National Australia Bank chief executive Cameron Clyne is determined not to "short term the business" in response to mounting regulatory, funding and competitive pressures. Clyne said yesterday that he had spent his three years as chief executive digging NAB out of a hole and he did not intend to put it back in one.NAB posted good results for the year to September yesterday. However, discussion at investor and media presentations focused on how the bank would deal with the higher costs imposed by the new Basel III regulatory regime, funding constraints and the intensification of competition in lending markets.NAB's net profit for the year to September was A$5.2 billion - up 23.6 per cent on the previous year. Cash earnings, the bank's preferred measure, were up 19.2 per cent to $5.5 billion.The bank increased its share in home loans, business loans and retail deposits. Home loans balances in the personal banking division increased by 19.1 per cent - three times system growth. Business banking loans were up 2.7 per cent, compared with system growth of 0.2 per cent. Retails deposits were up 10.4 per cent, compared with system growth of around eight per cent.The bank's promotion of its fee-free transaction account led to the creation of an additional 295,000 accounts in the year to September.The bank achieved this growth while also increasing its net interest margin (NIM). Personal banking NIM rose 12 basis points to 2.19 per cent over the year and business banking NIM was up from 2.51 per cent to 2.62 per cent.NAB's executive director finance, Mark Joiner, said things would be different in the 2011/12 year. Joiner said: "We expect pressure on the net interest margin. Wholesale funding costs will be higher. We will face higher funding costs for the next three years, with the peak in mid-2014."There will be more competition for assets and ongoing competition for deposits. And regulatory changes mean we will be moving to a higher quality mix in the liquids. All of that will put pressure on the margin."Clyne dismissed the suggestion from one analyst that, given the low growth outlook, the bank should set some cost targets.He said: "We are going to be vigilant, but we are not going to short term the business. Long term, we are very committed to rebuilding our platform." The bank has spent over a billion dollars during the past few years on NextGen, its banking system upgrade. Clyne said there were not many visible signs of change yet, but there had been some fundamental improvements to the bank's infrastructure. "We are comfortable with the program," he said. On the funding side, Joiner said the bank had executed above its plan. He said the bank would focus on secured funding in the year ahead - mortgage securitisation and covered bond issuance. Joiner said a key funding metric was its stable funding index, which is an aggregate of customer funding and term funding. At September, this index stood at 85 per cent - up from 78 per