Improved profitability comes despite a decline in sales due to the scope of consolidation and foreign exchange effects.
Net profit for the full year rose 79 percent to 2.15 billion euros ($2.27 billion) with the auto giant pledging to pay shareholder dividends for the first time since 2011 to the tune of 0.48 euros per share.
If the planned takeover is successful, it would see PSA regaining its position as the second-biggest car manufacturer in Europe after Germany's Volkswagen group. That position is currently held by rival French automaker Renault.
PSA's improved profitability comes despite a decline in sales due to the scope of consolidation and foreign exchange effects.
"In an environment characterised by adverse exchange rates, this growth was driven by higher volumes, positive price and mix effects, and lower fixed and production costs," a statement said.
Mix effects refer to the contribution that each company's product makes to sales or profits.
The automaker also upped its medium-term objectives for 2016-2018, aiming for an operating margin of more than 4.5 percent, compared with a previous target of 4 percent. Its target for 2021 is 6 percent.
Turnover for the full year fell to 54 billion euros, down from 56.3 billion a year earlier, a fall of 4.1 percent which was largely accounted for by last year's sale of the bumper arm of Faurecia, a car parts manufacturer partly owned by PSA.
Excluding the sale, revenues fell just 1.2 percent, largely hit by exchange rate fluctuation, PSA said.
Last month, the carmaker said car sales rose 5.8 percent to 3.15 million units in 2016 in an increase largely due to its resumption of business in Iran following the easing of most international sanctions under a nuclear deal with world powers.
The planned takeover of GM's European brands, which was unveiled last week, has sparked fears in both Germany and Britain that the prospective new owner could cut non-French jobs if the deal goes ahead.
PSA has been active in trying to win backing for the acquisition, with chief executive Carlos Tavares on Wednesday securing the backing of Germany's Chancellor Angela Merkel and also holding a phone conversation with British Prime Minister Theresa May.
Opel operates some 10 factories in Europe spread across six countries and had 35,600 employees at the end of 2015 -- 18,250 of them in Germany.
In Britain, it sells vehicles under the Vauxhall brand.
Following the results, shares in the French automaker were little changed on the Paris stock exchange, down just 0.1 percent at 18.73 euros.