Bank of Ireland said that the three months to the end of September saw generally better trading conditions compared to the second quarter of 2020. 

In a trading update today, Bank of Ireland said that business volumes and activity in Ireland improved including a 30% increase in its mortgage drawdowns compared to the second quarter of 2020.

But it said that while there has been improvement in the third quarter, recently announced Covid-19 restrictions by both the Irish and UK governments combined with Brexit present continued uncertainty.

Bank of Ireland said its net interest income (NII) – a key performance measure – is 2% lower in the nine months to September, when compared to the same time in 2019. 

The bank said this reflects lower new lending volumes and the on-going impact of lower interest rates. 

"Lower funding costs, including the impact of applying negative interest rates to certain deposits, has supported interest income. In addition, higher mortgage and revolving credit facilities (RCFs) activity has been positive," it said. 

While the third quarter has seen an improvement, it said that business income is still 19% lower in the nine months to September compared to the same time in 2019.

Bank of Ireland said it has not experienced a material increase in loan losses since June 2020, in line with its expectations. 

It also said the number of customers availing of a payment break continues to reduce as the breaks expire. 

The lender approved about 106,000 initial three-month payment breaks in Ireland and the UK, with about 27,000 availing of a further three month extension. 

As at October 16, it said it has a total of about 20,000 outstanding payment breaks. 

It also said that the "significant majority" of customers that have come off payment breaks have resumed full repayments, adding that the number of customers requiring additional support was in line with its expectations.

Bank of Ireland's non-performing exposures (NPEs) have remained broadly stable since the end of June 2020, and stood at €4.5 billion at the end of September, which is equivalent to an NPE ratio of 5.8%. 

It also said its voluntary redundancy scheme, which concluded in the third quarter, will result in about 1,450 workers leaving the bank in 2020 and continuing over the course of 2021. 

When completed the financial impact is a €114m reduction in annual staff costs, equivalent to 14% of September 2020 annualised staff costs. 

Francesca McDonagh, Bank of Ireland's chief executive, said that as the bank navigates Covid-19, it continues to support its customers at each stage of the pandemic, playing its part in the reboot of the economy, and staying focused on its strategic objectives.

"We are delivering good progress on transformation, customer delivery, and operating cost. Examples include the roll-out of our new Mobile App to iOS customers which follows the successful launch to Android users in May," Ms McDonagh said. 

"Our cloud-based personal current account journey is now the largest channel for customers opening a current account, and we launched a fully digitised mortgage application process for first time buyers in July," she said.

She also said the bank's voluntary redundancy scheme will deliver a step-change reduction to the bank's cost base.

Despite the backdrop of Covid-19 and Brexit, the Bank of Ireland CEO said the bank's capital position remains "strong".