Westpac's rebound in earnings has made investors optimistic that other banks due to report this week will produce a similar bounce from the COVID doldrums.
Westpac on Monday reported first-half cash earnings more than trebled to $3.5 billion.
The bank was able to set less money aside to cover potential loan losses from the pandemic.
Shares closed higher by five per cent to $26.23.
The positivity helped most financial shares. They proved best on the Australian share market and closed up by 1.42 per cent.
Yet the positivity was not widely spread.
The benchmark S&P/ASX200 index closed higher by just three points, or 0.04 per cent, to 7028.8.
The All Ordinaries closed down by 3.9 points, or 0.05 per cent, to 7286.8 points.
Information technology shares lost 1.94 per cent and there were losses of more than one per cent for energy and materials.
The weight of financial shares kept the market stable.
Fidelity International cross asset specialist Anthony Doyle said the outlook for banks had vastly improved on 12 months ago.
Banks set a lot of money aside for loan defaults to keep increasing during the pandemic, but that had not happened, he said.
Mr Doyle also cited Australia's relative success in containing the coronavirus, government support measures like JobKeeper and a surging housing market.
"All these measures have helped lift the outlook, whether it be for the Commonwealth Bank, Westpac or others," he said.
ANZ will give its first-half earnings on Wednesday, while NAB is due Thursday.
The Commonwealth will give a third-quarter update next week.
Meanwhile the federal government gave Australians over 50 access to coronavirus vaccines through general practice respiratory clinics and vaccination hubs.
On May 17, the program will be expanded to GP surgeries.
In the US, survey results due this week for the manufacturing industry and April payrolls are expected to show improvement.
Forecasts are that 978,000 jobs were created in the month as consumers their spent stimulus money and the economy improved.
US futures were higher after Wall Street closed lower on Friday to end April.
Elsewhere on the ASX, Premier Investments will pay back $15.6 million in JobKeeper wage subsidies after a surprising shift on the taxpayer funds.
The company will repay the net benefit collected during the first-half (ended January 30) of its financial year, having used JobKeeper to pay staff during coronavirus lockdowns as recently as April.
Premier said sales increased after these lockdowns, and fully offset the cost of paying staff wages during the restrictions.
Shares were down 1.26 per cent to $25.96.
Seven West Media said Google and Facebook had agreed to publishing deals.
Revenue from the multi-year deals, which will allow the two digital giants to use Seven stories, is expected before the end of the financial year.
Shares in Seven were higher by as much as three per cent early. They closed down by 4.21 per cent to 45 cents.
Miners disappointed. BHP dropped 1.4 per cent to $47.03, Fortescue shed 0.49 per cent to $22.48 and Rio Tinto lost 0.87 per cent to $120.09.
On Tuesday, the Reserve Bank of Australia will hold its monthly board meeting.
The board is expected to keep the cash rate, and other key measures, at a record low 0.1 per cent.
The Australian dollar was buying 77.29 US cents at 1722 AEST, lower from 77.78 US cents at Friday's close.
ON THE ASX
* The benchmark S&P/ASX200 index closed higher by three points, or 0.04 per cent, to 7028.8 on Monday.
* The All Ordinaries closed down by 3.9 points, or 0.05 per cent, to 7286.8 points.
* At 1722 AEST, the SPI200 futures index was higher by four points, or 0.06 per cent, to 7008.
One Australian dollar buys:
* 77.29 US cents, from 77.78 cents on Friday
* 84.68 Japanese yen, from 84.53 yen
* 64.20 Euro cents, from 64.16 cents
* 55.83 British pence, from 55.84 pence
* 107.72 NZ cents, from 107.30 cents.