Bendigo & Adelaide Bank Ltd (ASX: BEN
) released its 2020 half-year report this morning. Here are the key details…
BEN – Revenue up, profit down
The regional bank showed a 5.6% increase in revenue to $834 million and a profit of $146 million, down 28% year over year.
On a cash earnings basis, which is popular amongst banks in Australia, profit fell 2% to $215 million.
The difference between the figures, Bendigo Bank said, can be attributed to software impairment costs.
“Earnings for the half were impacted by ongoing technology investment, regulatory and compliance costs and staff investment to support mortgage growth,” CEO Marnie Baker said.
“Despite this, we delivered total income of $814.7 million, up 1.4 percent on the prior corresponding period, in a challenging environment comprised of low rates, increasing regulatory pressure, low consumer and business confidence and growing competition.”
BEN – Dividends down, slightly
Bendigo Bank’s board elected to pay a half-year or interim dividend of 31 cents per share, down from 35 cents per share last year. The dividend is fully franked.
BEN – Capital raising
In a separate announcement, Bendigo Bank said it would raise $300 million to support its growth in lending and strengthing its balance sheet to the extent that it goes above APRA’s minimum hurdle.
Bendigo Bank will over $250 million of new shares to institutional investors and $50 million as a Share Purchase Plan (SPP) to retail or smaller investors. Institutions will be asked to pay $9.34 per share and retail investors will pay the lesser of the institutional price or a 2% discount to the weighted price before the SPP closes. Our video below explains capital raisings and SPPs:
BEN – Outlook
Bendigo did not provide explicit forecasts for profit or revenue but did however comment on the macroeconomic outlook and broader expectations for growth.
“The market faces heightened regulatory focus, below average business confidence, increasing frequency and severity of weather events due to climate change, constantly changing and heightened customer preferences, global trade tensions and the longer-term impacts of drought, bushfires and Coronavirus.”
“We expect our mortgage lending growth rates to continue to exceed system, our small business portfolio to continue to grow at similar rates and our Commercial Real Estate business to grow.”
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