Nationwide Building Society has reported a 46% drop in annual profits as it continues to feel the impact of low interest rates.
Underlying pre-tax profits fell to £212m for the year to 4 April from £393m a year earlier.
The group added that it expected "lower levels of profitability" to continue into 2010-11.
It also said it was looking at the efficiency of its branch network and refused to rule out branch closures.
However, a Nationwide spokesman said the matter was being looked at over the medium to long term, adding that it was something the group monitored.
The building society said that to meet cost targets it was considering making possible cuts to its administration centre network.
The society said it expected that the house prices would stabilise over the coming year, after rising by 9% in the past 12 months.
"Unless there is a significant spike in interest rates, a major dip in prices is unlikely over the next year," it said.
"At the same time, the upside potential for house prices is limited by the high level of prices relative to household earnings and the more restricted availability of mortgage credit relative to pre-crisis levels," it added.
Its share of the mortgage market fell slightly to 8.7% from 9% in 2009, while mortgage lending totalled £12bn in the year to 4 April.
The Nationwide's arrears among its residential mortgage customers rose very slightly in the past year but were still much lower than the industry average.
Just 0.68% of residential mortgage accounts were more than three months in arrears, up from 0.64% in 2008-09 but still less than the average of 2.22% experienced by all members of the Council of Mortgage Lenders.
But the Nationwide warned the situation might deteriorate.
"The prospect of fiscal tightening and public sector redundancies may result in an increase in mortgage arrears and subsequent losses in future years," it said.
"Likewise, the recovery of the commercial property sector remains exposed to weak tenant demand and this may continue for some time whilst the economy fully recovers from the recession."
The amount of money it had to set aside for bad debts on customers' loans rose from £394m to £549m in the past financial year.
Little of this reflected defaults by normal mortgage customers, with the majority - £299m - due to bad loans secured on commercial property.
"The increase in defaults has been triggered by tenant failures and our borrowers' subsequent inability to service loans, along with covenant breaches on loan-to-values and business failures on owner occupied properties," the Nationwide said.