Bank of Ireland has announced profits before tax of 399 million euro for the first half of the year.
In an interim report the bailed-out lender said its impairment charges are down from 780 million euro to 444 million euro.
Some 88 million euro of that is purely on its residential mortgages.
Chief executive Richie Boucher said the review of business for the first six months of the year showed the bank was profitable.
"In the first half of 2014 we have continued to make good progress against our strategic objectives. We have returned to profitability and are generating capital," he said.
"In Ireland, we continue to support and benefit from the accelerating economic recovery; our new lending in 2014 makes us the largest lender to the Irish economy.
"The favourable economic outlook and the strength of and momentum in our Irish and international businesses gives us confidence in our ability to deliver attractive and sustainable returns for our shareholders."
Bank of Ireland also said that for more than eight out of 10 Irish mortgage customers who have agreed a restructured repayment scheme the conditions are being met.
The bank was hit by an IT failure yesterday which left thousands of workers without wages.
Teachers, gardai and civil servants were among those affected but the lender has committed to having the money in accounts today.
Bank of Ireland had stated in March that it was back in profit.
The formal results out today are confirmation that the bank is making money for the first time in five years.
It also follows the positive figures from Allied Irish Banks on Wednesday which showed it was back in profit for the first time since the financial crisis and subsequent economic collapse in Ireland.
Bank of Ireland was the subject of a massive stock gamble by North American investors Wilbur Ross and Prem Watsa over the last few years after they sold off part of a stake in the bank in June.
They bought in with an investment of about one billion euro as the financial crisis peaked in early 2011, staving off a further state bailout. The share price was about 10 cents at the time and closed at 33 cents on the back of the deal.
The investors earned about 690 million euro.
The Irish Government retains a 14% stake in Bank of Ireland following the 2009 bailout.
Mr Boucher said customers will not be out of pocket as a result of the IT difficulties which hit salary payments yesterday.
"What happened yesterday should not have happened and we apologise," he said.
Davy Stockbrokers said Bank of Ireland's half-year report showed better-than-expected capital generation and increased lending - 4.3 billion euro for the six months compared with six billion euro for the whole of 2013 - which it described as the stand-out features in "a solid first half".
The Irish Government invested 4.8 billion euro in Bank of Ireland five years ago and since then it has received six billion euro in return through sales of investments, interest coupons and fees for a bank deposit guarantee.
It also said its stake in the bank is worth about 1.2 billion euro.
Finance Minister Michael Noonan welcomed Bank of Ireland's report and return to profitability.
"The recovery in the Irish economy is taking hold and further proof of this is evident in the Bank of Ireland half-year results.
"The results show that the bank is lending into the real economy, reaching sustainable solutions with small and medium enterprises and mortgage customers in arrears, and making a profit," he said.
"As a 14% shareholder in Bank of Ireland, this is good news for the Irish taxpayer.
"The investment in Bank of Ireland shows that the state can make a profitable return on investments in the banks."