Bendigo and Adelaide Bank Posts 13% Rise in Half-Year Net Profit
Australian regional bank reports strong financial results despite price competition challenges
Bendigo and Adelaide Bank has announced a solid 13% increase in its net profit for the first half of the fiscal year. The bank's net interest margin has been impacted by price competition in both lending and deposits.
In the six months through December, the bank's net profit climbed to 282.3 million Australian dollars, surpassing market expectations of A$257 million. This positive performance can be attributed to a 14% year-on-year increase in half-year revenue, which reached A$1.03 billion.
However, the bank's cash earnings on an after-tax basis experienced a slight decline to A$268.2 million, compared to A$282.2 million in the previous fiscal period. This decrease can be attributed to a 15 basis point reduction in the bank's net interest margin, which currently stands at 1.83%. The margin has been affected by fierce competition in the home loan and customer deposit sectors, despite benefits from interest rate hikes.
Bendigo and Adelaide Bank's Chief Executive, Marnie Baker, emphasized the importance of managing the business for long-term value while addressing short-term challenges. In an effort to protect margins against competitive pressures, the bank has pre-funded the repayment of the Term Funding Facility. Additionally, the bank has implemented productivity initiatives, enabling it to keep expense growth below inflation.
Directors of the bank have declared a dividend of 30.0 Australian cents per share, marking an increase from the previous year's interim dividend of 29 cents. This reflects the bank's commitment to rewarding its shareholders.
Overall, Bendigo and Adelaide Bank's strong financial results for the first half of the fiscal year demonstrate its resilience amid challenging market conditions. The bank has proven its ability to navigate price competition in the lending and deposits sector while focusing on long-term value creation.
Analyst comment
Positive news. The market is likely to react positively as Bendigo and Adelaide Bank posted a 13% rise in net profit and exceeded consensus estimates. Despite challenges from price competition, the bank has implemented measures to protect margins and manage expenses, indicating a focus on long-term value. The increased dividend also signals confidence in the bank’s performance.
