Housing loans were up by $2.6 billion but the bank showed its net interest margin was down because of ongoing competition and a move by borrowers to fixed interest loans.

The increase in the home lending sector was across all of its brands while business loan growth was up by $600 million with strength in the small to medium sized company sector.

Customer deposit growth was also up by $1.8 billion in the half.

The bank declared a 22 cent dividend, fully franked for the half.

Managing director George Frazis said synergy benefits from the takeover of ME Bank had increased to $95 million from a previous estimate of between $70 million and $80 million.

He said ME Bank’s home loan book had returned to growth in the half year and BoQ and Virgin Money were growing at 1.8 times system

“We are a step closer to achieving our bold strategy of building a truly multi-brand, cloud based, digital retail bank with the launch of myBOQ joining Virgin Money on the common core banking platform which enhances the customer experience,” Frazis said.

He said the Australian economy was well placed but there was uncertainty about geopolitical tensions, elevated inflation, rising interest rates and supply chain and labour disruptions.

“We expect to see net interest margin headwinds reducing and the continued benefits of our integration and productivity programs driving a cost reduction of 1 per cent,” Frazis said.

“There may still be uncertainty associated with Covid-19 over the next year. We will continue to maintain a prudent approach to privisioning.”