The Bank of Ireland, Dublin-based lender, has claimed that its underlying pretax loss have reduced to a significant level touching 723 million Euros ($1 billion) in the first half , having strong influence from the declined bad loans offset rising funding costs.

In addition, the bank, country's largest lender by assets, has notified a 1.32 billion-euro loss for the same period last year whereas Bank of Ireland's loan destruction charge declined to 842 million Euros from 1.08 billion Euros. Further, its net interest margin, the difference between its funding costs and average rate at which it lends, narrowed to 1.33% points from 1.41 points.

"They share our view that the Irish economy is facing up to its challenges and its difficulties, it will come through this, driven in particular by the strength of the export sector", said the Chief Executive, Richie Boucher.

While commenting on the market scenario, an Analyst at Credit Suisse, Niall O'Connor, said that previous guidance was, in retrospect and more optimistic as wholesale funding costs rose and deposits fell faster than anyone could have expected.

Meanwhile, shares in Bank of Ireland were observed to experience a hike of more than 8% at 10 cents, during the morning trade.