Bendigo Bank reports $203.2m half-yearly after-tax profit for the 2018-19 financial year

BENDIGO and Adelaide Bank is looking to increase revenue and manage costs following its half-yearly results for the 2018-19 financial year.

Marnie Baker, the bank’s managing director, said this would be achieved by changing processes such as reducing duplication in IT processes, and investing in things that were going to future-proof the business.

“In a low revenue environment, you need to ensure you’re managing your costs as effectively as you can to ensure you continue to grow,” she said.

Bendigo and Adelaide Bank reported an after-tax statutory profit of $203.2 million in the six months to December 31, $28.5 million less than the first half of the 2017-18 financial year.

Cash earnings were also down, from $225.3 million in the first half of 2018 to $219.8 million in the first half of 2019.

Return on equity slipped from 8.33 per cent to 7.94 per cent, while the cost to income ratio rose from 54.2 per cent to 57.3 per cent. 

“In a low revenue environment, we’re done very well,” Ms Baker said. 

Aspects of the bank’s financial performance in the six months to December 31 might have been poorer than the first half of the previous financial year, but net customer growth grew by 57 per cent in those 12 months.

The bank recorded an 18 per cent increase in new customers, and the proportion of customers leaving was flat. 

Retail deposits rose from $50.3 billion in the first half of the past financial year to $52.3 billion in the first half of this year.

Total capital increased from 12.98 per cent in December 2017 to 13.84 per cent in December 2018.

EARLIER: GREATER focus could have been given to competition and a levelling the playing field for Australian banks in the financial services royal commission, according to the Bendigo and Adelaide Bank.

Marnie Baker, the bank’s managing director, said there was considerable scope for the government to supplement the recommendations of the Royal Commission, which were released last week, with ‘pro-competition’ initiatives.

She said such initiatives could include: ‘addressing the ‘too big to fail’ funding advantage accessed by the major banks, enhanced risk-weight settings that would results in fairer capital outcomes across all banks and the disproportionate cost of regulation on smaller participants.’

Ms Baker’s comments came as the bank this morning announced a $203.2 million after-tax statutory profit for the six months ending December 31.

“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,” Ms Baker said. 

“A less competitive environment means poorer customer outcomes.”

RELATED: Bendigo Bank records $434.5 million after-tax profit for the 2017-18 financial year

The bank said it continued to perform despite ‘an uneven playing field in a subdued, Royal Commission environment’.

Bendigo and Adelaide Bank reported an increase of 0.2 per cent on its after-tax statutory profit compared with the previous six months. 

Underlying cash earnings were flat on the previous half, at $219.8 million.

The fully franked dividend of 35 cents per share was in line with the prior period.

Cash earnings per share were down 0.2 cents, at 45.1 cents. 

“While our strategy to reduce complexity, invest in capability and tell our story has delivered solid results and strong growth in customer numbers, the lack of fair competition in Australian banking continues to inhibit true customer choice,” Ms Baker said.

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The bank is still reviewing the Royal Commission’s final report.

“Naturally, we will work with government and regulatory bodies to implement the government endorsed recommendations, and to ensure there are no unintended consequences,” Ms Baker said.

“A strong, competitive and fair banking system is essential for all Australians and a robust Australian economy. We feel there is more to be done to promote fair and equal competition for Australian consumers.”

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