Changes are happening - please bear with us while we update our site.

Changes are happening - please bear with us while we update our site. Click here to give us your advice and feedback.

Will the Bendigo Bank (ASX:BEN) share price continue to bounce back?

The Bendigo and Adelaide Bank Ltd (ASX: BEN) share price rose upon the announcement of its half-yearly results (HY21). Is Bendigo Bank a good ASX dividend investment?

The Bendigo and Adelaide Bank Ltd (ASX: BEN) share price rose upon the announcement of its half-yearly results (HY21). Is Bendigo Bank a good ASX dividend investment?

Bendigo Bank was formed following the merger of Bendigo Bank and Adelaide Bank in November 2007. The bank primarily focuses on lending to every day Aussies, in particular, residential (74%) and business (23%). Bendigo Bank competes against Bank of Queensland Limited (ASX: BOQ), Commonwealth Bank (ASX: CBA) and other major Australian banks.

FY21 highlights

BEN’s total lending for FY21 increased by 8.6% to a total of $68.3 billion, with residential lending being a major contributor, which grew by 14%. Further, there was a rise of 26.3% in applications compared to the prior corresponding period in HY20 (PCP).

Whilst lending grew, Bendigo Bank secured an additional $5 billion in customer deposits over HY21, taking total deposits to $72.3 billion.

Although net interest margin fell seven basis points (0.07%) compared to HY19, it jumped by one basis point (0.01%) relative to the last six months.

Bendigo Bank made significant strides in improving its bottom line, increasing its net profit after tax (NPAT) by 67.3% to $243.9 million for HY21 compared to the PCP. This big improvement is attributed to the reduction in interest expenses on customer deposits and lower operating expenses.

The fall in interest expenses on customer deposits was due to the fall in interest rates. As for operations, it appears the reduction was a result of a reduction in staff, which occurred in November and December 2020.

BEN’s board declared a dividend of 28 cents per share, which comprises the 4.5 cents per share for FY20 and 23.5 cents per share for HY21.

Management view

Marnie Baker, Managing Director and CEO of Bendigo Bank, said, “In line with our strategy to reduce complexity, invest in capability, and tell our story, we grew in all our key priority markets, which combined with effective cost management to result in positive cash earnings across all divisions“.

Marnie also expressed her view that Bendigo Bank’s strength and resilience is supported by the continual decline in the number of customer accounts on deferral, down 86% from the peak of 31% on 31 May 2020. The value of accounts where repayments have been deferred is around $1.1 billion, a reduction of 84.2% from a peak of $6.9 billion.

My view

Bendigo Bank has managed to improve its overall net profitability by tightening its expenses (cutting staff) and lowering interest rates on customer deposits. However, I don’t think this will be sustainable over the long-run. Be sure to compare BEN shares to other banks like National Australia Bank (ASX: NAB) or ANZ Banking Group (ASX: ANZ).

In such circumstances, I think to myself – where are future revenue and margin growth going to come from? In Bendigo Bank’s case, it will likely need to continue to increase the volume of loans due to the low net interest margin.

Bendigo Bank’s solid balance sheet, the decline in customer account deferrals and dividend-paying record make it a solid ASX dividend share, but I think growth will be hard to come by.

$50,000 per year in passive income from shares? Yes, please!

With interest rates UP, now could be one of the best times to start earning passive income from a portfolio. Imagine earning 4%, 5% — or more — in dividend passive income from the best shares, LICs, or ETFs… it’s like magic.

So how do the best investors do it?

Chief Investment Officer Owen Rask has just released his brand new passive income report. Owen has outlined 10 of his favourite ETFs and shares to watch, his rules for passive income investing, why he would buy ETFs before LICs and more.

You can INSTANTLY access Owen’s report for FREE by CLICKING HERE NOW and creating a 100% FREE Rask Account.

(Psst. By creating a free Rask account, you’ll also get access to 15+ online courses, 1,000+ podcasts, invites to events, a weekly value investing newsletter and more!)

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.
Skip to content