Westpac's full-year statutory net profit has fallen 15 per cent to $5.97 billion, due to one-off tax gains last year.
The one-off benefit from a tax consolidation related to its St George takeover pushed last year's profit higher, making this year's result appear weaker.
However, the bank's preferred measure of underlying cash earnings, which removes one-off items like the tax benefit, was up 5 per cent to $6.6 billion.
The bank recorded revenue growth of 6 per cent, but also saw costs grow by 4 per cent.
Westpac's net interest margin - the difference between the rate it borrows money at and the rate it lends it out at - was 5 basis points lower at 2.17 per cent.
The bank says it has boosted customer deposits, which now fund 67.6 per cent of its loans.
Westpac's chief executive Gail Kelly says that has been a key priority for the bank.
"At our half-year results, I stressed that a priority was growing deposits, so I am pleased that our total customer deposits grew 12 per cent or $38 billion this year, more than funding our growth in loans," she noted in the report.
The announcement caps a mixed bag of profits for the big four banks - ANZ and the Commonwealth Bank both saw stronger profits, while NAB's earnings fell sharply.
City Index analyst Peter Esho says Westpac's result sits in stark contrast to NAB.
"Westpacâs cash earnings Â of $6.6b are actually ahead of market expectations of around $6.4b, the dividend is in line and overall the earnings number looks world apart from that of National Australia Bank last week, literally," he wrote in a note on the figures.
"The earnings beat might not look too significant on face value but, when taken in the overall context of whatâs been a very challenging year for the financial system globally, we think the outcome is excellent." Gail Kelly says conditions for banks will remain challenging, with demand for credit low and savings high, but Westpac's result shows it is well positioned to weather the downturn.
"It builds on the platform that we've established in the first half of this year," she told a media briefing.
"The important point to make is this is not the result of one year's work - this clearly reflects the effort over five years of hard work within the Westpac group." Westpac will pay a final dividend of 84 cents fully-franked, up from 82 cents in the first half.
The bank has outperformed its rivals on the share market today, with Westpac shares up 2 cents to $25.05 by 11:09am (AEDT), while the other major banks were down 0.7-1 per cent.