Suncorp's banking division suffered a fall in the level of its loan book in the December half, as it diverted deposits to the balance sheet to improve its funding mix.Total lending at December 2009 was $36.6 billion, down 0.7 per cent from June 2009. The bank increased retail funding by 6.8 per cent half on half, including a 10.6 per cent increase in term deposits, but this was more than offset by a 39 per cent fall in wholesale funding from $12 to $7.3 billion and an 18 per cent fall in securitised funding.Suncorp chief executive Patrick Snowball said retail deposit funding, at 69 per cent of total funding, was at the high end of the bank's target range. This would give the bank the opportunity to increase lending volumes.The core banking business made a pre-tax profit of $224 million but this was offset by a pre-tax loss of $211 million in Suncorp's non-core bank, a portfolio of property and other commercial loans that were put in run-off last year.The non-core portfolio is managed by a separate team, given the task of working with borrowers to pay down receivables. Run-off for the December half was $1.9 billion, while the level of impaired loans increased 40 per cent over the half.Non-core banking income rose from $84 million in the June half to $115 million in the latest half but after higher operating expenses, up from $23 to $54 million, and a jump in impairment losses from $200 to $272 million, the loss increased from $172 million in June to $211 million in December. The non-core portfolio stands at $15.6 billion. According to Suncorp's interim financial statement: "Trading conditions in non-core segments remain difficult, with mixed opportunity to sell and refinance assets as well as weak levels of confidence in property markets."