The Co-operative Bank suffered a customer exodus amid a "hurricane of negative publicity" as 38,000 current account holders left in the first half of 2014 following its near-collapse last year.
Results for the period showed the lender narrowed losses to £75.8 million compared to £844.6 million for the same period in 2013 but the toxic legacy of its recent woes saw many customers depart.
Chief executive Niall Booker said it was in a much stronger position today, after it cut costs by shedding branches, and slashing nearly 900 jobs, and beefed up its balance sheet, most recently with a £400 million capital raising in May.
He said: "Considering the scale of the challenge we faced a year ago, we are encouraged by the progress made to ensure the stability of the bank."
But it lost a net 28,199 current account customers during the first six months of this year, with the departure of around 38,000 partly made up for by 9,700 new customers. The net loss amounted to 2% of the total.
Mr Booker said: "Considering the amount of time that we spent receiving negative publicity during the first and second quarters, I think the reduction is not significant and probably less than we would have expected.
"The loss of any customer is a mortal wound to somebody like me who has been in the industry for a long period of time. I don't think it is a bad outcome but I certainly don't want to appear complacent about it."
It came during a period when the lender reported a full-year loss of £1.3 billion, and the wider Co-operative Group announced that it had plunged £2.5 billion into the red for 2013, largely due to the bank's woes.
Meanwhile a scathing report by former Treasury mandarin Sir Christopher Kelly blamed the bank's near-collapse - after a £1.5 billion hole was discovered in its balance sheet - on a "sorry story" of multiple management failures.
The disastrous period saw it having to be rescued in a deal which saw the wider Co-op group's stake in the lender shrink from 100% to 20% as it ceded majority ownership to bondholders including US hedge funds.
Mr Booker said the "hurricane of negative publicity" had hit plans for an account switching campaign, which it now plans to re-start as it aims "to stem the outflow and turn the tide" of current account losses, and that the trend had recently slowed.
He told customers who had stuck by the bank that their "continuing loyalty is deeply appreciated" and reiterated its commitment to ethical values, following the change in its ownership structure.
Mr Booker said more than 73,000 had responded to a poll launched earlier this year as it updated its ethical policy - with results due in the autumn.
Meanwhile the bank closed 46 branches during the first half and plans to shut a further 25 branches during the second half.
It cut the number of permanent employees by 13%, and these have fallen by 21% overall since last year, to 5,860.
Mr Booker said: "The issues we continue to face in building a sustainable business are deep rooted and there remains much to be done.
"Transforming the organisation into a viable and profitable business which generates capital in the long term still requires significant change - both operationally and culturally."
He reiterated that the bank did not expect to achieve a full-year profit either this year or in 2015.
Mr Booker said the bank was "stronger than it was a year ago" and ahead of schedule in the disposal of unwanted assets, while the way the company was run at board level had improved following savage criticism in the Kelly report.
The report had painted a picture of the bank's culture in which an "acceptance of mediocrity" took hold.
It had noted that Methodist minister Paul Flowers had been appointed chairman in 2010 despite being "an individual who manifestly did not have the appropriate experience". He left last year and was later caught up in a drugs scandal.
His replacement, former Alliance & Leicester boss Richard Pym, is leaving the board in October when former Lloyds and AXA executive Dennis Holt will become interim chairman.
Meanwhile, the lender said it had formed a committee to consider the feasibility and timing of an initial public offering (IPO) on the stock market, which is expected to meet for the first time in September.
But Mr Booker said the Prudential Regulation Authority (PRA) had "indicated it would be concerned if an IPO were to distract focus from the primary goal of delivering the bank's turnaround plan".
He said it was "logistically unlikely" for this to take place this year.
The bank added £39 million to its provision for conduct issues in the first half, down from £163 million in the same period of 2013 and £244 million for the second half.
Of the latest provision, £5 million was for payment protection insurance (PPI) mis-selling, an issue that has haunted the wider banking sector which has shouldered billions of write-offs.
Most of the sum was due to what are described as technical breaches of the Consumer Credit Act, an issue the bank first revealed earlier this year.