Westpac's chief executive Gail Kelly is banking on home building and continued low interest rates to drive confidence and improvements in Australia's economy.
The head of Australia's second-largest lender gave an upbeat view of the economy as housing loan growth drove a record $3.77 billion first half cash profit.
The bank also lifted its fully-franked interim dividend to 90 cents, from the previous 86 cents.
Westpac's chief economist Bill Evans said on Monday that despite rises in dwelling approvals, business and commercial lending and business confidence, he was not forecasting an interest rate rise until the second half of 2015.
Ms Kelly said the world economy was gradually improving generally, with the US and Europe performing better as China's growth slowed to a still solid 7.0 per cent.
The latest official figures out on Monday showed approvals for new homes in Australia up nearly 20 per cent at 19-year highs.
"The pick up is related to the interest rate cycle at the moment," Ms Kelly said.
"Our focus on tilting to growth is delivering, and this is expected to continue into the second half of the year."
The bank increased housing loans by five per cent and is predicting a seven per cent total for the year.
It already has Australia's second largest share of the mortgage market, behind Commonwealth Bank.
Business lending was up five per cent in a positive sign for the economy.
Ms Kelly said she thought lending growth overall would increase six per cent for the full year.
Despite a bumper profit that beat expectations, Westpac's shares were the worst performers of the four majors, slumping 42 cents, or 1.2 per cent, to $34.45.
The stock had been predicted to fall as ANZ's did after a record result last week, given the record run in bank shares.
One disappointment was a surprise fall in net interest margins - the difference between its funding and lending costs - by eight basis points to 2.11 per cent.
Aggressive competition driven by National Australia Bank chasing a 15 per cent share of the home loan market drove that.
The bank also ended its run of paying special 10-cent dividends.
That was blamed on being cautious about meeting new regulatory requirements that banks hold higher capital ratios, despite Westpac already being the best capitalised of the majors.
Westpac's cost to income and bad debt ratios are also the best in the sector.
Morningstar analyst David Ellis said most promising was Mrs Kelly's more optimistic than usual economic outlook, given banks' tendency to be a barometer of the economy.
"There is evidence of a moderate pick up and we see it in the bank results every six months: business activity, consumer spending and loan growth," he said.
"As long as the Australian economy doesn't spiral into recession then the major banks should continue to do reasonably well."
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