IMB Bank's profit took a dive over the December 2016 half year, down eight per cent to A$12.8 million, with a narrower margin one cause.While these may continue over the remainder of the financial year, "in recent months, the margin has shown some improvement," Noel Cornish, chair of the IMB board wrote in the half-year report.IMB's average interest margin over the half was 1.98 per cent, a slight decrease in margin over the corresponding period last year.Cornish said this profit outcome was "in line with expectations and is considered an acceptable result in the current circumstances," "We have been operating in a challenging market with RBA reductions to official interest rates and continuing intense competition for loans and deposits," Cornish wrote."Competitive market conditions mean that the challenging operating environment is expected to prevail, and therefore the outlook is cautious," he said.IMB said housing lending growth "remains strong but is highly competitive and similar conditions also exist for retail deposits. As a result, there will be ongoing pressure on margin, however, we expect to see this ease in the current half with the adverse impacts of official interest rate reductions being offset as mitigating actions begin to take effect."IMB over the half completed its merger with Sutherland Credit Union, whichlifted branch numbers to 48 and member numbers to 190,000, serviced by 550 employees. Total assets are $5.4 billion, a bit better than one-third the size of the largest mutual ADI, Credit Union Australia.In December, IMB finalised an off market share buyback, its fourth. It used up was $16.5 million in capital and cancelled 3.49 million shares. Net assets at the half year were $315 million.After the share buyback, the capital adequacy ratio at calendar year end was 15.5 per cent.IMB will pay an interim dividend of nine cents per share, fully franked.