Falling bad debt charges enabled Spain's bailed-out Bankia to post a near 40% rise in net profit for 2015, although a rising legal bill linked to its troubled flotation is clouding its outlook.
Bankia, which has steadily improved profits in the past three years, is entering a key phase for its return to private hands.
Madrid, which owns 64% of the bank, vowed to sell off Bankia by the end of 2017.
Its progress so far in shaking off some of its past problems has been mixed, however, and Bankia will now have to contend with an uncertain political backdrop after an inconclusive general election that has yet to result in a government.
Falling charges against soured debts as Spain's economy rebounded helped Bankia post better than expected earnings, with net profit of €1.04 billion for the full year.
On the back of improving earnings, Bankia wants to lift its dividend payments for 2015 by 50% - helping the state, which had to inject more than €22 billion into the bank, recover funds.
But the bank had to book extra provisions against potential legal claims from small investors who lost money in its stock market flotation from mid-2011, causing it to miss its profitability target.
The bank's share price is down about 18% on the year, as investors fret about the impact of low interest rates. At below €1.35 per share, the state cannot exit Bankia at a profit.
Volatile global stock markets, which caused Britain to recently postpone a planned share sale in bailed-out Lloyds Banking Group, are an additional headwind.
Bankia bounced back quickly from huge losses on dud property assets after these were transferred to an external "bad bank" backed by the state.
It also cut costs and tried to shift more of its lending to small businesses and away from mortgages.
But thousands of ordinary Spaniards who bought into the bank's listing a year before its bailout are still pursuing it through the courts, arguing they were misled.
Bankia and its parent BFA have so far set aside €1.84 billion between them to cover potential compensation.