Bendigo and Adelaide Bank has reported a net profit of $189.4 million and underlying cash earnings of $169.7 million for the six months to December.

The regional lender's cash earnings were a 4.4 per cent increase from the same period the year before, while its net profit soared 227.1 per cent.

The bank declared an interim fully franked dividend of 30 cents per share.

Shares were up 3.9 per cent to $10.23.

Mike Hirst, Bendigo and Adelaide Bank's managing director, said his firm was faced with a "lacklustre demand for credit and heightened competition for retail deposits".

"Like all Australian banks we have had to adapt to these conditions, however our strategy of focusing on customer engagement and our drive to be more efficient has held us in good stead."

Mr Hirst said business conditions and sentiment improved during the second quarter of the financial year, but uncertainty remained in the market.

"In particular, we are yet to see more recent rallies in debt and equity markets translate into a material increase in demand for credit," he said.

The bank's funding costs fell in the six months to December, leading to a 10 basis point rise in its net interest margin to 2.18 per cent.

Net interest margin is a key measure of the profits made on loans.

Deposits make up 80 per cent of Bendigo's funding, and much of the funding cost reduction came from cheaper funds from wholesale markets, it said.

Mr Hirst also said costs had been contained.

Bad debt charges rose in the six months to December to $32.1 million, but they remained low as a percentage of the bank's total assets, the company said.

Bendigo declared a fully-franked interim dividend of 30 cents per share, consistent with the same period in the previous year.