National Australia Bank chief executive Cameron Clyne says there is little prospect of any official interest rate cut being passed on in full to customers any time soon.
Mr Clyne says funding costs for NAB are continuing to rise amid competition for retail deposits and ongoing pressures in wholesale money markets.
Most banks have lowered their borrowing rates by less than any cuts in the Reserve Bank of Australia's (RBA) cash rate, citing higher funding costs, and Mr Clyne says this will likely continue.
"I think there's no short-term return to the RBA cash rate and bank interest rate movements being aligned," he told ABC television's Inside Business program on Sunday.
Mr Clyne said the period between the mid 1990s to the mid 2000s was the only one where bank rates actually moved in line with RBA.
"If you go back prior to that, and then obviously the period since 2007, this is actually more normal," he said.
"Funding costs are driven by a variety of factors - what you pay for deposits, what you pay for long term and short term borrowings."
Mr Clyne says the battle for retail deposits has put the most pressure on funding costs in recent times, while wholesale funding has been "a little more benign".
"That's not to say it may not spike up again if you have instability in Europe or elsewhere, but funding costs are still continuing to rise," he said.
"That will obviously impact us to a degree to which we are able to reprice."
On October 31, NAB reported net profit for the year to September 30, 2012 fell 22 per cent to $4.08 billion, compared with the previous corresponding period, with results dragged down by difficulties at its UK-based operations.
Mr Clyne said turning around the performance of NAB's UK businesses would depend on the state of Britain's economy.
"A patient approach, although it's difficult, is actually in the long term interests of the shareholders," he said.