Bendigo & Adelaide Bank books profit lift on back of widening interest margin

Bendigo & Adelaide Bank has booked a lift in full-year profit despite the recent spike in wholesale funding costs.

New Bendigo & Adelaide Bank chief executive Marnie Baker. Picture: SIMON CROSS

Bendigo & Adelaide Bank has recorded a 1.1 per cent rise in annual profit, helped by a margin tailwind from early in the year and despite highly competitive lending markets in Australia.

Net profit totalled $434.5m in the year through June, against $429.6m the year before.

Cash earnings — a measure followed by analysts that adjusts for intangibles amortisation and strips out certain income and expenses — were up 6.4 per cent at $445.1m for the year.

Net-interest income was $91.6m higher at $1.32m, while expenses rose by $27.9m on the year before due in part to a rise in staff salaries, lower capitalisation rates and increased technology costs.

The bank (BEN), formed in 2007 through the merger of Bendigo Bank and Adelaide Bank, said its net interest margin — a profit measure based on the difference between the rate at which a bank borrows and lends — widened 12 basis points to 1.98 per cent for the year. However, the margin in the second half of the year was flat on the prior six months, in part held back by a spike in wholesale funding costs in 2018.

Bendigo & Adelaide plans to lift it final dividend for the year by 1 cent a share on last year to 35 cents, for a full-year payout of 70 cents a share.

Dow Jones