Suncorp is feeling the strain on capital resources in its banking division. The group reported yesterday that earnings in the bank have not been enough to cover the increase in its risk-weighted exposures.Speaking at the announcement of the group's results for 2007/08, Suncorp chief financial officer Chris Skilton said: "The unavailability of securitisation as a capital management tool has had a twofold impact. "Not only is it not possible to take risk-weighted assets off balance sheet for capital purposes, but the amortisation of existing securitised assets means that risk-weighted assets increase at a rate higher than lending growth."Despite its underlying problems, the bank was the only one of Suncorp's three businesses to produce earnings growth in 2007/08. Bank pre-tax profit was up 11.2 per cent to $633 million.Pre-tax profit for the general insurance business fell 63 per cent from $835 million in 2006/07 to $307 million in 2007/08.The wealth management business went from a pre-tax profit of $19 million in 2006/07 to a loss of $3 million last financial year.Overall Suncorp reported a net profit of $556 million for 2007/08, down 47.7 per cent from the $1.06 billion the previous year. The company has been hit by volatile investment markets and severe weather events.While the bank did well, it had its share of problems. Operating expenses rose 12.7 per cent, which was higher than the 12.6 per cent increase in income.Impairment charges were up sharply. Impairment losses on loans and advances rose from $25 million to $71 million.Skilton said a contributor to higher costs was branch expansion in Queensland and Western Australia. At the same time the bank closed a number of branches in rural New South Wales and Victoria.Another cost item was increased market spend to attract retail deposits. Compliance, notably implementation of the bank's anti-money laundering program, was another high cost area.The bank had very strong lending growth, with total lending assets up 22.1 per cent to $56 billion. Business lending grew at 31 per cent for the year to $26.1 billion, with residential lending up 15 per cent to $27.2 billion.The bank has an unusual asset mix, with business lending making up about 50 per cent of the total. A significant part of the lending growth was due to business customers, such as property developers, drawing on committed lines. The bank has a heavy weighting to property finance.Skilton said lending growth would slow in 2009 and come back to system growth rates. At the end of June 2008 the net interest margin was 1.81 per cent, down 10 basis points from the previous June but up from 1.76 per cent at the end of December 2007."Looking forward into FY09, I can confidently predict that our lending will slow significantly and we anticipate it will grow broadly in line with system."We are already seeing evidence of this in July, although a detailed analysis of our pipeline suggests that the impact will be more marked in the second quarter of the year than the first."The bank's $627 million of