Bank shares soar

Bendigo and Adelaide Bank shares have soared after the lender said strong second-half margin expansion helped lift full-year cash profit 4.2 per cent to $418.3 million.

BENDIGO and Adelaide Bank shares have soared after the regional lender said strong second-half margin expansion helped lift full-year cash profit 4.2 per cent to $418.3 million.

Shares in the bank were up almost seven per cent shortly after midday yesterday after Bendigo said net interest margin for the six months to June 30 was 0.08 percentage points higher than in the first half.

Net interest margin – a key metric of a lender’s financial health – finished the financial year at a healthy 2.34 per cent, while full-year statutory net profit was up 3.4 per cent to $429.6 million.

The bank benefited from mortgage rate increases designed to shift borrowers from interest-only loans to principle and interest, and to slow the growth of investor lending.

Managing director Mike Hirst said the result was strong despite constraints posed by the Australian Prudential Regulatory Authority’s intervention to address risks related to the property market.

“The APRA caps have had an impact, there is no doubt about that,” Mr Hirst said. APRA in March told major lenders to limit growth in higher risk interest-only loans to 30 per cent of new mortgages.

Bendigo lifted new loan approvals 17.7 per cent to $20.1 billion but non-residential approvals contracted 4.1 per cent.

Picture: DAVID GERAGHTY STRONG GROWTH: Bendigo Bank boss Mike Hirst has plenty of reason to smile after shares surged on the back of strong second-half margin expansion lifting full-year cash profit by 4.2 per cent.