BENDIGO Bank has announced a profit of $195 million in the past financial year, a drop of 43 per cent.
Last year, the bank's profit was $342 million.
Bank managing director Mike Hirst said the past financial year had been a consolidating one for the bank.
"The year for us has been one of consolidation and investment," he said.
"We performed pretty well."
The bank's retail profits rose $2.5 million to $148.5 million.
The share dividend remains at 30 cents per share.
Cash earnings dropped 3.9 per cent to $323 million.
Mr Hirst said the past 12-months had continued to be challenging for all Australian banks.
“Our core revenue generating businesses of retail, third party banking, wealth and rural banking continue to perform well, and we have been determined in our efforts to improve the funding and capital profile of the bank,” he said.
“We have been able to limit net interest margin contraction through prudent and proactive balance sheet management.
"We have sought to price both assets and liabilities in the most appropriate manner for all stakeholders. This has been combined with an active hedging program which, while expensive, has successfully mitigated the risk of significant margin volatility over the period.
“High funding costs and low demand for credit has been felt across the sector, but despite this Bendigo and Adelaide Bank continues to grow and invest in the business.
“Focussing on the bank’s long-term performance and sustainability is central to our strategy and requires us to continually balance the interests of all our stakeholders.
"This strategy has been vindicated by recent credit rating upgrades from Fitch and Standard & Poor’s, and is in stark contrast to the rating momentum of many banks across the globe.
“I would like to thank our customers, staff, partners and shareholders for their contribution to Bendigo and Adelaide Bank’s results.”
The bank’s term deposit retention rates have remained consistently higher than 80 per cent, notwithstanding the bank continuing to adopt a less aggressive pricing structure than many of its competitors.
Retail deposits grew by $2.1 billion over the six months to June 2012, and more than $4 billion over the past year.
Mr Hirst said the outlook for the coming financial year remained difficult to predict, with significant market volatility and revenue challenges facing all banks.
He said funding costs, changing asset mix and demand for credit are all volatile reflecting the global environment.
“Notwithstanding these pressures, Bendigo and Adelaide Bank continues to invest in our business, our people, and the communities we operate in," he said.
"We will work diligently in our efforts to become Australia’s leading customer-connected bank.
“We don’t take for granted our industry-leading customer satisfaction levels, or our industry-leading business customer satisfaction levels.
"And we certainly don’t take for granted our staff engagement levels, which are 2 per cent above the Australian high-performance benchmark.
“We will continue to leverage these strengths, and the strengths of our funding and capital profiles, to take advantage of the significant opportunities that exist for Bendigo and Adelaide Bank."