Shares jump as bank posts strong increase in earnings
Bendigo and Adelaide Bank shares rose 7% after the lender posted a strong increase in cash earnings and predicted further margin tailwinds for the rest of the year, while also having its say on the possibility of a high profile merger in the industry.
Bendigo’s unaudited cash earnings rose to $245 million in the five months to Nov. 30, a 22% increase over the prior corresponding period as lending declined and deposits increased, according to a report by The Australian.
Net interest margin post-revenue share arrangements over the five months to Nov. 30 stood at 1.85%, with an exit NIM of 2.01%, The Australian reported. NIM pre-revenue share arrangements stood at 2.3% year-to-date.
Bendigo shares were up 6.9% to $9.66 by Tuesday’s close after rising as high as $9.72 earlier in the day.
The bank reported the earnings increase as residential lending fell 0.2% between July and the end of November. Business lending fell 3% over the same period, while deposits rose 2%, The Australian reported.
Bendigo said it expected further tailwinds to its net interest margin in the second half of fiscal 2023. The bank predicted that the cash rate would rise as high as 4% by the middle of next year, up from the current decade high of 3.1%.
The bank expected operating expenses to increase slightly from 2021-22 levels due to higher non-lending losses and a greater mix of investment spend being expensed, The Australian reported.
Bendigo Bank managing director Marnie Baker said the bank’s NIM improvement was due to its management of volume growth and margins.
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“At our full-year results in August, we outlined our intent to sharpen our focus and concentrate our efforts on better returns, and to date in the first half of fiscal 2023 we have delivered strong growth in cash earnings and an improved return on equity,” Baker told The Australian. “Our NIM has continued to rise as we carefully manage our volume growth and margins, while continuing to prudently manage costs in an inflationary environment. We remain committed to our strategy and vision, and we are united in our purpose of feeding into the prosperity of the community and not off it.”
Merger slammed
Baker also slammed ANZ’s proposed $4.9 billion acquisition of Suncorp’s banking arm, saying the deal would stifle competition.
“If successful, this acquisition will concentrate market share and hand a commanding position in the Queensland market to a big four bank,” she said. “It will further entrench Australia’s banking oligopoly, which invariably leads to sub-optimal outcomes for customers and communities.”
Bendigo and Suncorp had reportedly held merger talks of their own in the past.
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