Bank of Ireland returned to profitability in the first half of the year.

It made a pre-tax profit of €399m in the six months to the end of June, reversing a half year loss in 2013 of €516m.

Excluding the benefit of one-off gains, the bank said today that underlying profits hit €327m.

The turnaround was boosted by higher interest income and a sharp fall in the amount of money the bank sets aside to deal with bad loans. Its impairment charge in the first of the year dropped to €444m from €780m.

Bank of Ireland Chief Executive Richie Boucher told Newstalk that the bank is generating capital again and new lending is gaining momentum.

Having suffered years of losses Irish banks are returning to profitability.

Meanwhile, AIB has swung into a profit, the bank said earlier this week, after years of losses and Ulster Bank said today it made a profit of €84m.