Like its larger rivals, Bendigo and Adelaide Bank (ASX:BEN) has managed to weather the 2023-24 financial storm, emerging largely unscathed despite the challenges posed by high interest rates and a sluggish economy.
Indeed, the year to June marked a period of incremental gains for outgoing CEO Marnie Baker. As she prepares to hand over the reins to Chief Financial Officer Richard Fennell, the bank's second-half performance, particularly the improvement in net interest margin, has positioned it for a solid start to 2024-25.
Statutory net profit after tax increased by 9.7% to $545.0 million, while cash earnings dipped slightly by 2.6% to $562.0 million. Home lending rose 3.1% to $60.4 billion, net interest margin decreased by 4 basis points to 1.90% (outperforming many larger peers), and customer deposits grew 3.4% to over $68 billion.
The bank declared total dividends of 63 cents per share for the year, up from 61 cents in the previous year, with a final dividend of 33 cents per share.
In Monday's earnings release, Ms Baker highlighted the bank's strength, capability, and differentiation.
"We remain committed to delivering sustainable long-term growth, strategically investing in key areas to capitalise on the strong demand for our products and continue to enhance shareholder returns," she said.
Ms Baker emphasized that Bendigo's balance sheet is well-prepared for the current economic climate.
"Credit expenses declined by 71% to $9.9 million, and the Bank's Common Equity Tier 1 ratio of 11.32% remains exceptionally strong, well above our target," she explained.
"Customer deposits increased by 3.4% over the year, driven by our digital deposit channels and the continued strength of our established deposit franchise," Ms Baker added.
Total lending grew by 2.6% for the year, with a 6.7% annualised growth rate in the second half.
"Agribusiness lending saw a 7.4% increase, benefiting from opportunities in economically prosperous states like Queensland and Western Australia," Ms Baker noted. "Business lending rose by 1.2%, as we continue to enhance our capabilities, streamline processes, and leverage our strategic advantages in micro and SME business."
Net Interest Margin (NIM) decreased by 4 basis points for the year due to lending and deposit pricing in the first half but improved in the second half, increasing by 13 basis points (or 11 basis points normalised) due to portfolio benefits, improved funding mix, and strong retention of maturing fixed-rate mortgages.
