Westpac Banking Corporation expects a modest pick-up in lending growth throughout this year.
Addressing shareholders at the company's annual general meeting, chairman Lindsay Maxsted said the bank is seeing signs of improved consumer and business sentiment across its businesses after the federal election and the easing of the Australian dollar.
"More interest is beginning to emerge from businesses as they think about investing again," Mr Maxsted said.
"This interest has yet to translate to real activity and new lending, but is a welcome sign.
"These trends support our positive view about the medium-term outlook for the Australian economy."
Mr Maxsted said the strength of Westpac's business and its substantial investments underway position the lender well for the future.
The chairman said the federal government's upcoming inquiry into the financial system creates an additional opportunity for the industry.
"While the Australian banking sector performed well through the global financial crisis, it is timely to take stock and look at how the system can better support the future growth of our economy," he said.
"With this in mind, it is encouraging that the terms of reference have been set broadly, to enable a more complete view of the sector.
"In this way, the panel will be well placed to assess where and how the allocation of finance across the economy can be enhanced."
Mr Maxsted warned it was necessary to be mindful of the "extraordinary" wave of regulation that has swept the globe after the global financial crisis, saying it was already adding cost and complexity to the system.
"Given the very important role banks play in the community, it is important to fully assess these changes and their appropriateness to our markets," he said.
"It is similarly important that these developments, along with their implementation timetables, do not carry with them unintended consequences or place our system at a comparative disadvantage to international peers.
"Achieving an appropriate balance between regulation and efficiency is particularly important as the economy emerges from a period of below-trend growth."
Mr Maxsted said the bank looks forward to participating in and supporting the inquiry.