Metro's annual profits have risen more than two-thirds since it replaced Connex as Melbourne's rail franchisee five years ago, as the company has become increasingly skilled at meeting performance targets that attract government bonuses.

The Andrews government conceded on Wednesday that the system of bonuses and penalties has created "perverse" incentives for Metro to sometimes skip stations and cut services short, inconveniencing passengers, in order to stay on time.

But it said that it was bound by the terms of the state's contract with Metro until it expires in 2017.

Metro, a subsidiary of Hong Kong-based rail operator MTR, was paid $1.188 billion in subsidies for operating Melbourne's suburban rail network in 2013-14. It made an after-tax profit of $46.22 million, documents filed to financial regulator ASIC reveal, of which $39.29 million was paid in dividends to its shareholders.