Bank of Ireland today announced profits of €1.9 billion for 2006.
Despite the 22 per cent rise in full-year earnings, the bank pledged to further reduce costs as it predicted a slower rate of profit growth this year.
The bank also described the slowdown in the housing market revealed yesterday as "really good news".
Underlying earnings per share (EPS) in the year to end March were 144.6 cents versus 118.5 cents a year earlier.
In the UK, Bank of Ireland said its contract to provide banking services at British Post Offices had been extended to 2020 after the operations broke even in the second half.
To ensure "strong and sustained" medium-term earnings growth the bank said it also planned to "significantly reposition the geographic earnings profile of the group" with non-Irish units set to contribute over 50 per cent of group profit.
On cost-cutting, the bank said it had reduced its cost-to-income ratio by 3 percentage points to 54 per cent last year and expected efficiency to improve still further to reach a percentage in the mid-40s over the medium term.
A programme to reduce costs, launched in March 2005, had resulted in cuts of €95 million in two years versus the €75 million targeted, Ireland's second biggest bank said.
"We expect to achieve annualised savings of €140 million by March 2008 and thus complete the Strategic Transformation Programme," the company said.
Chief executive Brian Goggin also said the slowing house price growth and its impact on the Bank of Ireland has been "totally and utterly misrepresented".
He said the market had been "fundamentally unsustainable at both the rate of inflation we've seen for the past several years and the rate of growth in mortgage demand".
He added that investors, worried by a recent cooling in the market, had failed to take into account the bright outlook for Ireland's economy as a whole and its fast growing population.
"What's happening in the housing market is very, very positive news from an overall economic perspective because it fundamentally underpins the soft-landing hypothesis that many of us have been talking about, and the rest of the economy is flying," he said.
The slowdown had been misrepresented by commentators who were not telling a "rounded story" on the Irish economy, meaning some investors had misunderstood the likely impact on Bank of Ireland and its mortgage business, he claimed.
"If you go back in time, it took external commentators many, many years to accept that the Celtic Tiger wasn't just a figment of somebody's imagination."