Commonwealth Bank has met market expectations with a record first-half net profit of $3.661 billion, up one per cent on the previous corresponding period.
CBA's net profit in the six months to December 31 was up from $3.62 billion in the same period in the previous year.
The bank's cash profit, a measure of its underlying performance, rose six per cent to $3.78 billion, from $3.58 billion.
Analysts had expected Australia's largest home lender to post an interim cash profit of about $3.7 billion.
CBA's profit growth was due mainly to a stronger performance from its retail bank, where personal loans and credit cards drove a 10 per cent rise in cash profit.
Chief executive Ian Narev said there had been improvement in the global economy in the six months to December, which had a positive impact on debt and share markets.
But, he maintained a cautious outlook, with consumer and business confidence in Australia still subdued.
"Risk remains in the economy and, as a major financial institution, we must remain cautious," Mr Narev said in a statement.
"If the current stability continues, we believe it will translate into a slow but steady rebuilding of consumer and business confidence in Australia."
Chief financial officer David Craig said the bank's funding costs remained elevated, due to competition for deposits and the impact of repricing long-term debt on wholesale markets.
"Deposit competition is still strong," he told reporters.
"It's that competition more than anything that is underwriting the costs.
"So, it is good for our 10 million deposit customers - this is a real benefit. But for our 1.6 million mortgage customers they have to pay for the cost of funding."
CBA's net interest margin, a measure of profitability of the bank's loans, was 2.1 per cent in the six months to December.
That was up from 2.06 per cent in the previous corresponding period, but down from 2.12 per cent in the six months to June 30, 2012.
Mr Craig said there had been no sign of an improvement in demand for loans in the six months to December, and bad debt charges had been stable.
CBA declared a fully-franked interim dividend of $1.64 per share, steady with the same period in the previous year.