Bendigo and Adelaide Bank lifts lending as CEO Marnie Baker and directors take pay cut

Bendigo and Adelaide Bank managing director Marnie Baker will take a 10 per cent salary cut.

Bendigo and Adelaide Bank says total lending tracked higher in the first quarter. Picture: AAP

Bendigo Bank managing director Marnie Baker is hopeful Victorian customers will taper off support packages as quickly as their interstate counterparts as restrictions ease in the state, but has cautioned on the uncertain economic outlook and says the bank needs more time before making any decision on whether to pay a delayed final dividend.

Speaking at the bank’s annual general meeting on Tuesday, hours after the lender revealed that the number of customers on repayment holidays was 69 per cent lower than the May peak, Ms Baker dashed shareholder hopes for even a token dividend payout, saying the board had made a “prudent decision to sit tight” until the lender’s half-year results in February.

“We just need some extra time just to make sure that things are travelling in the right way. We‘ve now put a timeframe on that and we will be back in February at our interim results and we’ll be able to make an announcement in relation to that, remembering we are still in very uncertain times,” she told The Australian.

More than 4,400 residential and consumer customers are still receiving support from the bank but that is down 74 per cent on the May peak, Ms Baker said. It is also providing support to 2,389 business customers, half the amount it was propping up in July.

More than half of those on repayment holidays are from Victoria, with the bulk of those in Melbourne, as the state lags the rest of the country in its reopening and recovery.

Ms Baker said she was encouraged by Daniel Andrews’ announcements on easing restrictions this week and that Victorian business was “ready to go”.

“That has put such confidence and optimism back into the Victorian market. Businesses are very, very resilient, and they‘ve learned how to adapt … business is ready to go. So I think it’ll be great going into this Christmas period, and we’ll be doing everything we can to support them,” she said.

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But the optimism wasn’t enough to shift the bank’s view on a final dividend payout, which it deferred at the full-year result in August.

The move to delay any dividend decision until February came despite the bank recording strong lending growth and improving its net interest margin in the three months through September.

The nation’s fifth largest bank saw lending growth of 11 per cent over the quarter on an annualised basis, with residential lending climbing 16.1 per cent, both well above system, while its net interest margin lifted 1 basis point to 2.3 per cent.

Ms Baker said the bank wasn’t simply pursuing growth for growth’s sake.

“We have always been really clear that this is about long-term sustainable growth. So it has to be at profitable prices: we are not growing our business off the back of sharp prices or individual deals. This is long-term sustainable growth.

“We‘re very pleased that we have been a beneficiary of what has been a very active refinance market of more recent months. And we’re very pleased to be able to pick up the business and the borrowers that are trusting us with their business.”

Bell Potter banking analyst TS Lim said the lending growth it recorded over the quarter showed the bank was positioning itself for the future.

“I think it’s a good move for them. And I’d say their deposit growth must be as good, or even better than their lending growth, enabling them to lend ahead of system,” he said.

Ms Baker said the bank would pull back on lending if pricing got “ridiculous”.

“When the opportunity arises, and it is sustainable business at profitable prices, we will be in the market. In the past we have stepped out of the market if pricing gets ridiculous or the environment isn‘t suitable, but at the moment it absolutely is. And our value proposition is resonating.”

While Ms Baker sees the potential for pressure in capital city housing markets in the coming year, she is more optimistic for regional areas, including Bendigo, where she said “you cannot develop enough land for new housing”.

Ms Baker will take a 10 per cent salary cut for the next six months and the bank’s board will slash director fees by 10 per cent as the lender looks to “share the burden” of the challenges facing its customers and shareholders.

Bendigo Bank shares ended the session up 2.25 per cent as the broader market finished down 1.7 per cent.