Westpac has announced a record $7.1 billion full year profit, and the bank expects improving consumer confidence to help it build on the result next year.

Westpac made a cash profit of $7.1 billion for the 12 months to September 30, an increase of eight per cent on last year’s result.

The bank’s net profit, which includes one-off financial items, was $6.82 billion, up 14 per cent from the previous year.

Chief executive Gail Kelly said all of the bank’s divisions had recorded solid earnings growth during the year.

“We are pleased with these results and we see them as high quality,” she said.

Westpac said customer deposits rose 10 per cent during the year to $383 billion, while lending increased four per cent.

The bank’s net interest margin dropped two basis points to 2.14 per cent during the year, though it had improved slightly during the past six months.

Net interest margin is the difference between interest paid on deposits and interest gathered on loans.

Mrs Kelly said the bank would continue to operate cautiously due to global uncertainty and changes in the Australian economy due to the slowdown in mining investment.

But she said the recent improvement in consumer confidence should provide a boost for the bank over the next 12 months.

“I’m encouraged by signs of growing confidence, which we expect to lead to increased lending activity, in particular in New South Wales and the gradual increase in domestic credit growth,” she said.

“We are well positioned to benefit from the pick up as confidence returns, all of our divisions and brands have good momentum heading into 2014.”

Westpac announced a fully-franked final dividend of 88 cents per share, taking the full year dividend to $1.74 per share, which is up five per cent on last year.

The bank will also pay a fully-franked special dividend of 10 cents per share, which comes on top of a 10 cent special dividend announced earlier in the year.