While not as good as the Commonwealth Bank’s 8% performance, but Bendigo and Adelaide Bank has managed a 4.2% lift in full-year cash earnings to $418.3 million for the 12 months to June 30, and the market cheered.
The Victorian-based regional lender also revealed a 3.4% lift in its statutory net profit for 2016-17 to $429.6 million, from the $415.6 million for the 2015-166 financial year.
Bendigo Bank retained a final fully franked dividend at 34 cents per share, bringing its full-year payout to a steady 68 cents. Despite the modest nature of the improvement and the unchanged dividend, investors loved the results, sending the shares up by more than 6% to just over $12.
The bank’s net interest margin (NIM), or the difference between the rate it lends money out and the rate it pays depositors, fell to a still high 2.22% from 2.23% the previous year.
This reflects a change in the bank’s calculation of the NIM (announced last week) which brings the measure in line with the Big Four. (The CBA’s fell 3 points to 2.11% in 2016-17). As a result of the change NIM was up 8 basis points from the previous half (which probably helped boost the shares as investors released the bank was more profitable than first appeared).
Bendigo CEO Mike Hirst said that the result was a strong one that was above system growth but somewhat hampered by APRA’s move to restrict investor lending.
“Recently APRA’s lending caps have somewhat restricted that strong lending growth across the retail, and third party channels, however, margin expansion was strong in the second half" Mr Hirst said yesterday.
Return on equity at the bank was up 31 basis points on the second half, and by 10 basis points on the previous full year. Bendigo said a 1.5% discount would apply to shares purchased under the dividend reinvestment scheme.
