Heightened competition for mortgages impacted earnings in the consumer division as the bank prioritised improving its lending margin over increasing volume.

Its net interest margin - a key measure of profitability - dropped four basis points to 1.9 per cent, better than analyst expectations of 1.88 per cent.

The margin stabilised during the second half of the year, a similar experience to major competitor Commonwealth Bank.

But higher-than-expected operating costs would result in consensus profit downgrades in the order of five per cent for the next two financial years, said E&P Capital analyst Azib Khan.

"While (net interest margin) strength is the positive, we view costs and the bad debt charge as being of low quality," Mr Khan said.

Cost-of-living pressures continued to strangle borrowers' finances.

In the bank's residential lending arm, 90-day arrears grew by eight percentage points but remained below industry averages, while arrears in business and agribusiness decreased.

Asset quality remained stable with strong liquidity putting the company's balance sheet in good stead, said outgoing chief executive Marnie Baker.

"Our home loan customers remain well ahead of their repayments with 40 per cent one year ahead of repayments," she said on Monday.

"Importantly, more than 85 per cent maintain a financial buffer."

Chief customer officer Richard Fennell will replace Ms Baker as CEO and managing director on August 31.

The bank does not expect a loosening of interest rates before the end of the calendar year, but predicted a combination of tax cuts, moderating inflation and forecast Reserve Bank rate cuts to improve conditions for customers in 2025.

Customer deposits grew 3.4 per cent over the year and the bank's liquidity coverage ratio remained strong at 137.8 per cent, Ms Baker said.

The company announced a fully franked full-year dividend of 63 cents per share.

After opening in the green, shares in the company sank 2.4 per cent to $12.10 in early trading on the ASX.

License this article