ANZ's half-year profit has fallen as a result of a three-fold increase in the amount of money set aside to cover bad debts.
The Australian-owned bank made $421 million in the six months to March - a drop of 34% compared with the $610 million made in the same period last year.
When one-off items are removed, underlying profit was down 5%.
Retail operations were hardest hit during the period, with profit falling 38% on the same period last year.
The bank says margins were squeezed because of stiffer competition for deposits, higher provisions for bad debts, higher wholesale funding costs and mortgage break costs.
Profit at its commercial arm was down 29%, despite a boost of 11% from its rural business.
Provisions for bad and doubtful debts were up more than 210%, although ANZ says the number of mortagee sales remains low.
The bank's markets business was the standout; market volatility sparked a 225% increase in trading income.
The profits of the wider banking group fell 28% to $A1.4 billion, while underlying profit was up 4%, to $A1.9 billion.