Investors in sights as regional heavyweight addresses falling profits
REGIONAL banking heavyweight Bendigo and Adelaide Bank is tapping investors for $300 million and has cut its dividend as rising costs weigh on its performance.
Shares in the group were put in a trading halt yesterday as it announced the capital raising program. The bank is selling $250 million worth of new stock to institutional investors in a share placement, and will offer another $50 million worth of shares to other investors.
In a statement to the Australian Securities Exchange, it said the funds would help support growth in mortgage lending and “further strengthen” its balanced sheet.
They will lift the bank’s socalled common equity tier one capital ratio — a key measure of balance-sheet strength.
The bank said it would have an increased buffer above the “unquestionably strong” level required by the industry watchdog, the Australian Prudential
Regulation Authority. It comes after the group’s net profit tumbled to $145.8 million in the six months to December, down 28.2 per cent from the same period a year earlier, in part reflecting more than $80 million in writedowns on the value of software.
The bank announced it was cutting its interim dividend to 31c, from 35c a year ago. Chief executive Marnie Baker said the decision to cut the dividend was “difficult”.
“We have a history of rewarding shareholders with a high yield and long-term returns,” Ms Baker said. “We feel this reduction was required.”
Shares in the placement are being sold at $9.34 each.