With a lacklustre, but well telegraphed, half-yearly profit to announce yesterday, Bendigo and Adelaide Bank's chief executive, Mike Hirst, used the regular briefing to reflect on some of the key debates in banking - and to explain why the bank lifted home-loan interest rates by more than any other lender in the market last week.Hirst told investment analysts and media yesterday that when it comes to "all the discussion that's gone on over the last two weeks, following the out-of-cycle rate increases, a lot of it really centres on that return on tangible equity number.  "What is a reasonable number for banks to be making?  The cost of capital is around 12 per cent, so it needs to be in excess of that.  If it's not, then banks can't raise the capital that they need to be able to grow.  "Should it be 20 per cent; should it be 15 per cent?  I think that is the real debate that people should be having."The key thing is, though, it needs to be fair and reasonable for all of those who have stakes in banking business; so, for the community, for shareholders, for borrowers and for depositors.  "From time to time, the balance is going to swing in favour of one or more of those stakeholders, but if you take a medium- to long-term view, you have to make sure that all of the changes that are occurring and impacting on that balance are somewhat permanent in nature.  "Because you can't just be making ad hoc decisions willy-nilly depending on how that gets out of balance, and that, I think, is what you've seen from the industry in the last period."There's no doubt that for the last four to five months, running costs have increased significantly. The banks bore the brunt of that for that five-month period, and then [the industry has] since moved to change that balance back to something that's more acceptable.  "The reality is that funding is probably as tight as it was during the difficult stages of the GFC.  The difference now though is that there isn't the demand for credit that there was during that period.  "So, we have been seeing the liquidity issues that emerged last time emerge [again].  It's actually self-regulating, if you like."I will say that banks haven't gone all the way to recouping that change in funding cost, and I think most have taken a wait and see approach, to see how permanent that current change is."Hirst said that while Bendigo increased its stock of loans at a rate faster than the rest of the market, "the majority of that was in the first quarter [that is, the September 2011 quarter] when the impacts of the funding costs and the competition that emerged in the second quarter hadn't fully taken hold.  "We have pulled back a little bit because there was profitless growth occurring, and, whilst you can do that for a period of time, it's not that smart to do it