The major bank, which ranks second behind CommBank of the big four Australian banks, on Monday revealed a one per cent profit drop as its results came in under expectations.

Despite the relatively poor result for the bank, Mr Miller said an improvement with loan repayments and the quality of loans for Westpac customers indicated the height of the post-pandemic cost of living pressures were behind the nation.

“As I sit here today and I look at the performance of the bank and I look at the performance in terms of bad and doubtful debts and delinquencies, it would appear to be the worst is behind us,” the Westpac boss said.

“Having said that, that doesn't diminish the fact that it is still quite challenging there in the marketplace.

“We're certainly still seeing consumers struggle with the cost of living challenges, but it does feel like the worst of it is behind us.”

He said this positive trend extended beyond those with mortgages on personal homes as the small business sector was also seeing an improvement with repayments.

“Pleasingly, from our perspective, we continue to see a reduction in stress rates within our business bank,” Mr Miller said.

“That's really pleasing to see because those small businesses, those small-to-medium enterprises (are) critical employers (and) critical drivers of activity in the economy.

“We can start to see, and are starting to see, some positivity there (and) some green shoots in terms of improving free cash flow (and) improving economic performance for those businesses which I think is very encouraging for the outlook.”

The improvement on mortgages comes after the Reserve Bank of Australia delivered its first rate cut in February this year, with the bank expected to deliver another in its May meeting.

Including the February call, Westpac is forecasting a total of four interest rate cuts in 2025, while fellow major banks are making similar calls.

NAB is forecasting the RBA to cut the cash rate by 0.5 per cent in May, followed by consecutive 0.25 per cent cuts in July, August, November, and February.

Both CommBank and ANZ are predicting a total of four cuts in 2025, bringing the cash rate to 3.35 per cent by 2026.