Bendigo and Adelaide Bank posts A$224.7 million cash profit
(13 February 2017 – Australia) Bendigo and Adelaide Bank has recorded a cash profit for the half year of A$224.7 million, up 0.4 percent on the previous period.
Bendigo said net interest margin (NIM) from loan customers had contracted over the past six months from 2.16 per cent to 2.10 percent.
This was despite Bendigo using the Reserve Bank of Australia's cash rate reduction in August to reprice mortgages. However, the margin recovered towards the end of the half as market repricing of loans washed through, resulting in an "exit margin" of 2.14 percent, the bank said.
The South Australian-based bank said its "arrears remain benign" , however figures indicate that residential, consumer and business loans arrears are trending higher.
Profit was buoyed by loan growth, which was twice the average.
The bank improved costs, as cost-to-income ratio dropped 2.1 percent to 54.3 percent. However, its bad and doubtful charge was higher.
Speaking of the bank’s investment in technology, chief executive Mike Hirst said Bendigo: “will continue to provide a material contribution to efficiency gains".
Common equity tier 1 capital (CET1) fell slightly to 7.97 percent, from 8.09 percent in June, driven by the increase in risk weighted assets. The bank expects CET1 to improve in the second half.
Revenue was five percent higher on the half at A$804 million.
Bendigo said it was still awaiting accreditation from the Australian Prudential Regulation Authority, permitting it to hold less capital against its lending book.
The bank is 80 percent funded by its customers' deposits, more than its larger bank rivals which rely more on capital markets.
"Our industry leading funding position continues to be a particular strength for our bank, providing flexibility for executing on organic and inorganic growth opportunities," Hirst said.