Kiwibank is critical of new Reserve Bank rules which it says are pushing up mortgage rates.
Chief executive Sam Knowles says they could end up damaging the economy.
The rules require banks to raise more money from domestic deposits and longer term overseas sources. Kiwibank is heavily reliant on retail deposits.
The Reserve Bank says they will deliver a more stable banking system.
But Mr Knowles says mortgage rates are being pushed up as banks scramble for funds from depositors.
The Reserve Bank estimates the rules could increase interest rates up by 0.2 of a percentage point.
But Mr Knowles says they could be significantly higher than this.
Kiwibank's profit fell 9% to $23.5 million for the six months to December compared to the same period a year earlier
Mr Knowles forecasts a similar annual profit to last year's $52 million result.
Total lending rose 15% to $9.8 billion, while retail deposits rose 3% to $6.9 billion.
It also increased the amount set aside for bad debts by 26% to $15.4 million.