Higher interest rates boost Bendigo and Adelaide Bank cash profit

The news: Bendigo and Adelaide Bank has lifted its full-year cash profit by 15.3% as higher interest rates boosted margins.

The numbers: Statutory profit for the year to 30 June was up 1.8% to $497 million. Cash profit climbed to a record $576.9 million but fell short of analyst expectations. Net-interest margins were up 8 basis points to 1.98% in the second half of the year. The lender declared a fully franked final dividend of 32 cents a share, up 15% from a year earlier.

The context: Chief executive Marnie Baker said the lender had managed to contain business-as-usual costs despite an environment of high inflation. Bendigo Bank has stayed away from the fierce competition in Australia’s mortgage market, reflected in slower home loan growth but stronger second-half margins compared with rivals Suncorp and CBA. However, the bank expects bad debts to gradually increase.

What they said: “While our asset quality remains sound and arrears are at historic lows, we do expect bad debts to trend upwards and move towards longer term averages of 10 to 12 basis points over time,” Baker said.