Bendigo FY26 Cash Earnings Up 3.0% to $530.2m, Final DPS 33c

Bendigo and Adelaide Bank reported cash earnings of $530.2 million for the year ended 30 June 2026, 3.0% higher than the prior year, and statutory net profit after tax of $375.1 million. Cash earnings of $273.8 million in the second half were 6.8% higher than the first half, with income growth of 2.6% and expenses down 2.1% on the prior half. Net interest margin increased 6 basis points over the second half to 1.98%, which the bank attributed to prudent management of its funding requirements. Total operating expenses increased 4.2% for the year, which the bank said reflects a combination of higher software amortisation, technology costs and ongoing investment in risk and digital capabilities, while second half expenses were 2.1% lower, attributed to benefits of the ongoing productivity program, fewer days in the second half and continued cost management disciplines. The results include an initial estimated provision of $70 million relating to a rectification plan the bank announced last week to address deficiencies in its management of non-financial risk, described as a multi-year program of work. The Board determined a fully franked final dividend of 33 cents per share.

Customer deposits grew 2.2% over the year, with lower cost deposits up 6.8% and higher cost deposits contracting 2.8%, lifting lower cost deposits to 54.8% of total customer deposits from 52.5%; the EasySaver and Up Grow & Flow products grew 10.7% and 43.7% respectively and the household deposit to loan ratio rose 3.5 percentage points to 76.3%. Total lending grew 1.5% over the year, with Business and Agribusiness lending up 8.8%, Business lending up 12.5% and Agribusiness up 3.8% over the year and 10.6% in the second half, while residential lending was down slightly, with digital channel growth of 13.0% offset by a 5.5% decline in third party originated channels following the bank's exit from the legacy mortgage partner channel. Up's lending grew 56.3% to $2.6 billion and its deposits grew 44.8% to $4.1 billion, delivering a profitable second half. Total credit expenses for the year were $13.3 million, of which $8.8 million were specific impairment charges from customer exposures, and impaired assets reduced 11.1% to $115.1 million; residential 90-day plus arrears increased 5 basis points to 0.87% while Business lending 90-day plus arrears reduced 54 basis points to 1.32%. The second phase of the bank's productivity program has commenced, underpinned by strategic partnerships with Infosys and Genpact, carrying restructuring costs of $29 million pre-tax in FY26 with an additional $56 million to $66 million pre-tax expected in FY27 and expected annual run rate benefits of $65 million to $75 million pre-tax to be realised from FY28. The acquisition of RACQ Bank's loan and deposit books is on track for completion in the first half of FY27, and the bank said it is focused on delivering a target return on equity above 10% by 2030. In its outlook the bank said the Australian economy has continued to show resilience with relatively low unemployment and strong business investment, but that cost-of-living pressures from higher inflation, especially since the Middle East conflict, have led to a sharp fall in consumer sentiment, and that three RBA rate hikes, softening property prices and geopolitical events are expected to result in more modest economic growth this financial year.