There was a lot of speculation among analysts last year that 2014 would be the year when the cost of funds for banks would start to fall. There was even talk that banks would cut their standard variable rates to reflect a reduction in the cost of funds.However, Commonwealth Bank's financial report last week showed that, while wholesale funding costs have come down, deposit funding costs have continued to rise.The bank's Customer deposits increased to A$426 billion at December 31 - up $41 billion on the previous corresponding period. Customer deposits make up 63 per cent of the group's funding base, unchanged from the previous corresponding period and the previous half.Funding costs contributed to a four basis point decrease in the bank's net interest margin, reflecting higher deposit costs from strong competition and the impact of the falling cash rate.In June 2012 the margin over the bank bill swap rate for three year term wholesale funding was 137 basis points. In June last year it was 82 bps and in December it was 69 bps.The margin for 12-month wholesale funding has fallen from 43 bps in June 2012 to 23 bps in June last year and 19 bps in December.As a result of these reductions in new wholesale funding costs, CBA's overall retail bank wholesale funding costs, relative to 2007, have fallen from a margin of 1.53 per cent in December 2012 to a margin to 1.37 per cent at the end of the latest half.However, the cost of deposit funding has continued to rise. The banks overall retail bank deposit funding cost, relative to 2007, has increased from a margin to 1.87 per cent in December 2012 to 1.94 per cent at the end of the latest half.As a result, the weighted average cost of retail bank funds, relative to 2007, has not changed over the past year.CBA's chief executive Ian Narev, said: "Six months ago we talked about the ongoing pressure on deposit margins, driven by competition and also a low cash rate environment. The net interest margin on deposits has continued to provide a bit of a drag to the result."