St George Bank overcame another year of slow growth in its home state of New South Wales to post a 13.9 per cent increase in cash earnings. The return on equity fell to 21.5 per cent, however.This is the last profit St George will report, with the bank's shareholders likely to agree later this month to sell the bank to Westpac.Home loan receivables were up 9.1 per cent from $69.2 to $75.5 billion over the year. Growth in the bank's home lending business lagged system, which St George chief executive Paul Fegan put at 11.6 per cent, because of the six per cent growth in New South Wales.St George has 55 per cent of its home loans and 56 per cent of its middle market (small and medium business) loans in NSW.Victoria was another laggard, with home loan growth of nine per cent. The bank's home loan business grew 17 per cent in Western Australia, 16 per cent in Queensland and 12 per cent in South Australia.Fegan said he expected to see those disparities repeated in the 2008/09 financial year. He said: "We have passed the low point but NSW will remain weak."The bank has been pursuing an expansion strategy to do more business outside NSW. Over the past year it opened one new branch in Western Australia, one in Victoria and four in Queensland. It installed 50 new ATMs.Fegan had little to say about what strategies the bank would pursue following the completion of its merger with Westpac.The bank reported net profit of $1.17 billion for the year, an increase of 0.9 per cent on 2006/07. After adjusting for significant items, including a $117 million expense on a disputed tax ruling on depository capital securities and $24 million of merger related costs, the bank reported cash earnings of $1.32 billion, up 13.9 per cent on the previous year.Earnings per share of $2.37 were up 8.3 per cent. This exceeded the consensus analyst forecast of $2.32 a share published by Thomson Financial prior to the result. Income was up 9.4 per cent to $3.5 billion and expenses were down 0.3 per cent to $1.38 billion. The reduction in expenses pushed the bank's cost to income ratio down to 38.7 per cent.St George chief financial officer Michael Cameron said the bank maintained its investment program, despite the reduction in expenses. The investment budget was up 30 per cent to $232 million and included spending on six new retail branches, one business branch, a new credit card processing partnership, a second factor authentication system for internet banking and the anti-money laundering program.The bank's net interest margin was down 10 basis points to 1.91 per cent, a fall that was attributed to the higher cost of deposits and the impact of higher liquidity. Liquidity was increased by $5.8 billion to $21.4 billion.The loan impairment expense rose 63.5 per cent from $178 million to $219 million. Among the specific provisions, expenses on residential loans were down from $15 million to $11 million.