Bendigo and Adelaide Bank has joined the larger Commonwealth Bank in boosting its net interest margin for the first time in years for the six months to December.
The regional bank reported a 10.7% jump in cash earnings compared to the previous first half to $225.3 million, short of market forecasts around $236 million.
Shareholders got their cut from the higher result and fatter margins – the interim dividend was lifted to 35 cents a share from 34 cents.
Bendigo said its net interest margin rose 18 basis points to 2.36% the CBA lifted its margin 6 points to 2.16%) due to mortgage repricing.
Like other banks, Bendigo raised interest rates for investor borrowings (interest only especially) in the wake of the Australian Prudential Authority’s tighter rules last year.
Over the first half, growth in total housing lending up 0.7% for the half., helping total income rise 6% to $843 million. Despite that the shares fell 2% to $11. The shares, like those of other banks were hit by the impact of the banking royal commission’s first day yesterday.
“This improvement obviously reflects mortgage repricing in response to regulatory caps on interest only and investor lending, as we sought to restrict growth in those products," said Managing Director Mike Hirst.
“The bank experienced strong growth in loans to home owner occupiers in an environment where competition for those customers remains fierce,” Hirst said by way of example. “While lending to home investors was curtailed by caps applied by APRA, all other metrics indicate that we are fulfilling our customers’ needs by providing a premium banking experience.”
“The bank experienced strong growth in loans to home owner occupiers in an environment where competition for those customers remains fierce," Mr Hirst said.
Bad debts were up $6.5 million, or 16.3%, with the increase driven by provisions raised for commercial exposures.
