Bendigo Bank cuts payout

Regional lender flags $300 million capital raising

BENDIGO and Adelaide Bank has flagged a $300 million capital raising and slashed its interim dividend following a 2.0 per cent dip in first-half cash profit.

The regional lender yesterday entered a trading halt ahead of its $9.34 a share placement and $50 million nonunderwritten share purchase plan, which it launched in order to strengthen its buffer above APRA’s “unquestionably strong” capital ratio.

The placement comes after the bank’s first-half cash profit result slipped to $215.4 million, down from $219.8 million in HY19, weighed down by higher staff and redundancy costs, a higher regulatory and compliance spend, and an income hit following the sale of Bendigo Financial Planning.

Bendigo Bank’s institutional offer is at a 9.0 per cent discount to the bank’s adjusted closing price of $10.26 on Friday, reflecting the absence of a 31 cent interim dividend, which has been cut from 35 cents a year ago. Chief executive Marnie

Baker (above) said the decision to cut the first-half dividend was “difficult” but “required, given the capital raising to ensure sustainability of the dividend, retain funds for growth and to enable us to continue to deliver our strategy”.

The capital raising – which follows a $275 million placement by mid-tier rivals Bank of Queensland in November – is expected to add about 67 to 81 basis points to the bank’s level two Common Equity Tier 1 ratio.

The bank said Common Equity Tier 1 improved by 24 basis points to 9.0 per cent during HY20.

Statutory net profit fell by 28.2 per cent to $145.8 million during the period, reflecting $106.1 million in software impairments and software accelerated amortisation adjustments.

Net interest income increased by $17.9 million, or 3.2 per cent, to $676.4 million, while the firm’s net interest margin before revenue share arrangements increased by two basis points to 2.37 per cent.

Total lending of $62.9 billion, was up 2.8 per cent on the prior corresponding period, though agribusiness lending fell 6.8 per cent on account of the rolling drought.

Ms Baker said a housing market recovery had helped underpin an above-system mortgage lending growth of 7.7 per cent for the period, but conceded the financial landscape continued to suffer in the face of several uncertainties.

These included climate change and increasingly severe weather events, drought, coronavirus disruptions and sagging business confidence.