Updated 12.00

Finance Minister Michael Noonan says positive first half figures from AIB this morning have exceeded market expectations.

The bank made a profit of €437m in the first half of 2014, compared to a loss of nearly €840m in the same period in 2013.

It is down to a range of issues including higher income, cost-cutting and a drop of nearly 90% in its provisions for loan losses to €92m.

The bank said there has been a decline in the number of home owners in mortgage arrears over the last six monthys. Management says the bank has approved €5.6bn of new loans so far this year.

Chief Executive David Duffy, speaking on Newstalk's Business Breakfast, rejected any suggestion that another property bubble is developing in the Irish market, despite rapidly rising prices in some areas:

Despite the good results, the minister says it will still be next year before his government can look at recouping some of the taxpayer's €11.5bn investment in AIB.

Mortgage arrears

And on mortgage holders who are in arrears, Mr Duffy told Newstalk AIB has built up a relationship with the Irish Mortgage Holders Organisation, to help address problems, adding "every customer will get exactly the same solution, no matter where it comes from."

Meanwhile, Mr Noonan said the bank is making progress in reaching "workable and sustainable solutions with SMEs and mortgage holders in arrears".