Bendigo Bank tells AGM it’s aware of growing borrower stress

Bendigo and Adelaide Bank’s leadership has revealed it’s identified emerging stress in its home loan book but assured investors it can weather a potential downturn.

Bendigo and Adelaide Bank chief executive Marnie Baker. Picture: Rob Leeson

Bendigo and Adelaide Bank’s leadership has warned of emerging stress in its home loan book but assured investors it was better placed than much of the competition to weather a potential downturn.

Presenting at its annual general meeting, Bendigo and Adelaide Bank chairwoman Jacqueline Hey said the bank was well provisioned and prepared for arrears, which remained at “historically low levels”.

But Ms Hey said the bank was seeing a small cohort of borrowers who “need our ongoing support to help them with practical steps to adapt to the higher rate environment”.

Ms Hey, who retired from the bank’s board on Tuesday, said Bendigo and Adelaide Bank would “carefully balance the interests of our shareholders and our customers” as it navigated the higher interest rates that risked pinching the bank and its borrowers.

Bendigo and Adelaide chief executive and managing director Marnie Baker told shareholders a small number of the bank’s borrowers “will require our assistance” as higher interest rates bit.

“We know some of our customers are doing it tough, which is why it is important we stay close to them,” she said. “Our primary objective is to keep our customers in their homes.”

Ms Baker said Bendigo and Adelaide Bank’s approach was leading to historical loss rates on the mortgage portfolio near “the lowest in the industry”.

Bendigo and Adelaide Bank chairwoman Jacqueline Hey.

She said the bank was seeing a shift in its home borrower business, with a growing demand for digital mortgage products.

The regional lender’s strengths and weaknesses were on display at the AGM as a parade of shareholders demanded the dual-headquartered financier commit to its branch network.

At the meeting in the central Victorian regional city of Bendigo, the bank’s leadership touted the hefty deposit base from its branch network underpinning its results but nodded to the costs associ­ated with the extensive footprint.

Ms Baker said moving to digital banking products was part of Bendigo and Adelaide’s transformation agenda.

But shareholders demanded the bank commit to its extensive community branch network, which provided Bendigo and Adelaide with a large volume of its deposit funding.

Bendigo and Adelaide Bank has been on an acquisition tear, with its recent move to snap up financial services business Ferocia folding neobank Up into the group. The lender also had been looking at Suncorp’s banking arm, which is set to be sold to ANZ Bank.

Several shareholders demanded Bendigo and Adelaide Bank retain cash in its branches, criticising the lender for shutting branches in regional and metropolitan areas.

Some also took aim at moves by the bank to shut its cheque-handling systems, warning moves to shift services online did not serve an elderly customer base.

Ms Hey told shareholders Bendigo and Adelaide Bank was faced with balancing its “shareholders, depositors and lenders and matching our balance sheet”, but said this would see the lender outmanoeuvred on pricing.

“Won‘t always be the best price at every point in time,” she said. “We’ll make sure that we on behalf of shareholders continue to set our market pricing where we can cover our cost of capital.”

Ms Baker warned shareholders the deposit market was likely to “remain very competitive” as other lenders competed for funding “in preparation for the repayment of the Reserve Bank Term Funding Facility”.

Bendigo and Adelaide Bank shares closed 3c up at $8.80.