Pooled funding works for ME Bank 25 November 2010 7:12PM Ian Rogers The latest financial data for Industry Super Holdings and its ME Bank arm differs, as usual, on the assets though not on the earnings of the group and its banking arm.APRA data puts ME Bank assets in the order of A$16 billion, of which less than a third show up in ISH's 2010 balance sheet, although all new lending now appears to do so.Industry Super Holding's profit increased $10 million, to $30 million, or a yield of eight per cent. ME Bank earned more than three-quarters of this profit. On a pre-tax basis, the bank's profit was $26 million out of group profit of $33 million.This share may help explain why ME Bank, rather than funds management, is receiving all the new capital being raised lately by the group from the industry superannuation funds that owns this 10-year old bank.The capital base of Industry Super Holdings increased $131 million over the year, to $447 million, and more is on the way.Super funds chipped in a further $65 million in August 2010, with the same amount callable by ISH at any time. ME Bank got all this latest dose of capital a week later.The funding strategies of Industry Super Holdings and ME Bank look pretty distinctive at a time of much talk about the need to lift retail deposits.While the bank has a good story to tell on the retail side, asset growth for now is largely being funded from wholesale sources.Industry Super Holdings' annual report shows ME Bank found investors for $2.7 billion in pooled mortgage bonds over the last year.Few others lenders these days operate on such as high percentage of pooled investment in pooled mortgage assets - a funding niche once occupied by a host of once familiar but now diminished names such as Aussie, Rams and Wizard.Wholesale funding has taken off. Term wholesale has increased by a billion dollars, to $1.3 billion and $1 billion for short-term and long-term funding, respectively.Retail funding has increased by $300 million to $1.24 billion. It's worth noting that it took the industry super funds' banking brainchild a decade to break the $1 billion mark.However, it took the credit crunch in 2007 to force ME Bank to seek out retail deposits in any volume in the first place, so reaching this level of deposits really reflects three years of work by the bank.Retail customer deposits have increased by one-third, from $906 billion to $1.236 billion. ME Bank almost doubled business customer deposits, from $289 million in 2009 to $535 million this year. Industry Super Holdings increased the valuation on ME Bank in the 2010 accounts by $180 million to $578 million.