The bank expects interest rates to peak and for competition over market share to continue this year
Bendigo and Adelaide Bank has delivered a strong result for the half year ending Dec. 31, reporting a 22.9% jump in its cash earnings to $294.7 million for the half year, and a 14.5% increase in its total income to $958.2 million on the prior half.
Bendigo’s statutory net profit lifted 49.3% to $249 million, driven in part by a revaluation of the Homesafe portfolio, restructuring charges, and amortisation of acquired intangibles, while operating expenses lifted 4.9% to $532.2 million, up 1.1% than the prior comparative period, largely due to investment in its transformation program.
“The strong result you see today owes much to our strengthened focus on profitable growth,” said Marnie Baker (pictured), CEO and managing director. “Over the half, we have delivered a 145-basis point increase in our return on equity to 8.79% and a 500-basis-point improvement in our cost-to-income ratio to 54.6%, in line with our medium-term objective of towards 50%.”
Australia’s most trusted bank’s net interest margin rose 19bp on the previous half and 8bp on the prior corresponding period, reflecting the positive impact of rising rates and the bank’s active management of margin and volume for lending and deposits, Baker said.
Bendigo said it expected interest rates to peak or plateau this year.
“The longer-term trend will not be decided until inflation returns to within the RBA’s target range,” Baker said. “While credit expenses are benign, they are likely to come under pressure as the tightening cycle continues and moves closer toward historical averages for the bank, which are low by industry standards.”
“Borrowers remain well positioned with 43% at least one year ahead on repayments and 33% two years ahead on repayments. We have seen very little deterioration in these numbers with 84% of home loan customers maintaining a financial buffer.
“At this point in the interest rate cycle, it is reasonable to expect house prices to continue to moderate, which in turn, will lead to lower system credit growth.”
She said she is also expecting continued competition for market share, primarily among the big four banks, using cash back offers for housing loans and other incentives.
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