Suncorp Bank says it is earning a return on capital in its "core" banking business of in excess of 15 per cent, though losses from its non-core commercial banking business, which is in run off, continue to limit overall returns from the bank.The investor presentation for the insurance and banking group's full-year profit shows net profit for Suncorp Bank increased to A$149 million in the June 2011 half, from $110 million in the December half.The net interest margin for the core bank increased to 1.97 per cent from 1.83 per cent over six months.The bank is playing a delicate game of managing for yield at a time of subdued growth in credit and an abundance of household savings. The bank saw its growth in housing credit fall to only half the rate of growth of the banking system over the six months to June (at 1.7 per cent for the bank, compared with 3.4 per cent for all banks). Retail deposit inflows at Suncorp increased over the last few months of its financial year at a time when the overall level of household deposits with banks declined (a trend linked to an accelerated pay-down of debt).Suncorp may be looking for above system growth given its investment in extra capacity.The bank said it opened 21 new branches and "district banking centres" over the last year. Combined with a revival in marketing spending (this was cut heavily the year before) and the employment of more "frontline" staff, Suncorp recorded growth in expenses in the core bank of seven per cent over the year.As a result of the flooding in Queensland earlier this year, loans 90 days or more past due increased by more than 70 per cent to $386 million over the June half-year. But impaired assets fell by a fifth to $107 million. The bank's overall level of impaired assets continues to climb, however, given the stress in its ageing non-core business.The non-core bank produced a loss of $68 million in the second half. The bad debt charge in the non-core bank for the half, at $104 million, was down from an average of $160 million in the two prior halves.The non-core bank still has around $16 billion in assets to run off, equal to one third of the assets of the core bank.These assets and their credit quality remain a millstone for Suncorp.In June, Fitch Ratings cut the long-term credit rating for Suncorp Bank to A from A+, while leaving the credit ratings of Suncorp's insurance entities unchanged at A+.