HBOS, the bank formed by a merger of Halifax and Bank of Scotland, has seen a 19% rise in annual pre-tax profit.
HBOS is optimistic about the growth prospects for the UK economy
Pre-tax profit was £5.71bn in 2006, compared with £4.81bn a year earlier, driven by cost controls and earnings from corporate banking and insurance.
HBOS said it was optimistic about the UK economy and growth in its main markets, and that the UK business environment was "generally benign".
However, analysts said they were disappointed by the figures.
"Overall the quality of these figures looks poor and the guidance of 2007 on loan growth, margin, costs and bad debt looks disappointing," analysts at Fox-Pitt, Kelton said in a note.
The company's shares closed down 52 pence, or 4.59%, at 1,081p on the London Stock Exchange.
For 2006, HBOS said that its share of the mortgage market remained at 21%, the largest in the UK.
Last year, the lending increased by 10% to £376.8bn from a year earlier, and customer deposits grew 5% to £211.9bn.
HBOS said it was concerned about the impact of unsecured debt on UK lenders, saying the uncertainty that stemmed from an increasing number of personal insolvencies made it "cautious about future trends".
"It will be a brave man who calls the top of the unsecured market," said chief executive Andy Hornby in an interview with Reuters news agency.
He added that despite the worries, he was still "quietly optimistic" about HBOS's credit outlook.
The company said that it would pay a full-year dividend of 41.4 pence, up 15% on 2005.