ALLIED Irish Banks (AIB) has said it expects to hit its target of 2,500 lay-offs by 2014.
More than 1,000 staff have left under a voluntary scheme, including early retirement, with another 700 to go by the end of December.
In an interim management statement, AIB said it expects to see bad debt provisions for 2012 materially reduce from this year's elevated levels. It also said the pace of arrears in the mortgage book has slowed, along with those in relation to loans to small and medium- sized businesses.
"Although economic conditions remain challenging, we have seen signs of a stabilisation in underlying economic indicators, including house prices," the statement said.
"We have materially accelerated the rate of engagement with customers in difficulty and are now providing forbearance and restructuring options to customers to ensure sustainable repayment schedules."
AIB said about 70pc of mortgage customers with revised terms are adhering to the new conditions.
Elsewhere, the bank said it is implementing pay cuts of 15% for senior levels and pay freezes at junior levels. Its branch network has also been drastically reduced, with 45 sub-office closures and six branch amalgamations completed in Ireland by the end of November.
Eight branches and four sub-offices will have closed in AIB UK by the end of December, while another 16 Irish branches are expected to close in 2013.
In its statement to the Stock Exchange, the bank said: "Substantial progress has been made in the second half of 2012 in restructuring the bank and implementing our revised strategy and cost efficiency initiatives to ensure a reduction in the bank's operating cost base of around €0.4bn by 2014.
"The core business environment remains challenging although there is continued evidence of stabilisation."