Bendigo and Adelaide Bank Ltd said on Thursday that retail deposits currently comprised 87 percent of the bank's on-balance sheet funding source in May this year while its loan arrears settled to below the 0.94 percent of the bank's loan book.

The bank's chief financial officer Richard Fennell said that Bendigo currently draws 13 percent of its funds from the wholesale markets while 19 percent of its off-balance sheet is being funded from securitisation markets.

Mr Fennell is upbeat that confidence in the securitisation market is being revived as he added that up to 10 percent of off-balance sheet funding comes from wholesale markets, mostly located in Australia.

He said that Bendigo expanded its retail term deposit base to $18.5 billion in May, which is an improvement from the $18 billion recorded as of December 31 last year, though he added that retail call deposits plunged to $10.3 billion in the same month.

Mr Fennell noted too that the total retail deposit base declined to $29.8 billion in May, coming from the $32.2 billion posted in December.

He blamed higher interest rates for Bendigo's mere steady figures in loan arrears, adding that the bank's proportion of loan repayments, which were 90 days past due to its total loans, also steadied to below 0.94 percent in May.

Bendigo's cost to income ratio from April to May was steadying at around 57.5 percent, which should be a throwback on the bank's earlier declaration in February that its cost to income ratio of 57.7 percent would remain steady by the last half of 2009/10.

The bank said that a long term target of 55 percent should be realistic enough considering the present situation though it gave assurance that "the fundamentals of the business are very sound and we've got a very low-risk balance sheet."

Bendigo is set to release its full year 2009/10 result by August 16 and as of 1308 AEST, the bank's stocks were trading at $8.60, losing three cents of its value from the previous trading day.