Bendigo and Adelaide Bank (BEN) H1 2025 earnings summary

Executive summary

• Total assets surpassed AUD 102 billion for the first time, driven by strong residential lending and deposit growth, with customer numbers up 4.9% to over 2.7 million and NPS 31.1 points above major banks.

• Half-year cash earnings after tax were AUD 265.2 million, down 1.1% year-over-year and 9.7% sequentially, while statutory net profit after tax fell 17.5% over the half, impacted by lower Homesafe valuations and increased expenses.

• Digital and broker channels drove mortgage growth at twice the system rate, with the digital bank Up surpassing 1 million customers and deposits up 23%.

• Maintained strong regional presence, with more than half of branches in regional and rural locations, and invested $40.3 million back into communities in FY24.

• Blocked over AUD 34.4 million in fraudulent transactions and completed the sale of Bendigo Superannuation Pty Ltd.

Financial highlights

• Cash earnings for the half were AUD 265.2 million, down 1.1% year-over-year and 9.7% from the previous half; statutory NPAT was AUD 216.8 million, down 17.5% HoH and 23.2% YoY.

• Total income was AUD 972.4 million, up 1.6% year-over-year but down 2.5% sequentially; net interest margin contracted 6bps HoH to 1.88%.

• Operating expenses increased 5% HoH and 8.3% YoY, with cost-to-income ratio at 61.5%.

• Interim dividend of AUD 0.30 per share, fully franked, with a 64% payout ratio.

• Residential lending up 5.3% HoH, customer deposits up 5.4% HoH, both outpacing system growth.

Outlook and guidance

• Expecting RBA rate cuts in 2025, with rates to fall to around 3.5% by year-end and some benefit from recent pricing changes anticipated in the second half.

• FY25 and FY26 cash investment spend to be AUD 30-40 million higher than FY24, with two-thirds booked as opex.

• Targeting continued above-system growth in residential lending and a return to business lending growth in FY 2026.

• Business-as-usual cost growth expected to moderate and remain at or below inflation through the cycle.

• Focus on digital enhancements, rolling out Bendigo Lending Platform to retail, and completing Rural Bank migration.