Results solid, FSI improves position, AGM hears
Bendigo and Adelaide Bank's Annual General Meeting heard that a continued disciplined approach to margin, cost management and balance sheet growth reflected the Group's 13.1 percent increase in cash earnings.
Managing Director, Mike Hirst said while competition and subdued consumer and business confidence contributed to a low growth environment, recent Financial System Inquiry recommendations - in particular changes to risk weights on mortgages and the amount of capital required by the majors -will spearhead a fairer go for all banks.
"Recent capital raisings by the major banks will ensure that we are better able to compete as they have repriced to more reasonable rates relative to the amount of capital being applied," Mr Hirst said.
"Even though the majors now have to hold more capital against mortgages, they still hold less than 65 percent of the capital required by standardised banks like us, for those same assets.
"We must continue to provide outstanding customer experience and be highly efficient if we are to maintain our value proposition," he said.
Chairman Robert Johanson told the Annual General Meeting that unless substantial levels of new business was seen, the Bank would not need to raise additional tier 1 capital.
"The additional capital that the major banks have been raising lately has been to increase the level of capital they hold for their existing business," Mr Johanson said.
"Indeed, if we achieve advanced accreditation as a result of the investment in new systems of risk management, we should have the flexibility to ensure that our current levels of capital are sufficient for some time.
"Banking in Australia has enjoyed a long period of high returns on capital being generated for shareholders. We expect that over time these rates of return will reduce.
"This seems inevitable in an economy where the risk free rate is at all-time low levels, and where around the world returns on capital employed in banks are much lower than in Australia.
"We do need Australian banks to be, as the Murray report found, unquestionably strong to ensure ready access to international capital markets," he said.
The meeting heard that the Bank's innovations and premium style of banking have been highly commended in 2015, receiving a number of awards for outstanding service, product, customer advocacy and satisfaction.
Mr Hirst said the Group's continued investment in leading edge technologies directly reflects customer demand, partnering with fintech firms to provide the experience customers expect.
"We know that the pace of change in technology is incredibly fast these days, although not quite as fast as the change in functionality that our customers are seeking," he said.
"Our banking app - Connect - is market leading in functionality and customer experience, our award winning miBanker app supports our business banking customers across many aspects of their business with advice and information, and our new miVoice app sees us collaborating with customers around new initiatives.
"We believe we have that partnering mindset, and that will allow us to remain at the forefront of customer considerations. It is present in our strategy, where we state our success comes from focusing on the success of all the stakeholders in our business."
Mr Hirst told the Annual General Meeting that the Great Southern class action had been resolved.
"The court found that the Bank didn't engage in any wrongful conduct and labelled any claims of wrongdoing as fanciful, vindicating the Bank's position that we've always attempted to act lawfully, respectfully and morally," he said.
"Nevertheless, it is important to acknowledge that there are many peop