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Bendigo and Adelaide Bank announces full-year profit and increases dividend


Bendigo and Adelaide Bank (BEN) has announced an after tax statutory profit of $352.3 million for the 12-months ending June 30, 2013. Underlying cash earnings were $348.0m, an increase of 7.7 per cent on the prior corresponding period1. Cash earnings per share were 85.4 cents, an increase of 1.4 per cent.

BEN's Board of Directors has also announced an increase in the final dividend to 31 cents per share - an increase of 3.3 per cent on the prior half - taking the full-year dividend to 61 cents per share2. The increase reflects BEN's strong capital position and improved earnings performance.

Bendigo and Adelaide Bank managing director Mike Hirst said the bank had produced a solid result in difficult trading conditions.
"Consumer confidence and demand for credit remains low, and competition remains very strong for retail deposits," Mr Hirst said.
"Despite this we have been able to produce a result that shows improvement in a range of profitability and efficiency measures - including net profit, cash earnings, net interest margin, dividend, earnings per share, return on equity and cost to income ratio.

"We continue to enjoy the fantastic support of our customers, and of the communities we operate in. This has again been reflected in above-system asset growth across a range of portfolios. Our business operates with a conservative funding and balance sheet structure, and a highly engaged staff. Together these factors place Bendigo and Adelaide Bank in an ideal position to benefit from any improvement in market sentiment and demand for credit," Mr Hirst said.

Business performance
Net interest margins continue to come under pressure from a combination of vigorous competition for retail deposits and the natural compression caused by low official cash rates. Notwithstanding this, BEN managed to increase net interest margin to 2.21 per cent for FY13, up 10 basis points on the prior corresponding period.

While retail deposits continue to make-up approximately 80 per cent of BEN's total funding, there has been a material improvement in the cost and availability of wholesale funding options for the bank. This was evidenced by two successful senior unsecured wholesale funding offers during the 12-month period, marking the first senior unsecured raisings by BEN since the start of the global financial crisis.

BEN continues to invest in its distribution footprint and capability. This, combined with industry leading customer satisfaction and brand advocacy, has allowed the business to grow total lending at an annualised rate of 4.8 per cent over the past 12-months. This compares favourably with system growth of just 3.4 per cent over the same period.

BEN has reported its third consecutive six-monthly improvement in its cost to income ratio, which now sits at 56.2 per cent for the June half-year. The group continues to grow revenues faster than costs, with revenue growing at 3.5 per cent for 2H13, versus -0.4 per cent for cost growth. However, the group expects an increase in costs during FY14 as the Basel II Advanced Accreditation project continues, and we open our new office accommodation for approximately 1100 staff in Adelaide.

There was a material improvement in capital ratios over the period, with Core Tier 1 increasing