Bendigo shares tank as cash earnings and profit tumble
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More news: Shares in Bendigo and Adelaide Bank shed more than 18% at the start of trading after the lender reported a slump in first-half cash earnings and statutory profit.
Bendigo shares were down 18.3% to $10.97 at 10:25am AEDT, making it the worst performing company across the ASX 200.
Bendigo Bank sees plunging profit, hit by funding, system costs
The news: Regional lender Bendigo and Adelaide Bank reported lower earnings in the six months to 31 December, hit by high funding and system costs, even as lending volumes grew.
The lender said it will pay a 30 cent dividend, in line with last year’s payout during the same period.
The numbers: Cash earnings, a preferred management metric closely watched by analysts, fell 1.1% to $265.2 million. Statutory profit after tax tumbled 23.2% to $282.3 million.
Net interest margin, a key profitability metric for banks, fell 5 basis points from a year earlier and 6 basis points over the half to 1.88%, hit by funding costs “to support accelerated lending,” it said.
Operating expenses soared 5% due to increased investment spend, including expensive technology needed as part of its multi-year transformation efforts to accelerate its digital capability.
The bank said it expects interest rates will fall to a more “neutral level” of 3.5% this year.
What they said: "We've improved our risk-based pricing capability to deliver stronger residential lending front book returns over the half, and we have now exceeded $100 billion in assets," CEO Richard Fennel said.
"However, our earnings have been challenged both on the income and expense lines. Income was impacted by margin pressures, driven by higher funding costs to support accelerated lending growth. Expenses have also increased due to continued investment to deliver our transformation program."
The source: ASX
