Bendigo Bank ignores the elephant in the room: Suncorp
The ACCC wants Bendigo, not ANZ, to buy Suncorp Bank. Funny then the idea didn't rate a mention during today's - pretty solid - Bendigo results.
The Australian competition regulator’s decision to kybosh ANZ’s $4.9 billion bid for Suncorp Bank was ostensibly about greater concentration in the Australian banking oligopoly but under-pinning its case was the potential for Bendigo and Adelaide Bank to be a fifth pillar.
That thinking sounds a little magical. Bendigo doesn’t have a spare $5 billion, it would have to use scrip. Its bid would rely on realising substantial synergies - which means branch closures and staff cuts. And the Suncorp Group board has disparaged the idea.
Nevertheless, Bendigo’s annual result today did no harm to its candidature as a fifth pillar if indeed Suncorp Bank becomes its plus one. The bank lifted cash earnings (the underlying profit focus on by investors) 15.3% $576.9 million, its fully franked dividend 15.1 per cent to 61c and its net interest margin 20 basis points to 1.94 per cent (although the second half was tougher with NIM falling 5 basis points.)
That was a little below some analyst expectations with consensus just north of $591 million and there was an initial sell-off. But longer term this is an innovative bank which maintains exceptional customer satisfaction, high customer advocacy, improving productivity and well managed credit quality. While return on equity lags the majors it did improve 90 basis points to 8.62%.
