The Commonwealth Bank has posted a modest two per cent rise in its half-year net profit to $4.62 billion.

The bank’s preferred measure of cash profit, which excludes a range of one-off costs, was 4 per cent higher at $4.8 billion.

In a worrying sign for Australia’s largest bank, revenue fell four per cent to $21.9 billion, although it said its operating income was up six per cent to $12.36 billion.

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CBA’s 6 per cent growth in net interest income was driven by a nine per cent rise in “interest earning assets”, basically loans.

The bank said it grew business lending by 6.8 per cent, home lending by 6.5 per cent and its New Zealand bank ASB had a 12 per cent rise in business and rural balances, with the lending largely funded by a 10.6 per cent increase in household deposits.

CBA said its net interest margin — which measures the gap between what it pays to borrow funds and what interest rate it lends the money at — was steady at 2.06 per cent.

Despite the financial planning scandal that has engulfed CBA over the past couple of years, it grew funds management income by 6 per cent and insurance income by 17 per cent.

CBA also reported a 6.1 per cent rise in costs, largely due to technology investment, as well as a 3 per cent rise in bad loan expenses to $564 million.

The banks return on equity — a key profitability measure — fell 1.4 percentage points to 17.2 per cent, largely due to the $5.1 billion capital raising it undertook last year to meet tougher regulatory requirements.

The bank’s chief executive Ian Narev said the solid result was reflective of a gradual transition for Australia’s economy.

“These results show that through the latter part of 2015, the Australian economy continued its steady transition from a resource-dependent economy to a more diversified one,” he noted in a statement.

“Sound monetary policy and a lower Australian dollar are stimulating construction and starting to benefit export-sensitive industries such as tourism, education and agriculture.”

CBA will maintain its first-half dividend at $1.98 per share, unchanged on the same period last year.

– ABC