Bendigo and Adelaide Bank (BEN) has joined the growing list of reporting companies boosting payouts to shareholders.
The regional bank yesterday lifted interim dividend to 31c a share, up a cent from the previous interim.
It represents a payout ratio of around 66% based on earnings per share of 45c a share.
The bank made a cash profit of $185.9 million for the six months, up 9.5% from $169.7 million a year ago.
But statutory net profit fell almost 9% to $180.7 million, as a result of one-off charges.
Chief executive Mike Hirst said in yesterday’s statement that lower funding costs helped lift the bank’s margins over the half year. "Deposits are at pleasing levels and wholesale markets are working well," he said.
With 70% of the bank’s funding coming from deposits, easing interest rates has reduced its cost of funding.
"We have a lot of flexibility in how we fund our business and this is reflected in our increased margin.
"We’re seeing low growth due to subdued demand and an increase in people making additional efforts to pay down their debt," Mr Hirst said.
"This is most evident in our mortgage and our Rural Bank portfolios."
"It also means we’re seeing low levels of arrears in the book – a natural outcome of people making additional repayments," he said.
BEN 1Y – Lower funding costs help Bendigo
Mr Hirst said the Bank has seen good margin growth, driven by the strength of the funding side of the business."Deposits are at pleasing levels and wholesale markets are working well.
"We have a lot of flexibility in how we fund our business and this is reflected in our increased margin. Cost control is a relatively positive story and our people have embraced continuous improvement across the business.
"This activity is not only driving efficiencies, it’s delivering a better customer experience," he said.
Mr Hirst said he expected conditions to be roughly the same in the second half.
"Things should remain stable although I expect the focus of competition to shift from deposits to assets. Given how well our brand resonates with our customers and communities, our Bank will be able to compete effectively in this environment.
"Our new loan approvals grew strongly half on half as we increased our customer base.
"We continue to lead customer satisfaction and advocacy and this isn’t limited to our retail brand.
"Demand for our offering remains strong and we will build upon this momentum."
The bank’s shares rose half a per cent to $11.78, weakening in late trading after being up more than 1% earlier in the day.
The cash result confirms the lead seen last week from the Commonwealth with its 14% lift and the solid first quarter update from the ANZ.
