Bendigo and Adelaide shares slide following 'soft' result
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More news: Bendigo and Adelaide Bank shares fell 2.83% by 12:56pm AEDT following a drop in cash profit for the first half of the financial year.
Citi analysts said it was a “soft result underneath the noise”. They said the weakness in Bendigo’s results was the net interest margin (NIM) contraction of 15 bps during the first quarter before it stabilised at 1.83%.
“This was impacted by a large liquidity build (will partially reverse with a term funding facility repayment), however underlying NIM trends appear softer than we anticipated from a pricing and mix perspective,” Citi said.
“Management have guided further NIM headwinds on both sides of the balance sheet. This is consistent with peers on the liability side, but the drag looks greater on the asset side. Coupled with a dividend per share miss and soft capital, we retain our sell call and downside catalyst watch.”
Bendigo and Adelaide Bank posts drop in first-half cash profit
The news: Bendigo and Adelaide Bank has reported a drop in first-half cash profit, with its margins squeezed by competition in home loans.
The numbers: Statutory profit for the six months to December 2023 was up 13.4% to $282.3 million thanks to revaluations at its Homesafe business. However, cash profit fell 5% to $258.2 million amid intense competition in mortgages. Its net interest margins dropped 15 basis points to 1.83% in the half year. It will pay a fully-franked interim dividend of 30 cents a share, up from 29 cents a year earlier.
The context: Chief executive Marnie Baker said the lender had focused on long term value while adjusting for short-term headwinds. “We have been deliberate in our decision to pre-fund the repayment of the term funding facility, protected our margins where competitive tensions were irrational, kept expense growth below inflation... and stayed the course on our investment plans,” she said.
The bank is forecasting for the RBA cash rate to stay at the current level for most of 2024 and expects cost of living pressure would continue to mount on households.
The lender said in a separate statement it is considering a new Capital Notes debt offering, but said whether the fund raising proceeds will depend on market conditions and regulatory and other approvals. It did not disclose the size of the potential capital raise.
The sources: ASX announcement, ASX announcement
