A slide in Bendigo Bank's first half profitability yesterday stoked concern among institutional investors of a slowdown in revenue growth across most parts of the lending market.Bendigo reported a 12.3 per cent fall in interim profit to A$203.2 million on the back of soft loan growth and higher operating costs.While the slowdown in interest-related income was slightly less than the drop-off revealed in Commonwealth Bank's first half result announced last week, analysts say the composition of both banks' interim results reveals a much softer lending environment than they had assumed."We saw a similar trend for contraction in net interest margin in the Bendigo announcement that mirrors the CBA disclosures," said CLSA analyst, Brian Johnson."The decline at Bendigo wasn't as great compared to CBA, however it shows revenue growth was weak."That revenue weakness was greater than most people had expected."Bendigo's proprietary net interest margin declined three basis points to 1.95 per cent. CBA, which reported its first half result last week, suffered a four basis point decline in NIM to 2.1 per cent.Bendigo's share price was hammered for most of Monday and closed down more than 6 per cent to $10.39 on heavy turnover.The deterioration in Bendigo's interest margins also triggered a sell-off of other listed banks, including the majors.Bank of Queensland (down 4 per cent) was the hardest hit followed by Suncorp (down 2 per cent) and NAB (down 1.6 per cent).Bendigo's first half performance was partly undermined by a deliberate decision to rein in the bank's loan exposures to the construction and real estate industries.The bank asked some business borrowers to refinance with other lenders, which resulted in the value of loan assets in the construction portfolio sliding by around 17 per cent to $936 million.Managing director Marnie Baker said that the rebalancing of the business loan book was completed during the half and that the bank was now returning to a normal footing in the SME market.Chief financial officer Travis Crouch said the program to rebalance the SME book had taken 18 months to complete and was undertaken because the bank was over-exposed to several industries."It is a material decrease in our portfolios," he said."We are very comfortable with where we are now."Baker said she believed Bendigo's housing loan growth was recovering and would track towards the system growth rate.Bendigo expanded its mortgage book by 2.7 per cent during the half, well below the industry average of 3.3 per cent.Baker said she welcomed the release of the Hayne royal commission's recommendations but took aim at the final report for not advancing measures to improve competition in the banking market."We continue to implement our strategy to control our destiny and realise our vision, but the external environment still inhibits customer choice," she said."Whilst the royal commission's final report makes strong industry-wide recommendations to improve customer outcomes, little goes to the issues of competition and a level playing field - something that many inquiries cite as being essential to better customer outcomes."Baker called on the federal government to address the