Lower cash profits weigh on Bendigo and Adelaide Bank shares
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More news: Shares in Bendigo and Adelaide Bank are down more than 3% to $12.02 in early trading after the lender posted a drop in full-year cash profit and squeezed margins. While net interest margin improved during the second half, cash earnings slipped amid heightened competition.
E&P analyst Azib Khan flagged likely downgrades to consensus estimates. The brokerage has a 'Neutral' rating on the stock with a price target of $10 a share.
What they said: "While net interest margins (NIM) strength is the positive, we view costs and the bad debt charge as being of low quality. We expect consensus NIM upgrades to be more than offset by cost downgrades, such that we expect consensus pre-provision for FY25F and FY26F to be downgraded by ~5%," he said in a note.
Bendigo Bank FY cash profit, margins dip amid rising competition
The news: Bendigo and Adelaide Bank has reported a drop in full-year cash profit as increased competition squeezed margins.
The numbers: Statutory profit for the year to June was up 9.7% to $545 million, missing Visible Alpha consensus analyst expectations of $570 million. Cash profit was down 2.6% to $562 million, while net interest margin slipped 4 basis points to 1.90%.
It will pay a fully-franked final dividend of 33 cents a share, up from 32 cents a year earlier.
The context: The lender said customer deposits grew 3.4% over the year, while total lending was up 2.6%. While net interest margin improved during the second half, cash earnings dropped due to heightened competition, much of it in the home loans segment.
The bank said cost of living pressures continue to remain a challenge for households, and expects interest rates to stay at current levels into 2025.
Chief executive Marnie Baker said the lender’s home loan customers have remained well ahead of their repayments, and said the bank will continue to invest in key growth areas to improve its digital capabilities.
The source: ASX announcement
