Covid-19 and the various lockdowns across Australia have destroyed earnings of Bendigo and Adelaide Bank, with the major regional lender revealing that profits for 2019-20 nearly halved.
Bendigo Bank on Monday revealed a net profit of $192.8 million for the 12 months ending June 30, down a large 48.8% compared with financial year 2019.
Revenue rose 0.9% to $1.61 billion and the net interest margin eased 3 points to 2.33%.
The impact has caused the banking group to drop its final dividend. Last year it was 35 cents a share.
But shareholders at least get the interim of 31 cents a share for 2019-20, instead of something around the 70 cents a share paid for 2018-19.
That wasn’t enough and the shares dropped 6.5% to $6.54.
Cash earnings after tax for the 2020 financial year were down a still nasty 27.4% to $301.7 million.
Bendigo Bank CEO Marnie Baker said the financial damage had predominantly been from the economic downturn induced by COVID-19, which has induced a low-interest-rate environment.
“Our full-year result has been impacted by COVID-19, record low-interest rates and investment costs required to support the delivery of our strategy,” she said.
“We expect market conditions to remain challenging, and because of this we are unable to provide meaningful guidance for financial year 2021.”
Bendigo Bank’s bad and doubtful debts were $168.5 million for the year ending June 30, largely driven by a $127.7 million provision set aside because of COVID-19.
Total deposits were up 5.7% to $67.7 billion and total lending rose 5.1% to $65.3 billion.
Chair Jacqueline Hey said in Monday’s statement “Whilst economic uncertainty remains and the full impact of COVID-19 is still evolving, the Board has acted prudently in considering the interests of shareholders and APRA’s industry guidance on capital management, to defer a final dividend decision.
“Ongoing stress testing continues to support the Bank’s strong balance sheet and capital position,” Ms. Hey said on Monday. And shareholders can’t expect any guidance for the time being from the bank.
Looking to 2021, the bank said market conditions are expected “to remain challenging and because of this we are unable to provide meaningful guidance for FY21. We continue to focus on maintaining a strong and resilient balance sheet supported by our growth and clear transformation strategy.”