But economic growth is still expected to slow, to about two per cent this year and 1.5 per cent in 2027, due to the impact of the Middle East crisis, according to ANZ Banking Group.
The favourable outlook comes ahead of the May 12 federal budget, as the fourth-ranked top institution posted a flat bottom-line first-half net profit of $3.65 billion on Friday.
ANZ's preferred cash profit metric, excluding significant items, jumped 14 per cent to $3.78 billion year-on-year and rose a massive 70 per cent from the final quarter of its financial year.
The economy is currently chugging along around 2.6 per cent but economists generally expect a contraction, as consumers rein in spending due to higher interest rates and inflation and as the global economy eases.
Chief executive Nuno Matos said the bank, which has a large institutional trading arm, knows the world is more complex since the US attacked Iran on February 28.
"As Australia's most international bank, we have a front row seat to global developments," he said in a results briefing.
"The real impact of this crisis remains ahead of us, with the physical flow of critical commodities from the Middle East being key."
Consumer and business confidence is already "materially weaker", he added, although the impact on spending has so far been modest and employment growth remains stable.
"This supports our central expectation that Australia will avoid a recession, although the situation is extremely dynamic," Mr Matos said.
ANZ is the first of the three major banks to report its earnings for the six months to March 31 this profit season. Commonwealth Bank will post its third-quarter results later this month.
All are being closely watched for signals on how customers are weathering high inflation and interest rates, and the outlook for the economy.
Mr Matos warned that the longer the conflict drags on, and if the Strait of Hormuz - a key passageway for about 20 per cent of the world's oil supplies - remains closed, the global economic impact will increase.
On Thursday during Asian trading, the price of Brent crude oil - the global benchmark - jumped above $US125 a barrel as the Strait of Hormuz, a key passageway for about 20 per cent of the world's oil supplies, remains closed.
Before the war, it was trading around $US60. On Friday, it was around $US110. Commonwealth Bank economists believe it could jump to $US150 a barrel if the crisis continues.
ANZ's interim result was boosted by a nine per cent cut in operating expenses as part of its ongoing business "reset" program, as operating income came in flat at $11.2 billion, excluding one-offs.
Its net interest margin - a key measure of the earnings it makes on lending products - was broadly resilient, falling just one basis point to 1.53 per cent.
At the same time, total non-performing loans slid by two basis points to 0.55 per cent, while home loans 90 days or more in arrears also dipped slightly.
Mr Matos said the borrowing behaviour of ANZ's customers hasn't changed much, with households maintaining high savings buffers.
"We have not seen any material increase in new customers entering hardship or receiving assistance," he said.
He would not be surprised, though, to see more retail customers switching to lower margin products on the loan side as interest rates rise - the next central bank hike is expected this month - and shift into term deposits from savings accounts.
ANZ will pay shareholders an interim dividend of 83 cents, 75 per cent franked, per share in line with last year.
Its shares were trading down one per cent at $36.24 ahead of midday.
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