Westpac's full year net profit has fallen by 15 per cent to $5.97 billion due to the tax implications of its takeover of smaller rival St George.
The result for the year to September 30 was down from $6.99 billion in 2010/11, when Westpac received $1.1 billion in tax benefits.
The 2011/2012 result includes $165 million in retrospective tax charges.
Westpac's cash earnings in the 12 months to September 30, which takes out one-off financial items, rose five per cent to $6.598 billion compared to the previous year.
The cash result was above analysts' expectations of $6.46 billion.
Cash earnings from the bank's Australian retail and business banking units were higher than the previous year's, up 14 per cent to $2.1 billion as deposits and loans grew.
Other divisions of the bank posted more steady results, with St George's earnings flat compared to the previous year, at $1.2 billion.
Chief executive Gail Kelly said credit growth would remain subdued in the year ahead, while savings are expected to continue to grow strongly, due to weak consumer sentiment.
"Volatility in global markets is likely to continue and as a result of the structural changes that are now occurring, both overseas and domestically, the operating environment will remain challenging," she said.
Westpac's impairment charges in the year to September were up 22 per cent from the previous year to $1.2 billion.
The rise was due to more bad debts being written off, rather than an indication of growing financial stress, chief financial officer Phil Coffey told reporters.
"If you look at the credit health of the book, it is actually continuing to improve, but we'd say that rate of improvement was slowing through the year," he said.
Mr Coffey said impairments were not expected to rise significantly in the year ahead, as lower interest rates help to offset the impact of the high Australian dollar.
"Retail trade, wholesale trade and manufacturing are the areas in the (second) half where we saw a tick up in stress," Mr Coffey said.
"The strong dollar is continuing to put pressure on companies, but the flip side is that interest rates are lower, so a lot of borrowers have got a bit of a breather from that."
Westpac declared a fully franked final dividend of 84 cents per share, up from 82 cents a year earlier.