Despite the fact that the financial institution's operating profit increased to Â£185 million, up from Â£149 million in the corresponding period of 2009, the bank's performance was impaired by Â£499 million worth of "impairment losses".
Between January and June last year, Ulster Bank lost Â£8 million.
Commenting on the size of its impairment losses, which rose by Â£63 million during the second quarter, the company said: "Economic conditions remain challenging with a continued downward pressure on asset values and a resultant impact on the credit quality of customers."
The announcement coincides with parent company Royal Bank of Scotland (RBS) announcing half-year profits of Â£9 million, despite pre-tax operating profits standing at more than Â£1.1 billion.
Earlier this month, it was reported that RBS had agreed to sell 318 branches to rival bank Santander as part of its planned restructuring work.
By Claire Archer