IMB Ltd ended the 2011/12 financial year in much the same place it started it. Business growth took a back seat as management of the Wollongong-based building society restructured the group's capital position and boosted capital adequacy, with a view to participating in industry rationalisation.Net interest income was down 1.5 per cent to A$95.2 million. Net profit was down three per cent to $30.1 million. The return on equity was 12.7 per cent.Retail deposits rose four per cent, from $2.6 to $2.7 billion. However, this growth was offset by a 22 per cent fall in middle-market deposits. Total deposits were down two per cent to $3.4 billion.Loans (net of provisions) rose 0.4 per cent to $3.7 billion. Lending approvals, of $701 million, were down on the previous year.IMB's chief executive, Robert Ryan, said in a statement that funding cost pressure was a factor in the flat result. IMB's interest margin fell from 2.05 per cent to 1.99 per cent.Ryan said: "Funding conditions have remained challenging due to the aggressive pricing structures adopted by many of our competitors and this has also had an impact on margins."Ryan said the good news was the strength of the group's balance sheet. Capital adequacy rose from 12 per cent in 2010/11 to 15.8 per cent in the year to June. IMB's liquidity level was 25.6 per cent.In May, IMB announced that it would overhaul its capital structure. It is a mutual approved deposit-taking institution and also a public company limited by guarantee and shares. The shares are traded on an exempt market operated by IMB.In July, it launched the first in a series of buybacks designed to cancel its ordinary shares.IMB chairman Michal Cole said in a statement: "The current capital level establishes IMB at a similar level to its peer group of larger building societies and credit unions. This is a necessary precondition to being able to compete effectively in the deposit and lending markets, as well as being a credible participant in mutual ADI (approved deposit-taking institution) rationalisation."