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Bendigo and Adelaide Bank Post Robust Results

Bendigo and Adelaide Bank Post Robust Results
The bank's Basel III common equity tier 1 ratio stands at 8.09 and total capital at 12.21 per cent.
Aug 08, 2016 By Simon Herrmann Tags: BEN, Earnings

Second-tier bank Bendigo and Adelaide Bank (ASX:BEN) released its financial results for the full year today and announced an underlying cash profit of $439.3 million, a 1.6 per cent increase on the prior corresponding period. The bank stated that conditions were challenging as the low interest rate environment impacted loan growth and customers are encouraged to reduce debt.

Bendigo and Adelaide Bank posted total income of $1,551.9 million which is just 0.6 per cent above last year’s figure. Net profit after tax was $415.6 million, down 2 per cent compared to the previous corresponding period.

Bendigo's Dividend Yields 6.8 Per Cent

Management announced a fully franked dividend of 34 cents which brings the full year distribution to 68 cents. The full yea distribution yields 6.8 per cent based on the last traded price, well above the market average highlighting the tremendous income opportunity of the stock, despite the latest share price volatility.

With earnings per share of 90.4 cents for the full year BEN is trading at a price to earnings (P/E) ratio of just 11 times, well below its peers.

Managing Director Mike Hirst commented on the results: “Lending growth accelerated in the second half, with costs well managed in this unprecedented low interest rate environment.” He also pointed out further challenges as a result of these market conditions: “Many of our mortgage customers are ahead in their loan repayments, while excess loan repayments continued to increase and mortgage offset accounts grew by 11 per cent of the year.”

The results highlight why Bendigo Bank is often referred to as a ‘retail bank’ with about 82 per cent of funding provided by retail customers. Retail deposits increased by 8 per cent during the period.

The bank's Basel III common equity tier 1 ratio stands at 8.09 and total capital at 12.21 per cent, which emphasises Bendigo’s healthy financial position relative to the global benchmark.

Bendigo’s share price rose around 3 per cent on the open to be last traded at $10 around 11am. BEN’s stock has lost 16 per cent since the beginning of the year, but the stock has rebounded nearly 25 per cent since hitting a low in late February.

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Simon Herrmann Author: Simon Herrmann Aug 08, 2016

Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.

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