Westpac has reported a flat full-year profit of $8.07 billion as customer compensation and legal costs reined in performance.

Cash earnings – Westpac’s preferred measure of profitability – for the 12 months to September 30 barely moved from the $8.06 billion reported a year ago.

Australia’s second-largest lender, which had been tipped to slightly beat last year’s performance, set aside a previously announced $281 million for customer remediation and associated costs related to issues of the type heard by the financial services royal commission.

The provision was low compared to the $421 million and $360 million made by rivals ANZ and NAB, and chief executive Brian Hartzer seemed to confirm analysts’ belief that costs from the royal commission may continue to bite.

“We’re committed to running our business in a way that meets standards from customers and the community and we’ll continue to look to improve things,” Mr Hartzer said.

“I’d like to say we’re largely through it but it is possible there may be other issues.”

Nonetheless, Westpac acknowledged that the royal commission was performing an important service.

“The royal commission has been a valuable and rigorous process,” the bank said in a statement.

“The stories and examples of poor behaviour affecting customers that have come to light are confronting and have understandably impacted the public’s trust in the industry.”

The consumer bank, which includes the lender’s mortgage book, reported flat cash earnings of $3.14 billion as four per cent growth in loans and lower impairments were offset by lower margins, the increased provisions for refunds, and reduced card and ATM fees.

Chief executive Brian Hartzer flagged housing credit growth of four per cent and total credit growth of 3.5 per cent for FY19.

“We expect house prices to cool further, and investor demand to remain weak,” Mr Hartzer said.

On the other hand, demand from first home buyers is holding up.”

Statutory profit was up one per cent to $8.095 billion, while cash earnings dropped one per cent and the 13 per cent return on equity was at the lower end of Westpac’s target range.

Westpac’s business bank lifted cash earnings eight per cent and the New Zealand unit five per cent, but its institutional business and wealth management unit both reported lower earnings.

–AAP