National Australia Bank's strategy of abolishing retail banking fees and being price leader among the big four banks for mortgages and online deposits has earned bragging rights for the bank's chief executive, Cameron Clyne, but it yet to produce anything for the bottom line.NAB's personal banking division reported cash earnings of $743 million for the year to September, down 15 per cent on the previous corresponding period. The division's net interest margin was down 26 basis points over the year, from 2.57 to 2.31 per cent. The cost to income ratio blew out from 48.1 to 54.8 per cent.The second half of the year saw some improvement. Cash earnings were up 34 per cent half on half and the rate of decline in the net interest margin slowed.Also on the positive side, the division increased its home loan market share from 12.8 to 13.2 per cent, with a 21 per cent growth in its mortgage book.It also increased its share of retail deposits from 13.1 to 13.6 per cent.Clyne said the bank picked up momentum in the second half and had a sustainable pricing model for retail banking.One prop for the retail bank earnings was a long overdue investment in collections. NAB is making much earlier calls (often automated robot calls) to delinquent borrowers, and these may be the chief factor behind a decline in the level of 90-day arrears to 0.71 per cent, at September 2010, from 1.01 per cent a year earlier. NAB said the 30-day arrears rate, which is does not disclose, was stable.The best news for the retail bank may be the wide margins being earned on third-party home loans.The business formerly known as Challenger Mortgage Management, and now known as Advantedge, produced a net profit of $53 million on operating income of $149 million.NAB paid Challenger $371 million for Advantedge, of which $279 million was for goodwill.