Bendigo Bank takes a hit
Profit down but hopes for lift from big four woes
BENDIGO and Adelaide Bank shares have taken a dive after a 2.4 per cent dip in firsthalf profit, but the regionally focused lender hopes to benefit from the big four’s public relations disaster at the royal commission.
In revealing a flat $219.8 million first-half cash earnings result yesterday, Bendigo Bank managing director Marnie Baker told investors that an “uneven playing field” in the banking industry had not only inhibited the growth of smaller lenders but also served as a catalyst for the wrongdoing uncovered at the financial services inquiry.
“Trust in the banking sector was and is still at an all-time low,” Ms Baker said.
“We know consumers are looking for an alternative, and as an organisation that puts the interests of customers first, we are well placed, given the strength of our product offering, our market-leading customer service and our price competitiveness, to be that for them.”
Subdued earnings knocked the bank’s share price down by as much as 5 per cent in early trade yesterday, with first-half statutory profit also taking a hit, down 12.3 per cent to $203.2 million.
Ms Baker pointed to tighter lending standards, as well as diminishing margins and increased costs due to tougher regulatory conditions for the decrease.
Net interest income for the half decreased $11.5 million to $656.5 million, while expenses increased by $18.7 million or 4.2 per cent on salary increases, and an increase in legal costs and software licence fees.
Ms Baker said Kenneth Hayne had made strong recommendations on how to bet- ter deliver for customers, and added there was considerable scope for government to supplement the final report.
“(But) we do need to watch out for the unintended consequences on the availability of credit, and demand leaking into the unregulated sector,” she said.
Ms Baker said any changes from the commission would probably be procedural and policy-related, not structural. The bank announced a fully franked interim dividend of 35 cents a share, in line with the prior period.