Bendigo and Adelaide Bank announced their 1H18 results, with an after tax statutory profit of $213.7 million, up $22.7m. Underlying earnings were $225.3 million, which is a 10.7% increase on pcp. It is a story of tight management, a boost to NIM from asset repricing, which may not be repeated, and an uplift in commercial property lending provisions plus a rise in bad and doubtful debts. Capital benefited from weighted risk asset adjustments and so was stronger than expected. But being a regional bank remains a tough gig.
Cash earnings per share were 46.8 cents a 3.3% increase on the pcp. A dividend of 35 cents per share, up 1 cent on the pcp.
They reported an exit net interest margin of 2.38% a margin expansion of 18 basis points, driven by mortgage and deposit repricing. They also warn that front book discounts will challenge their margin in 2H18.
76% of their home lending portfolio was at or below 80% (or around a quarter of the book is above 80%).
Home safe proceed to completed contracts continue to exceed pre-overlay values. The overlay assumes a 3% rise in property prices for the next 18 months, then rising back to 6%. This may be optimistic!
The liquidity ratio was 128.8% and NSFR around 111%.