Nine out of 10 mortgage applications to Danske Bank were approved in the first half of 2014, helping to drive a pre-tax profit of £45m, the bank has said.
Home loan lending was up 38% compared to the same period last year, which Danske's head of business and corporate banking Kevin Kingston said supports an overall rise in confidence across all sectors of the Northern Ireland economy.
The turnaround from a £1m loss in the same period in 2013 has mainly been driven by decrease in the amount the bank has had to put aside to cover bad loans, even making a £5m gain due to an improvement in some such loans.
Turnover was £109m, up from £95m during the same period in 2013, and total income is up 14%.
Mr Kingston said that the future was looking optimistic after a turbulent few years for the bank and the sector as a whole.
"The 38% increase in mortgage approvals reflects what we are seeing in terms of greater activity in the housing market," he said.
But he added that he was not expected a swift return to the boom in house prices experienced in the years up to 2007.
Since that peak in the market, prices have fallen by around 50%.
Mr Kingston said: "It will be a long time before we see a housing bubble in Northern Ireland.
"We have some pretty competitive products which are attractive to the rising number of first-time buyers and also to those who want to switch their mortgage provider.
"The current climate is offering people an opportunity to get into the market at relatively affordable prices."
Mr Kingston said that in business banking, over the six-month period, Danske recorded its best-ever performance in attracting "new to bank" customers.
He added that the rise in business banking customers, previously driven by larger companies, was now being bolstered by smaller firms, which make up the vast majority of the businesses resident in Northern Ireland.
"Last year the recovery was led by large businesses and this year we are seeing that confidence trickle down into the small to medium-sized enterprise population, and that itself is a very good sign," he said.
"We're forecasting growth of 2.4% by this time next year, consumer confidence and business confidence levels are continuing an upward trend and employment levels continue to rise."
Mr Kingston said that once the uplift converts into real wage growth, the statistics could be even better.
"People are being more cautious, but we are looking at the growth we have seen in deposits, there is more cash being generated.
"We are obviously still in recovery mode but there will be a build up of resources which might yet come into play and outlook will appear even better."
The bank's chief executive Gerry Mallon said online and mobile services continued to grow in popularity.
"Today more than 136,000 of our customers are actively using online banking and over 85,000 of them are also using our mobile and tablet apps."
Last month the bank announced it was closing two branches in Holywood and west Belfast and moving customers to its Belfast city centre headquarters. Its latest closures mean that Danske Bank will have around 50 branches in Northern Ireland, compared to 95 in 2003.
Danske's Danish parent company also reported an improved performance in the first half of 2014. It increased turnover by 9% to €2.9bn (£2.3bn), delivering a net profit of €920m (£727m) which was up by 88% compared to 2013.
The Northern Bank was sold to Denmark's biggest bank, Danske, in 2004. It was rebranded to Danske Bank in November 2012.