Heritage Building Society applied the brakes over the last financial year, recording minimal growth in receivables and taking this stance in order to manage the continual increase in the cost of funds.Brian Carter, chair of HBS, wrote in the annual report that the society "reacted to the business environment in a very proactive way by moderating lending levels".There was very little growth in the core home loan book, which increased just $100 million over the year to $6.1 billion.The building society, the largest in Australia, did manage to lift its interest margin over the year, however, to 1.6 per cent from 1.5 per cent.Net profit increased 17 per cent to $29.9 million. Impaired assets fell to $2.3 million at June 2010 from $3.1 million the year before, an improvement in an already very low ratio.In a lament at the increased market power handed to big banks over recent years, Brian Carter wrote that "it can only be hoped that as confidence returns to world markets there will be a return to the situation which existed prior to 2007 where there was a more level playing field."Of the planned withdrawal of the government guarantee on deposits from October 2011, Carter wrote that "this may present more challenges for the market generally and particularly for Heritage".Heritage lifted its capital ratio to 13.9 per cent at June 2010 from 12.5 per cent a year earlier, through retained profits and the placement of $50 million in subordinated capital notes.Carter wrote that Heritage settled a wrangle with Société Générale Australia over the latter's attempts to make Heritage pay an increased margin on the warehouse trust provided by SG to the building society for many years "on terms we regard as favourable to Heritage."