Earnings for Westpac's biggest division, retail and business banking, fell back in the March 2010 half as it struggled to deal with the impact of high-cost funding used to increase the bank's share in the mortgage market, rising consumer impairments and revenue lost as a result of fee reductions.The retail and business banking division reported cash earnings of $873 million in the six months to March, down five per cent on the September 2009 half and down 12 per cent on the previous corresponding period.Retail and business banking also suffered a weakening of its cost to income ratio, which moved from 47.4 per cent in the March half last year to 49.5 per cent in the latest half. The benefit to margin from the controversial decision in December 2009 to lift interest rates by 45 basis points (against sector norms of 25 basis points) thus is yet to make much impact on divisional earnings, though the bank said it was giving away from margin on deposits and was also ensuring sales staff received appropriate bonuses for focusing on deposit growth.It is the restoration in profits at Westpac Institutional Bank that is the primary driver of the growth in cash earnings at the group level, and where the impairment cycle is now well past its worst point (unlike the retail and business bank). Overall, Westpac reported modest revenue growth for the half. Revenue of $8.6 billion was up two per cent on the September 2009 half and four per cent on the previous corresponding period. Expenses grew at the same rate as revenue in the six months since September.The good bottom line result was due to a big reduction in impairment charges, down from $1.6 billion in the September half to $879 million in the latest half (and a bigger reduction than many sell-side analysts that model these things expected).As a result, the bank was able to report net profit of $2.8 billion, up 32 per cent on the previous corresponding period. Cash earnings, the bank's preferred measure, were $2.9 billion, up 28 per cent on the previous corresponding period.