Bendigo and Adelaide Bank Ltd (ASX: BEN) shares will be put under the microscope today after Australia’s fifth largest retail bank announced its most recent half-year results. In the first hour of ASX trading, Bendigo and Adelaide Bank shares have dropped around 4%.

In the six-month period ended 31 December 2015, Bendigo and Adelaide Bank reported a 0.6% fall in revenue to $781.6 million and a profit of $208.7 million, down 8.2% on the prior corresponding period. Cash earnings rose 5.8% year over year.

The bank saw a reduction in bad and doubtful debts, and a reduction in net interest margin to 1.8% from 1.93%.

“This last half saw extreme price competition for mortgages, with several competitors seeking to increase their balance sheet exposure to Australian home loans and some irrational pricing in the lead up to changes in regulation,” Bendigo and Adelaide Bank Managing Director, Mike Hirst, said. “Of course, those changes were deemed necessary by the Financial System Inquiry to begin levelling the playing field for all banks.”

Pleasingly, the company announced an interim dividend of 34 cents per share, up from 33 cents per share a year earlier. The dividend is payable 31 March 2016.

Against a backdrop of falling interest rates and volatile wholesale funding markets (a channel banks use to source money from international markets), Bendigo and Adelaide bank said it remained well funded with customer deposits.

“Funding is a particular strength, with about 81 percent of funding now provided by retail customers,” Mr Hirst added. “As the wholesale markets move through a period of volatility and higher prices, our funding profile provides some insulation from those issues.

With growing regulatory scrutiny over banks’ capital structure, Bendigo and Adelaide Bank boasted a common equity tier 1 (CET1) capital ratio of 8.24%, up from 8.17% last year.

Looking ahead, Mr Hirst concluded by saying the bank’s outlook is positive.

“Our Bank’s outlook – particularly because of our strong capital, funding and credit position – remains very positive,” he said. “We have built a strong and valued brand and our steadfast approach to disciplined margin management and balance sheet growth means our Bank is well placed for sustainable growth.”

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Motley Fool writer/analyst Owen Raszkiewicz does not have a financial interest in any company mentioned. Owen welcomes -- and encourages -- your feedback on Google+, LinkedIn or you can follow him on Twitter @ASXinvest.

Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.