Bendigo and Adelaide Bank Ltd (ASX:BEN) has released their earnings results for the half-year ending 31st December 2015. The result showed lower profit and interest income, however the bank’s management provides a positive outlook for FY16.
Revenue Down 10%
Over the period, revenue was $1.3 billion, down almost 10%, when compared to the PCP. With profit for the period down over 8% for the period, to $208.7 million. Moreover, the bank’s Net Interest Margin contracted 1 basis point, to 2.16% over the period.
However, on an underlying basis, cash earnings increased to $223.7 million, a 2.7% expansion for the period. Homesafe Trust Contribution was $23.9 million higher, due in part to the relatively strong conditions in the residential property markets of Melbourne and Sydney.
Managing Director Mike Hirst commented on the results: “The last half saw extreme price competition for mortgages, with several competitors seeking to increase their balance sheet exposure to Australian home loans and some irrational pricing in the lead up to changes in regulation.”
Credit Rating Stable
On the 29th July 2015, S&P ratings services affirmed its long-term counterparty credit rating on Bendigo Bank at A-, with a short term rating of A-2. According to S&P, the rating reflects the group’s business stability, strong capitalisation and very low credit losses, along with its focus on lower risk residential mortgage lending.
The board has declared an interim fully franked dividend of 34cents per share, an increase of 1cent per share. The Ex-Dividend and payment date are on the 1st and 31st of March 2016 respectively.
Additionally, the board has declared that a 1.5% discount will be applied to shares issued under the ‘Dividend Reinvestment Plan’, along with the ‘Bonus Share Scheme’.
Over the period, cash earnings per share were 48.9 cents, a 1.7% increase to the PCP.
Managing Director Mike Hirst remains quite optimistic on the outlook for the future performance of the bank: “Our banks outlook-particularly because of our strong capital, funding and credit position-remains very positive. We have built a strong and valued brand and our steadfast approach to disciplined margin management and balance sheet growth means our bank is well placed for sustainable growth, and is one that investors and customers should consider.”
BEN, as at 11.59am (AEDT), has declined almost 3.5%, to $8.91.
Author: Ben Khouri
Feb 15, 2016
Ben Khouri is a financial editor for Wise-Owl with a particular focus on the top ASX 300 companies. Having a vast background in economics and finance, Ben provides financial commentary & analysis as well as global market updates, which guide investors in devising investment strategies. Ben specialises in analysing economic data and global events from around the world and examines the impacts they have on the major equity markets.