Higher margins boost Rural Bank

John Kavanagh
Higher lending margins are starting to have a big impact on bank earnings, if the latest results from Rural Bank are indicative of the trend.

The bank, which usually opens the reporting season each February and August, disclosed a 19 per cent lift in interim net profit with no growth in its loan book. It attributed the growth in earnings to improvement in the margin.

Profit for the six months to December was $26.8 million, up from $22.4 million in the previous corresponding period.

The bank had loans under management of $3.61 billion in December, compared to loans of $3.68 billion a year earlier. As usual, the bank summarised its result in a media release lodged through the ASX.

Rural Bank chief executive Paul Hutchinson said in the statement that the economic conditions tempered farmers' appetite for debt.

He said that where farmers have had good seasons they have used improved earnings to reduce debt.

Retail deposits make up 95 per cent of the bank's funding.

The bank changed its name from Elders Rural Bank in August. Bendigo and Adelaide Bank owns 60 per cent of Rural Bank and Elders 40 per cent.