EBS Building Society has reported a 37 per cent fall in pre-tax profits for the six months to the end of June.
In a statement on its website this morning the lender said pre-tax profits over the period dropped to €27 million, down from a €43 million over the same period in 2007.
Net income dropped to €23 million compared with €36.6 million a year earlier.
The lender said the decline in income reflected its business focus on the Irish property market and increased funding costs down to the credit crunch.
EBS said demand for mortgages has slowed as higher borrowing costs and weaker consumer confidence led potential buyers to defer their purchase.
The society said its loan book has grown by 4.5 per cent in the first six months of the year to €16.6 billion.
The worsening economic conditions had resulted in asset quality deterioration and as a result EBS has increased its impairment charge to €5 million, almost the double the €2.6 million from a year earlier.
In its statement EBS said further increases in its impairment charge were likely if the "property market and economy remains stressed".
EBS said its balance sheet remains strong with total capital of 10.5 per cent and tier 1 capital of 7.8 per cent. It described its liquidity position as "robust".
Chief Financial Officer Alan Merriman said the "results demonstrate the operating resilience of EBS . . ."
"In a more difficult market, with income down, cost management and vigilant credit portfolio management are key areas of focus and a reduction of 6.2 per cent in costs reflects this," he said.
Chief executive Fergus Murphy added that ""despite the credit crunch and difficult market conditions, EBS continues to punch above its weight in the Irish market . . ."