Bank of Ireland says the number of “defaulted” loans on its books is continuing to fall also while deposits and new lending are increasing on the back of more positive economic conditions.

In an interim management statement, the bank said the volume of defaulted loans stood at €16.4 billion at the end of September, down €1.9 billion on the previous quarter.

The bank said early and default mortgage arrears were also continuing to fall in the third quarter, with reductions achieved in both owner occupied and buy-to-let mortgage books.

However, the bank said it will continue to keep under review its provisioning assumptions on its Irish residential mortgage books.

Bank of Ireland said it has continued to trade in line with it expectations in the last quarter on the back of increased net interest margins and lower funding costs.

“The positive economic environment in our key markets of Ireland and the UK has, amongst other things, benefited collateral values and new business origination,” it added.