BEN Shareholders Like What they See

Some sleight of hand for shareholders from Bendigo and Adelaide Bank in its interim result on Monday.

The bank said shareholders will receive a fully-franked interim dividend of 28 cents a share, including 4.5 cents a share as part payment for the 2020 final dividend.

The board had previously deferred a decision on the final dividend last year, citing the uncertain economic environment and the news sent the shares surging by 10% yesterday to $10.44.

Investors seemingly concentrated on the dividends but missed the fact that the interim of 23.5 cents had been trimmed sharply from last financial year’s 31 cents a share.

The 4.5 cents a share one off payment was also sharply lower than 35 cents final paid out in 2019.

The bank reported total income growth of 3.3% to $849 million for the half and statutory net profit growth of 67.3% to $243.9 million.

That was predominantly attributable to software impairments and software accelerated amortisation adjustments recorded in December 2019 and not repeated in the current period.

The bank’s cash earnings after tax increased 1.9% over the prior corresponding period to $219.7 million.

This was driven by growth in its lending portfolios and an increase in hedging revenue, which offset a 7 basis points decline in its net interest margin to 2.30%.

Investors also liked the improvement in bad debts. The shares jumped more than 11% to end at $10.56.

CEO, Marnie Baker said in the release that “Our bad and doubtful debts of $19.5 million, comprised six basis points of gross loans. We reviewed our COVID-19 collective provision overlay at 31 December 2020, resulting in a modest reduction to manage ongoing uncertainty around the future impact of the pandemic.

“The increase in specific provisions primarily relates to existing impaired loans and reflects limited recovery action and asset sales due to COVID-19,” she said.

The bank was upbeat on the outlook as it reported strong market share growth in home loans and lower bad debts.

Chief executive Marnie Baker said the bank was on track with plans to ramp up its market share and cut costs.

“With business confidence and consumer sentiment up, an ongoing low-rate environment, a growing housing market, an improving jobs market, continued growth in regional Australia, and our customers showing remarkable resilience and adaptability, we are buoyed by the outlook,” Ms Baker said.

“However, we always take a long-term view, and we remain mindful of the global and local impacts of the pandemic, international trade sentiment, decisions on government support measures and the ongoing reality of natural disasters and climate change.

“Looking ahead, supported by our growth and transformation strategy, we continue to target above system residential lending and further growth in small business and agribusiness sectors, whilst reducing our cost base, and maintaining a strong and resilient balance sheet.

The sleight of hand in the dividend at least showed shareholders that the bank was thinking of them. The trimming of the interim tells us the board remains worried about the outlook.


About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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