Bendigo and Adelaide Bank is hoping a tempering of pricing on term deposits will lift margins at a time of rising liquid asset levels, which are climbing both at management's choice and because of customer preference.The bank put its level of liquid assets at 13 per cent at June 2011. They may be higher now given a surge in deposit inflows and an accelerated pay down of consumer loans over recent weeks.At a briefing in connection with the bank's profit for the year to June, the bank's managing director, Mike Hirst, said: "We have seen a large inflow over the last month; near record levels. And we are also seeing people pay back personal loans, credit cards and margin loans."We have seen a continued increase [in loan repayments] as people continue to clean up their balance sheets."There seems to be a strong correlation between the amount of press that offshore issues get and what happens with inflows."One consequence of this is that the bank has, as of last week, trimmed its pricing on term deposits, a step that may help lift net interest margins and underpin profit growth, which on some measures was disappointing in the second half of the bank's financial year.At profit briefings, the bank's executives invariably repeat the mantra that they endeavour to manage the bank for profit rather than market share. But, on key measures in the second half of its financial year it was market share that improved at Bendigo and profit that dipped.On profit measures such as return on equity and return on assets, the bank's profits dipped, to an ROE of 8.94 per cent and an ROA of 0.62 per cent.Using more generous measures of cash profit and return on tangible equity, Bendigo did improve, with the former up to A$151 million in the second half, from $140 million in the first half, and ROTE up to 17.3 per cent, from 16.5 per cent.The bank achieved above-system growth in home loans and deposits, thanks, in part, to an acceleration in third-party funding of loans through mortgage managers and its expanding network of franchised community bank branches.Other drags on profit were the impairment of investment in new customer relationship management systems, which executives insist is a tremendous aid to sales and targets marketing more effectively. At the same time, a strict application of the accounting rules, in Bendigo's view, demands a write-down of part of this software investment on the grounds that it is not generating the cash flows required to justify the at-cost investment.On the other hand, the bank saw a further gain to profit from its direct investment in the properties of some of its older customers taking out reverse mortgages through the HomeSafe product.The bank said it would look for "non-dilutive" capital management measures to help lift its core tier-one ratio back to seven per cent, which will include finding buyers for subordinated tranches in securitised loans.