Bendigo and Adelaide Bank (BEN) investor relations material

Executive summary

• Cash earnings after tax rose 3.0% year-over-year to AUD 530.2 million, driven by 5.1% income growth, margin expansion from lower-cost deposits, and productivity initiatives.

• Lending momentum returned in H2, with residential lending growth and strong digital deposit sales up 34% year-over-year; total lending grew 1.5% year-over-year, with business lending up 12.5% and agribusiness up 3.8%.

• Strategic partnerships with Infosys, Genpact, Mphasis, and Google launched to drive productivity, technology innovation, and cybersecurity.

• Risk management uplift is the top priority, with a multi-year AML/CTF program and a rectification plan for non-financial risk, with a provision of AUD 70 million.

• Acquisition of RACQ Bank's loan and deposit book progressing, expected to complete in 1H27, and anticipated to be ROE and EPS accretive.

Financial highlights

• Net interest margin increased 7 bps year-over-year, reaching 1.98% in H2.

• Total income was AUD 2,045.9 million, up 5.1% year-over-year; net interest income AUD 1,756.0 million, up 4.6%.

• Operating expenses rose 4.2% year-over-year, but H2 costs fell 2.1% sequentially due to productivity programs.

• ROE returned above 8%, with ROTE above 10% and H2 ROTE near 10.5%.

• CET1 ratio at 11.34%, well above board target and up 34bps year-over-year.

Outlook and guidance

• FY27 BAU cost growth expected at 4%-5% (excluding RACQ), with total notable expenses of AUD 100-123 million pre-tax.

• RACQ acquisition to add AUD 33-37 million NII and AUD 8-9 million OpEx in-year, with a 31 bps CET1 impact.

• Targeting system-level growth in residential, business, and agribusiness lending, with system growth for business/agri forecast at 6%-7%.

• Margin headwinds expected from competition and funding costs, partially offset by replicating portfolio tailwinds.

• ROE targeted above 10% by 2030; digital deposit sales targeted to exceed 55% in FY27.