Asia-focused ANZ Bank on Thursday said annual net profit increased three percent to a record Aus$7.5 billion (US$5.3 billion) but growth slowed from the previous year, underscoring the headwinds facing the sector.

Cash profit, which strips out non-core items and is favoured by analysts, was up just one percent to Aus$7.22 billion in the 12 months to September 30. This compared to a 10 percent rise in the previous corresponding period.

Annual net profit for the year to September 30 2014 was up 15 percent.

British-born chief executive Mike Smith, who has overseen a big push into Asia and is standing down in January, said it was a challenging operating environment.

"We are continuing to evolve our strategy and accelerate its execution to maximise value for our customers and for our shareholders," he said.

"There are significant opportunities for ANZ, however lower economic growth, intense competition, the growing cost of regulation and market volatility present headwinds for all banks."

He pointed to events over the last six weeks of the bank's financial year, including China's currency devaluation and the US Federal Reserve's decision to leave interest rates on hold as dampening customer activity and denting earnings.

The comments highlight the difficulties facing incoming chief executive Shayne Elliott, amid a focus on boosting Asian returns that have lagged the lender's domestic units.

He will also need to protect margins and mortgage market share in Australia at a time when some economists are predicting a housing slowdown.

ANZ, which operates in 34 countries, said profit improved seven percent in its Australian division and three percent in New Zealand, but dropped two percent in its international and institutional bank.

It left its final dividend steady at 95 cents, a move that contributed to the share price closing 2.02 percent lower at Aus$28.17.

"They're still trying to continue with what has been such a driving force for them -- a progressive dividend policy they've been growing to keep shareholders happy. But there's only so much of that you can do," IG market analyst Evan Lucas said.

On Wednesday, fellow banking giant NAB lifted its annual net profit 19.7 percent to Aus$6.34 billion. Westpac Bank reports its results next week.

Australia's biggest lender, the Commonwealth, works to a July-June financial year and announced a five percent rise in annual net profit to a record Aus$9.06 billion in August.