Costs up and margins down at bankmecu

Mutual bank bankmecu suffered falls in its net interest margin, revenue and net profit in the six months to December, while its costs increased by almost eight per cent.

The bank reported a net profit of A$12.1 million for the December half - down 14 per cent on the previous corresponding period. Net interest revenue was down three per cent.

The bank's net interest margin fell from 2.42 per cent in the six months to December 2012 to 2.19 per cent in the latest half.

Its cost-to-income ratio rose from 56.4 per cent to 60.8 per cent.

Customer deposits rose 4.6 per cent to $2.7 billion and loans rose 3.1 per cent to $2.3 billion.

Despite the soft numbers, bankmecu managing director Damien Walsh said in a statement that the result was solid.

Walsh said: "We continue to invest in technology to ensure we are offering our customers convenient ways to bank with us.

"We have exceeded our customer acquisition targets, with a diversity of new customers that positions the bank for sustainable long-term growth."

Like a number of lenders, bankmecu has had to contend with customers taking advantage of low interest rates to accelerate repayments on their loans. It said that 85 per cent of home loan borrowers were ahead with their repayments, with the average about 21 months in advance of their repayment schedule.