Bendigo CEO Richard Fennell
A failure to preview its earnings slump, especially its margin contraction, cost shareholders in Bendigo and Adelaide Bank dearly yesterday, with its shares diving 15 per cent, after falling as much as 18 per cent early in the day.
This is the largest one day fall in any bank’s share price Banking Day can remember.
Net profit over the half year to December 2024 fell 23 per cent to $216.8 million. Over six months NPAT fell 17 per cent.
The net interest margin fell to 1.88 per cent in December from 1.96 per cent in June.
Operating expenses increased 5 per cent to $598.4 million, while staff costs increased by 10 per cent, over both six months and the full year.
This trio of metrics shocked investors, offsetting the good news in the result; system growth around two times in the second half and the declaration by the CEO, Richard Fennell, that the bank faced “plenty of demand.”
Bendigo management attempted to paint a picture of disciplined cost management, strategic investment and progress on productivity.
The bank could also point to a couple of milestones; surpassing $100 billion in assets during the half and customer numbers at its Up digital bank brand passing one million.
The consolidation of core banking systems – from six into one – is almost complete.
At the Q&A in the investor briefing yesterday bank management faced demands that they confirm the bank adhered to their continuous disclosure obligations and to explain their failure to update the market. Fennell confirmed the first.
Residential loan arrears of 0.63 per cent were 9 bps higher over six months and 11 bps higher over 12 months.
Hardship applications being handled by the care centre were “more complex” Fennell said.
Shares in the bank closed $2.05 lower at $11.37.