A compression of the interest margin for Bendigo and Adelaide Bank was a trend that accelerated in the wake of pricing choices set off by the Reserve Bank of Australia's cash rate cut in May 2016.That was just one factor in the declining returns that characterised the results released yesterday by the bank, which nonetheless managed to return an after tax  profit for the 12 months to 30 June 2016 of A$415.6 million, with underlying cash earnings of $439.3 million. This was a 1.6 per cent increase on the prior corresponding period. Bendigo's return on assets, return on equity and return on tangible equity (a group favourite) all declined over the year to June 2016. The ROA eased to 0.61 per cent, from 0.64 per cent in 2015, a level much less than that generated by the major banks.?ROE fell to 8.94 per cent in 2016 from 9.09 per cent in 2015 while ROTE fell to 12.94 per cent from 13.28 per cent.While dedicated to a pillar of its strategy, summed up in one of managing director Mike Hirst's favourite phrases of "growth at profitable prices," Bendigo found the low interest rate environment faced by all banks proved a drag on earnings.It trimmed the net interest margin to 2.16 per cent from 2.20 per cent a year earlier. And while 2.16 per cent was steady with the margin over the first half of the full year, management emphasised the consequences for the final group margin of the decision to "pass on" 20 basis points out of 25 basis points from the May cash rate cut.Hirst said the bank ensured "ongoing attention to margin and cost management" but conceded "the low interest rate environment has impacted our net loan growth as customers are rightly choosing to reduce debt and improve their financial position. Many of our mortgage customers are ahead in their loan repayments, while excess loan repayments continued to increase and mortgage offset accounts grew by 11 per cent over the year.""We continue to leverage the core strength of our retail brand and distribution network, with about 82 per cent of funding provided by retail customers. The second half saw solid growth in new customer and existing customer deposits, with retail deposits up by eight per cent. The business mix among the bank's retail channels provided highs and lows, the "direct" broker business flourishing while the "mortgage manager" channel produced limp growth.Business lending, which includes agribusiness lending, has exceeded system growth. This was due to seasonality factors, Hirst said, with loans being drawn down in the second half of the year.?On one measure the risks in the mortgage book are waning, with only 30 per cent of loans covered by lenders mortgage insurance, down from 35.1 per cent in 2015 and 37.9 per cent in 2014.