tax loss of 1.24bn euros (£1bn) for the first six months of this year, compared to a a loss of 668m euros in 2009.

An underlying profit was wiped out by 1.8bn euros (£1.4bn) the bank set aside to cope with bad loans.

Losses of 900m euros (£746m) were linked to loans it has transferred to the National Asset Management Agency, the Irish Republic's "bad bank".

The bank also took a hit of almost 900m euros on other loans.

Excluding the bad loan charges, profits were down 32% to 553m euros (£458m).

The bank, which has plans to cut 750 staff over the next two years, said it had cut costs by 3%.

Its UK division, of which the Northern Ireland business is a part, showed a loss of £168m.

It's underlying profit was £107m but there was an impairment charge of £221m. The underlying profit figure is almost 50% lower than the same period in 2009.

The bank said its performance in Northern Ireland badly affected the overall results of the UK division.

Housing

It said the impairment charge on its property investment loans was "impacted by the low levels of economic activity particularly in Northern Ireland."

It added that impairment charges on land and developments loans were due to a decline in asset values and "an over supply of residential housing stock in Northern Ireland."

Impairment charges on non-property business lending in the UK division ballooned by more than 400% from £17m in the first half of 2009 to £89m in the first half of this year.

The bank said this was mainly due to impairment charges on "a small number of large individual cases in Business Banking."

Looking ahead the bank said the measures announced in the UK budget in June may have a negative impact on immediate growth prospects, but that they should accelerate the rebalancing of the economy and be supportive of longer term growth.

Bubble

In a rescue plan for its economy, the Irish government has pumped seven billion euros into its top two lenders, with Bank of Ireland and AIB each getting 3.5bn euros in state cash.

Bank of Ireland has 44 branches in Northern Ireland and runs a financial services joint venture with the UK Post Office.

The banking sector across Ireland has been badly hit by the bursting of a property bubble.

On Tuesday Northern Bank reported losses of £16m for the first half of the year.

Meanwhile its parent company, Danske Bank Group, announced pre-tax profits of £200m

Last week the Ulster Bank announced losses of £314m for the first half of the year.

Although its operating profit increased to £185m, that was wiped out by £499m set aside to cover bad loans. The bank's results relate to the island of Ireland.

Meanwhile its parent company, the Royal Bank of Scotland (RBS) announced pre-tax profits of £1.1bn.

AIB reported a half year loss of 2bn euros (£1.66bn) with its Northern Ireland business, First Trust, losing £52m.