(Reuters) -Australia's Westpac Banking Corp ( WEBNF ) recorded a marginal 1% drop in its first-half net profit on Monday, as a rise in operating costs due to technology investments offset growth in total loans.

Westpac recorded growth in home, business and institutional lending volumes, but its operating expenses rose nearly 6% to A$5.70 billion, driven by costs tied to its UNITE simplification program.

The bank's net interest margin - the difference between interest earned from lending and paid for deposits - fell one basis point from last year to 1.88%, due to persistent competition in lending and term deposits.

Core net interest margin stood at 1.8%, narrowing by three basis points due to tighter loan spreads from increased lending competition and a shift toward lower-margin savings accounts and narrower deposit spreads.

The country's second-largest mortgage lender said its net profit after tax was A$3.32 billion ($2.14 billion) for the six months ended March 31, compared with A$3.34 billion reported a year earlier.

That missed Visible Alpha consensus estimate of A$3.43 billion.

Westpac also declared an interim dividend of 76 Australian cents, higher than 75 Australian cents declared a year earlier.

($1 = 1.5513 Australian dollars)