AMP Bank's decision to stop lending to residential property investors altogether, in response to regulatory demands to slow the rate of growth in that sector, has proved costly. The bank had almost no growth in its mortgage book in the second half of last year.The bank has recommenced investment property lending, including self-managed superannuation fund property loans.Despite the hiccup, AMP Bank managed strong growth in income and earnings in the year to December, a higher margin and a higher return on capital.The bank contributed A$100 million to AMP Group earnings - an increase of 14.3 per cent over the previous corresponding period. Net interest income rose 14.8 per cent to $271 million. The net interest margin went up 18 basis points to 1.59 per cent.The bank made a 16.5 per cent return on capital, compared with 15.2 per cent in 2014.The cost-to-income ratio rose from 30.3 per cent in 2014 to 30.6 per cent last year,The residential mortgage book increase by 4.7 per cent from $13.9 billion in 2014 to $14.6 billion at the end of last year. System growth over that period was 7.5 per cent.Customer deposits rose four per cent to $9.6 billion.The loan impairment expense rose from 0.01 per cent of gross loans and advances to 0.04 per cent of GLA.The bank's funding was stable, with customer deposits rising from 54 per cent in 2014 to 56 per cent last year, securitisation fell from 24 per cent to 19 per cent and wholesale funding rose from 17 per cent to 20 per cent.The bank's tier one capital ratio was 7.9 per cent - down from 9.3 per cent in 2014.