Credit unions and building societies have not been immune to tighter margins during financial year 2008. The combined net profit of credit unions increased just one per cent to $312 million, with the profit for all building societies flat at $143 million, according to Australian Prudential Regulatory Authority quarterly statistics released yesterday.The sector, though, is effectively funding itself, with credit union deposits increasing ten per cent to $35.8 billion, and with net loans and advances also up ten per cent for the year to $34.3 billion.Residential lending, which accounts for over 80 per cent of all credit union lending, grew at an above system 13 per cent to $27.6 billion.Total building society lending grew 8.4 per cent to $17.2 billion, with deposits up 5.7 per cent to $18.7 billion.Louise Petschler, chief executive of industry association Abacus, said e capital adequacy for the sector is 19 per cent, with loan delinquency remaining at very low levels.The return on assets after tax for credit unions remained stable in FY08 at 0.8 per cent, although return on equity after tax fell from 9.1 to 8.4 per cent.Building society return on assets was also stable at 0.7 per cent, with return on equity falling from 9.7 to 8.9 per cent."Our members are planning for more subdued credit growth in the year ahead,  reflecting a general slowing in lending demand, and are also closely managing funding given the continued dislocation in wholesale and securitisation markets," said Petschler.Credit union total assets increased ten per cent for financial year 2008 to $42.5 billion, with building societies growing seven per cent to $21.8 billion.Credit union reserves increased eight per cent to $1.46 billion, with building societies growing seven per cent to $232 million.For the year, credit union numbers consolidated by ten to 133, with building societies shrinking two to twelve.