Bendigo and Adelaide Bank has unveiled an after tax statutory profit of A$231.7 million for the six months ended 31 December 2017, an increase of $22.7 million on the previous comparable period.Likewise, underlying cash earnings were $225.3 million, a 10.7 per cent - or $21.8 million - increase on the prior corresponding period. Return on equity was marked up accordingly: return on average tangible equity was up 28 basis points to 11.7 per cent; return on average ordinary equity was up 39 bps to 8.33 per cent.Managing director Mike Hirst, in releasing the interim results, told analysts, media and shareholders that much of the positive result was due to the rebalancing of the group's mortgage book, necessitated by APRA's lending caps on investor and interest-only loans."This improvement obviously reflects mortgage repricing in response to regulatory caps on interest only and investor lending, as we sought to restrict growth in those products," First said.The first half saw growth in total housing lending up 0.7 per cent for the half with owner occupier principal and interest lending settlement flows up 13 per cent on the prior corresponding period. "The Bank experienced strong growth in loans to home owner occupiers in an environment where competition for those customers remains fierce. While lending to home investors was curtailed by caps applied by APRA, all other metrics indicate that we are fulfilling our customers' needs by providing a premium banking experience," Hirst said."Our disciplined approach to asset and liability pricing resulted in margin expanding 18 basis points relative to the prior corresponding period, with an exit margin of 2.38 per cent."Cost to income ratio was down by 2.2 per cent (220 bps) to 54.2 per cent."With 79.6 per cent of funding provided by retail customers, we are very well positioned as we head into what may well be a time of greater volatility for financial markets," Hirst said."A focus on increasing efficiency to drive a better customer experience and planned, active cost management has driven productivity improvement, with our cost to income ratio moving down 220 basis points to 54.2 percent."Our ability to organically generate capital has enabled us to achieve APRA's 'unquestionably strong' capital benchmarks well within the required timeframe."Our current capital position is a highlight, with Common Equity Tier 1 Capital having grown to 8.61 per cent, generated by strong profitability, a stable balance sheet and reduced risk. "Progress towards advanced accreditation awaits APRA's release of new capital adequacy guidelines, however the significant investment we have made to improve our risk capability is already paying dividends," Hirst said.He nevertheless took the opportunity to point out that SME loan assets carried a risk-adjusted capital weighting of only 55 per cent for banks that have achieved advanced accreditation, while standard model banks have to settle for 100 percent weighting.Hirst added that while bad and doubtful debts increased slightly this half, they would start trending down and the outlook for 90 days past due is down.Among those debts sits the last overhang of the Great Southern