National Australia Bank met forecasts with a 20 percent rise in second-half profit, driven by strong loan growth, and said it targeted revenue growth above the industry average.
NAB Group Chief Executive John Stewart said the bank had no direct exposure to distressed subprime loans, but said he expected business and housing credit to slow due to higher interest rates.
The Melbourne-based bank, which owns the UK's Yorkshire Bank and Clydesdale Bank, reported that annual profit rose 17.7 percent to A$4.4 billion (US$4.076 billion).
NAB also posted a cash profit of A$2.315 billion ($2.144 billion) for April to September, on an ongoing basis, up from A$1.930 billion from a year ago. Excluding the disposed businesses, the second-half cash earnings were A$2.299 billion.
Six analysts on average had forecast a profit of A$2.311 billion.
The solid result comes at a time when global banks are writing down billions of dollars because of their exposure to distressed subprime mortgage loans in the United States.
Australian banks have benefited from sixteen straight years of economic growth, while a three-decade low unemployment rate has kept lenders' bad debts under check.
But analysts expect higher funding costs, due to the global credit squeeze, and decade-high interest rates in Australia to slow the pace of profit growth.
"Asset quality measures show early signs of moving up from historically low levels but are within expectations for this stage of the credit cycle," Stewart said.
NAB's profit marks the end of Australian commercial banks' fiscal 2007 profit reporting season, which largely fell short of market expectations.
NAB's rivals, Australia and New Zealand Banking Group, St George Bank and Bank of Queensland, all announced plans to raise capital to sustain growth as lenders' funding costs rise.
National Australia Bank shares rose as much as 3.1 percent at the start of the Friday session. NAB shares are up 4.4 percent so far this year, lagging a 15 percent rise in the S&P/ASX 200 Index in the same period.