Bendigo and Adelaide Bank, Australia’s fifth-largest retail bank, today announced results for the year ending 30 June 2019.
- Statutory net profit: $376.8 million, down 13.3 percent, as a result of remediation and redundancy costs and unrealised losses relating to Homesafe due to the decline in property valuations in Melbourne and Sydney
- Cash earnings after tax: $415.7 million, down 6.6 percent, primarily attributable to remediation and redundancy costs
- Underlying earnings: $435.7 million, down 2.5 percent, excluding remediation and redundancy costs
- Net interest margin: 2.36 percent, steady year-on-year, increasing 2 basis points (bps) in second half, compared to the first half
- Total income: $1.6 billion, steady
- Bad and doubtful debts: $50.3 million, down 28.8 percent
- CET 1: 8.92 percent, up 30 bps
- Cash earnings per share: 85 cents per share (cps), down 8 percent
- Total fully franked dividends: 70.0 cps, steady
- Total lending: $62.1 billion, up 1.1 percent, with residential lending above-system, at 3.5 percent
- Total deposits: $64.0 billion, up 1.5 percent, with retail deposits up 3.3 percent
“Earnings for the year were impacted by remediation and redundancy costs. Despite this, we delivered total income of $1.6 billion, in line with the prior year, in an environment of low growth, political uncertainty, subdued consumer confidence and increasing competition.
“Net interest margin was steady year-on-year, and, half-on-half, increased by 2 basis points, reflecting the active management of margin and volume for both lending and deposits.
Key metrics
Total lending grew by 1.1 percent to $62.1 billion, with noticeably stronger growth of 3.6 percent in the second half – well above system growth of 2.6 percent. In the second half, residential lending was up 4.3 percent and agribusiness showed growth influenced by seasonality up 12.8 percent, both well above system; whilst small and medium-sized business lending grew 9.5 percent.
Bad and doubtful debts being down 28.8 percent to $50.3 million.
During the year, the Bank divested Bendigo Financial Planning which serves to further simplify and de-risk the business and deliver cost savings.
The Board declared a final dividend of 35 cents2 per share, taking the fully franked full year dividend to 70 cents per share, continuing our history of rewarding shareholders with a high yield and long-term returns.
During the year, the Bank launched Australia’s first and largest next-gen digital bank, Up, which has exceeded initial customer growth expectations. We also became the first lender globally to offer a digital home loan application and assessment process under its own brand, Bendigo Express, using Tic:Toc’s instant home loan technology.
Remediation
Total costs for remediation for the year were $16.7 million. These were all self-reported to the regulator and relate to:
- Insufficient documentation to demonstrate that services had been provided to Bendigo Financial Planning customers in accordance with their service contracts. This business was subsequently sold.
- Products not operating in accordance with their terms and conditions.
Operating expenses were $954.5 million, up 5.9 percent on prior year. This included $16.7 million remediation costs; and $11.9 million redundancy costs.
Excluding remediation and redundancy costs, adjusted cost to income ratio was 57.4 percent, up from 55.4 percent in prior year, attributable to staff costs, including the additional Elders agri-finance managers; insurance premiums; and IT investment.
