Bendigo and Adelaide Bank says interest rates on deposit accounts may be about to fall as other sources of funds become cheaper and more accessible for banks.
The regional lender's managing director Mike Hirst said wholesale funding had become cheaper in recent months, as world markets stabilise.
He said he expects the big four banks to strike more of a balance between funds from deposits and wholesale markets as a result.
"I would expect that, as long as there's continued strength in those wholesale funding markets, I would think there will be some abatement of the pricing around retail deposits," he said.
Competition for deposits has also been cited by banks as a major reason for not cutting mortgage rates in line with the central bank's cash rate.
Bendigo on Monday reported a $189.4 million profit for the six months to December 31, more than triple its $57.9 million profit in the same period the previous year.
A major reason for the profit rise was $95 million in asset value writedowns in the previous corresponding period, and a $38.7 million gain on the sale of shares in wealth management firm IOOF Holdings in the first half of 2012/13.
Cash earnings, which excludes one-off financial items, were $169.7 million, up 4.4 per cent from the previous corresponding period.
Bendigo's net interest margin, a measure of its profits on loans, increased by nine basis points over the six months to December, reflecting lower funding costs.
The results sent the bank's shares higher, up 37 cents, or 3.8 per cent, to $10.22 at 1201 AEDT.
Mr Hirst was still cautious about the second half of the financial year, due to uncertainty in financial markets.
"Clearly, we think there is going to be continued low credit growth," he told analysts.
"Especially around things like consumer lending and credit cards, people are looking to clean up their personal balance sheets.
"That is going to be a challenge for us, but one I think we can meet through our expanding network and value proposition."
The bank declared a fully-franked interim dividend of 30 cents per share, consistent with the same period in the previous year.