Shares in regional lender Bendigo and Adelaide Bank (BEN) eased 2.6% yesterday in the wake of a full year result that just beat consensus by reporting a 13% rise in cash profit for 2015 to $432 million.
Statutory profit came in at $423 million, on a 7.4% rise in revenues for the year to June of $1.55 billion.
Shareholders will get a final dividend of 33 cents per share on September 30, making a total dividend payout for the year of 66 cents a share, up 2 cents on the 2013-14 payout.
Managing director Mike Hirst said the results reflected Bendigo’s continued approach to disciplined margin management and balance sheet growth.
“Having to operate on an uneven playing field impacted mortgage growth and this was compounded by repayment of debt by customers.
“However, it’s great to see our customers building equity and improving their financial wealth by taking advantage of the current low interest rate environment,” he said in yesterday’s statement.
The bank’s net interest margin eased a fraction (0.4%). The cost to income ratio rose marginally, with cost to income ratio up 0.7 percentage points to 55.2 for the year.
Bendigo said its Homesafe product was a big contributor to earnings outside interest income. It added more than $63 million to revenue, up 26% on its contribution in 2014.
(Homesafe allows the bank to help a home buyer pay for a house by taking a discounted part share in it. Bendigo gets income from the sale of the house and so earnings from this product rise when house prices rise.)
“Net interest margin experienced a slight contraction of 4bps reflecting the highly competitive, low interest rate environment in which the Bank continues to operate,” Mr Hirst said in yesterday’s statement.
"Having to operate on an uneven playing field impacted mortgage growth and this was compounded by repayment of debt by customers. However, it’s great to see our customers building equity and improving their financial wealth by taking advantage of the current low interest rate environment.
"Pleasingly, the recent APRA announcements regarding changes to risk weights on mortgages is a positive step toward leveling the playing field and a good outcome for customers seeking greater choice in banking service providers.
"We’ve prudently managed our balance sheet in these conditions, with our Basel III common equity tier 1 ratio increasing 15bps to 8.17 percent. Total capital increased 118bps to 12.57 percent and our capital raising activities during the year having been well received by investors.
"Our focus on achieving advanced accreditation continues, a significant investment that has already increased our risk management capability and is improving how we can best meet our customers’ needs," he said.
