AIB has increased its credit provision by €210m due to the impact of the coronavirus on the economy.
The bank said a further impact from the crisis would be felt in the next three months.
It also expects to incur exceptional costs in the range of €150-€175m this year, including costs relating to restitution and operating costs associated with the tracker mortgage scandal.
Almost 50,000 personal and small business customers have availed of Covid-19 payment breaks in AIB’s retail banking segment.
The value of the payment breaks amounts to €3.26bn.
It represents 8pc of its mortgage holders and 11pc of small businesses, according to a trading update from the group.
At the end of the payment break, impacted customers will have an option to extend the term of their loan.
Within its Corporate, Institutional and Business Banking (CIB) segment, close to 700 customers have requested a modification of their existing banking facilities.
Meanwhile, new lending was 12pc lower in the first three months of this year when compared with the same period last year, mainly due to lower international lending.
However, AIB experienced strong new lending in retail banking, with 11pc growth in mortgages, increasing its market share of 32.9pc.
Customer accounts of €72.4bn were up €0.6bn in the first quarter of the year.
The bank’s net interest margin – a key measure of profitability in a bank – was 2.19pc during the three months, down six basic points from the last three months of 2019.
Colin Hunt, CEO of AIB, said: "Critical to our ability to support individuals and businesses through the crisis is AIB's robust capital and liquidity position and the strength of our business model.”
“We delivered a solid underlying operational performance in Q1 and whilst 2020 will be an uncertain and difficult year, we will retain our relentless focus on our customers and are confident we can generate value to shareholders over the medium term."
Elsewhere, AIB customers are spending an average of 28pc less due to Covid-19.
However, in certain sectors, such has groceries, spending is up.
Customers are also shifting their spend online with increased spend in many areas, including online groceries up 121pc, online electrical goods, where spending is up 71pc, and spend on online clothing, which is up 56pc since the start of the pandemic.
Online ordering of takeaways has increased 43pc.