Margins hit by 'ongoing competitive pressure' in lending market
Bendigo and Adelaide Bank continues to see rapid growth in business and agribusiness lending through its broker channel.
For the third half-year reporting period in a row, broker-originated lending in this segment increased by more than 20%.
Business and agribusiness has become a strategically important earnings line for Bendigo. Earlier this month, the bank hired Travis Dillon, previously of Ruralco Holdings, as a non-executive director to help evolve the segment.
Despite the growth in the broker channel, cash earnings in business and agribusiness fell 5% sequentially in the first half, due to seasonal outflows from the agribusiness loan book.
Bendigo’s core residential lending product saw $10.1 billion of inflows in the first half, up from $ 6.5 billion in the first half of 2024.
The broker channel contributed to exactly 50% of these inflows, down from 52% in the first half of 2024.
“We have experienced significantly increased demand for both lending and deposit products from our customers, which has led to the strongest balance sheet growth we have experienced in some years,” said Bendigo’s chief executive Richard Fennell.
“However, our earnings have been challenged both on the income and expense lines. Income was impacted by margin pressures, driven by higher funding costs to support accelerated lending growth. Expenses have also increased due to continued investment to deliver our transformation program.”
Net profit after tax across all of Bendigo’s product lines fell 23.2% year on year to $216.8 million, while the net interest margin fell six basis points to 1.88%, “reflecting a combination of higher funding costs and ongoing competitive pressure in lending markets”.
