Bendigo and Adelaide Bank disappointed the market yesterday with a softer than expected first-half profit, thanks to weak revenues and higher costs.
Even though interim dividend was left unchanged at 35 cents a share the fall in cash earnings of 2.4% – to $219.8 million – mirrored the weaker performance from the Commonwealth for its first half and the NAB for its first quarter.
Like its larger peers, the bank blamed higher funding costs for the weaker performance.
The shares slipped 6.8% to $10.39 after touching a high of $10.90.
But judging by the slight fall in the bank’s net interest margin to 2.35% from 2.36%, the higher funding costs could not have been that onerous – the CBA, for example, saw a fall of four points, while the NAB said its net interest margin “declined” without revealing the actual figures.
Net interest income fell $11.5m to $656.5 million while costs $18.7 million, or 4.2%. That was effectively a $30 million impact on the bottom line and the reason for the drop in earnings.
While credit expenses fell by $20.8 million or 44.9%, net impaired assets increased by $45.0 million or 25.5% – so there was a negative movement of more than $34 million in these areas. All up that’s an extra $54 million or so net in high costs, lower revenues or increased impairment charges.
Chief executive Marnie Baker said there remained a “lack of competition” in Australian banking, and last week’s report from the royal commission into industry misconduct had done little to change this.
“Whilst the Royal Commission Final Report makes strong industry-wide recommendations to improve customer outcomes, little goes to the issues of competition and a level playing field, something many inquiries cite as being essential to better customer outcomes, and a point we’ve made for years,” she said in yesterday’s statement.