Westpac chief executive Gail Kelly has rejected the suggestion that the bank's aggressive productivity program had "trimmed its revenue muscle".Kelly briefed analysts on the bank's December quarter performance yesterday, and its low income growth emerged as a concern.Operating income was flat, quarter-on-quarter, and unaudited cash earnings, of A$1.5 billion, were down three per cent.The main cause of the drop was a $200 million fall in markets and treasury income.Expenses were two per cent higher as the bank took on restructuring charges (redundancies) and expensed more of its investment in technology.The net interest margin was 10 basis points lower, compared with the average of the June and September quarters. This was due to funding cost increases and lower Treasury earnings. Kelly said: "There is no doubt that we are dealing with a lower growth environment."In response to this new environment, Kelly has made productivity a "central element of the group's strategic agenda", and kicked off a program in October 2010. This program entered a new phase in November last year.However, she said, the bank was pursuing revenue growth in a number of areas. For example, the re-branding of St George as the Bank of Melbourne, in Victoria, was bringing new customers to the bank.She said the bank was doing more work in growth sectors such as agribusiness, mining and small business. And the bank is changing its approach to pricing. "Over time, we intend to price properly for our costs," she said.Kelly said she was comfortable with expenses growing ahead of income during the quarter."We are where we want to be. You will see benefits flow through as our head count reduces. We know how to manage costs."