Toowoomba-based Heritage Building Society yesterday reported a five per cent increase in net profit to $20.5 million for financial year 2008, though a $6.5 million gain from the Visa initial public offering was required to produce the rise in headline profit.Tighter margins impacted profit with the interest expense up 29 per cent for the period to $415 million. Interest revenue increased 22 per cent to $501 million.Growth in deposits was strong at 14 per cent or $324 million, to $2.7 billion. Chief executive officer John Minz said the deposit book has grown by another $170 million since July, with two thirds term deposits.Residential lending increased ten per cent for the period to $5.9 billion, with the majority of new lending sourced through Heritage's own network of 59 branches."I would have said at the start of the financial year (2008) residential lending was 60 / 40 in the favour of brokers, but by the end of the year that reversed."Heritage had been a heavy user of securitisation in the past, with Minz adding the level of residential lending funded through securitisation currently stands at 46 per cent.Arrears of 30 days plus was 0.37 per cent at the end of the financial year, although Minz said the figure has subsequently fallen in the first quarter of the 2009 financial year.Total lending outstanding is $6.1 billion, with Heritage beginning to focus on agribusiness in the last year.Minz said that at the end of last year the building society's business lending strategy was reviewed, and although the agribusiness book is currently very small at around $70 million, he views the product as a growth opportunity.The capital adequacy ratio is 12.3 per cent, and the liquidity ratio 15.4 per cent, with total assets increasing eight per cent for the year to $6.9 billion.