National Australia Bank chief executive Cameron Clyne has defended the bank's retail banking strategy against charges that it is a high-cost, low-margin approach that adds nothing to shareholder returns."We are very happy with the personal bank," Clyne said.The personal banking division, which includes NAB's Australian retail business, UBank, Homeside and Advantedge, yesterday reported unaudited cash earnings of A$464 million for the six months to March 2012.Earnings were up 7.4 per cent on the previous corresponding period but down 7.2 per cent on the September 2011 half-year.Net operating income of $1.7 billion was down 0.9 per cent half-on-half.The division's net interest margin took a big fall - down from 2.22 per cent in March last year to 2.17 per cent in September and then down to 2.02 per cent in the latest half.The division's return on assets was a modest 0.65 per cent (down nine basis points half-on-half). The cost to income ratio rose from 51.5 per cent in the September half to 52.1 per cent in the latest half.The bank's mortgage market share and household deposit share grew strongly. The mortgage portfolio increased by more than twice the rate of system growth during the half. (On the other hand, growth in home loans from the business bank, which was once very strong, is now weak).What analysts were asking Clyne at yesterday's half-year results briefing was whether the growth is at too high a cost, and whether what increasingly looks like profitless growth is sustainable.Clyne said: "You have to go back to where we were three and a half years ago. We were in a situation where we were bottom in customer satisfaction, we had no deposit growth and we were writing poor quality mortgages at half system."If that had gone on it would have threatened our group. We had to undertake a radical, organic strategy."Clyne said the strategy had delivered results not just in terms of growth in loans and deposits. "It has helped the group. Deposit growth has strengthened the balance sheet. New customer numbers have given us an opportunity to cross-sell."He said it was a goal of the bank to continue growing deposits ahead of system and to hold the net interest margin steady, which he conceded was "a difficult aspiration".He said the bank's new technology platform would help gather deposits at a lower cost. He said NAB had learnt some lessons from UBank, which was launched as an online-only retail bank in 2008. "We are learning a lot from UBank in terms of efficiency and deployment of new technology."