Westpac does not expect conditions in the banking sector to improve any time soon, but says it is in good shape to deliver sound returns for shareholders.
Chairman Lindsay Maxsted told shareholders at Westpac's annual meeting on Thursday that operating conditions remained challenging.
However the bank did not expect conditions to be any more difficult than in recent years.
"Indeed, given the material strengthening of the balance sheet we are in excellent shape to positively respond to whatever emerges in the external environment," Mr Maxsted said.
"With all of our businesses showing good momentum, Westpac is well placed to continue delivering sound returns for shareholders."
Westpac, Australia's second largest home lender, in November reported its net profit in the year to September 30 dropped 15 per cent from the previous year to $5.97 billion.
The fall was a result of a significant tax benefit in the previous year related to Westpac's integration of St George, a benefit that was not repeated in fiscal 2012.
Cash earnings, a clearer measure of the bank's ongoing operations, rose five per cent in the 12 months to September 30 to $6.6 billion.
Mr Maxsted reiterated to shareholders his concerns about calls for Australian banks to hold more capital.
He said he was already on the record as saying that while such calls may have been relevant five years ago, they were not applicable today.
He warned that excessive regulation or capital would risk placing Australian banks at a disadvantage against their international peers and could limit the financial resources available to support the economy.
"On any comparable measure the Australian banks are strong and very well capitalised - indeed Westpac's capital ratios place the group in the upper ranks of banks globally," he said.
"It is hard to argue that as a sector we are undercapitalised."
Westpac's shares were three cents higher at $25.93 at 1013 AEDT.