St George Bank chief executive Paul Fegan argued yesterday that the market should focus on what he called the bank's underlying earnings of $626 million for the six months to March 2008. On that number earnings were up a respectable 8.8 per cent on the previous corresponding period. But the market was not convinced. St George's shares fell three per cent yesterday as investors took in what they considered a disappointing result. Since the bank's share price hit its 12 month high of $38.50 late last year it has fallen almost 30 per cent.Statutory net profit was $514 million, down 10.1 per cent on the previous corresponding period. There were three significant items: a $117 million charge resulting from a Federal Court ruling that tax deductions claimed between 1998 and 2003 were not deductible for tax purposes; a $30 million restructuring cost; and a $53 million gain on the sales of shares into the Visa Inc IPO. Adjusting for these items, cash earnings were $603 million, up 6.2 per cent.  And earnings per share were up 2.1 per cent.The bank argued that "underlying earnings" of $626 million was a more meaningful number because it excluded a loss that resulted from a sharp turnaround in an investment portfolio. St George runs a captive mortgage insurance operation, St George Insurance Australia, which has a $358 million investment portfolio. Investment income went from went from $30 million in March last year to a loss of $23 million in the latest half. The bank argued that the extreme volatility of this performance meant the result should not be taken into account.While presenting this argument, St George chief financial officer Michael Cameron said he was not convinced about the validity of underlying earnings measures.On the basis of cash earnings return on equity was down from 23.2 to 20.3 per cent. Return on assets was down from 1.07 to 0.97 per cent.Economic profit, calculated on a 12 per cent capital charge on average ordinary equity, was down six per cent. Expense to income ratio fell a little from 42.6 to 42.5 percent.Among the operating divisions the strongest contribution came from institutional and business banking, which made a profit before tax of $294 million - up 25 per cent on the previous corresponding period. BankSA was up 10 per cent to a pre tax profit of $127 million, retail banking was down seven per cent to $350 million and wealth management was down 21 per cent to $80 million.The wealth management result was affected by the fall in equity markets. Funds under management fell from $44.3 billion in March last year to $43.9 billion in the latest half.The net interest margin was down from 1.97 per cent in September to 1.92. Fegan said interest margins held up well and most of the fall in the margin was due to a decision to increase the bank's liquid asset position.Highlights included a 14.9 per cent increase in lending volumes and a 14.1 percent increase in retail deposits. Fegan said