CFO Andrew Morgan
Bendigo and Adelaide Bank reported a net profit of A$282.3 million for the six months to December – a 13.4 per cent increase over the previous corresponding period.
After adjusting for a $47.8 million gain on restructuring its investment in Homesafe, the cost of the termination of its agreement with Elders and other restructuring costs, cash profit was down 9 per cent to $268.2 million.
Income: Net interest income fell 0.6 per cent to $813.6 million, compared with the previous corresponding period. Other operating income rose 7.6 per cent to $143.2 million. Total income rose 0.6 per cent to $956.8 million.
Expenses and cost to income: Operating expenses rose 7.1 per cent to $552.7 million. The cost-to-income ratio rose 350 basis points year-on-year to 57.8 per cent.
Impairment expense: The credit expense was $10.8 million, almost double the $5.6 million expense in the previous corresponding period but down on the $28 million expense in the June half last year.
Credit quality: Home loan arrears (overdue by 90 days or more) have risen from 41 bps in the December half 2022 to 46 bps in the June half last year and to 52 bps in the latest half. Gross impaired loans fell year-on-year from $118.4 million to $96.1 million.
Margin: The bank’s net interest margin was 1.83 per cent, down from 1.9 per cent in the previous corresponding period and 1.98 per cent in the June half last year. Loan pricing and higher deposit and funding costs were the main contributors to the decline in NIM. The bank pre-funded the repayment of its Term Funding Facility loan with a higher rate of deposit growth. This is currently sitting on the balance sheet as higher liquids and also contributed to the margin contraction. The bank said this will normalise later in the year.
Return on equity: On a cash basis, ROE was 7.82 per cent – down from 8.79 per cent in the previous corresponding period and 8.45 per cent in the June half last year.
Earnings per share: EPS rose 5.8 per cent year-on-year to 49.9 cents per share. On a cash basis, EPS fell 4.8 per cent to 47.4 cents per share.
Dividends: The bank declared an interim dividend of 30 cents a share, up a little from 29 cents in the previous corresponding period. The dividend payout ratio was 63.3 per cent, compared with 55.6 per cent in the previous corresponding period.
The divisions: The consumer division’s cash profit fell 10.4 per cent to $250.8 million, compared with the previous corresponding period. The business and agribusiness division’s profit rose 13.6 per cent to $208.7 million.
Market share: Residential mortgage lending settlements were down 6 per cent and the portfolio balance fell 0.1 per cent to $58.5 billion. Share of residential lending fell 8 bps year-on-year to 2.7 per cent. Business lending share fell 8 bps to 1.4 per cent. Deposit share fell 1 bps to 2.4 per cent.
Capital: The bank’s common equity tier 1 capital ratio was 11.23 per cent, compared with 10.13 per cent in the previous corresponding period and 11.25 per cent in the June half last year.
Funding and liquidity: The bank has $68.4 billion of customer deposits – up 3.5 per cent since June last year. Deposits represent 74.9 per cent of total funding. It has $2.9 billion of $4.7 billion borrowed under the Term Funding Facility program left to repay. It diversified its funding sources during the half, with the issue of its inaugural euro covered bond program. The liquidity coverage ratio was 151.4 per cent and the net stable funding ratio was 119.7 per cent.