In an interim management statement, the bank said the increase is mainly due on the €24 billion loan portfolio that may transfer to NAMA.

The bank said that it it expects to see operating profits in all of its divisions – Ireland, Capital Markets, UK and CEE despite the very difficult operating environment.

AIB said that its Capital Markets division continues to perform very strongly, and its operating profit is expected to be ahead of the level seen in 2008. It added that its Polish operations will see a broadly similar operating profit in 2009 compared to 2008.

However, income pressure and the cost of customer deposits is the main reason for the expected fall in operating profits in its Irish and UK divisions.

AIB said that the deterioration in its overall loan book continues, but that the pace of that deterioration is slowing. It said that reflects the significant portion of the book already ‘criticised’ rather than any material improvement in the quality of the book or operating conditions.

It said the increase in criticised loans in the second half of 2009 is expected to be much less than the €18 billion increase in the first half of the year.