Bendigo and Adelaide Bank (BEN) H1 2025 earnings summary

Executive summary

• Cash earnings after tax for 1H25 were $265.2 million, down 1.1% year-over-year and 9.7% sequentially, with statutory NPAT at $216.8 million, down 17.5% sequentially and 23.2% year-over-year, reflecting margin pressures and increased expenses from transformation investments.

• Total assets surpassed $102 billion, with record balance sheet growth and strong demand for lending and deposit products.

• Customer numbers grew 4.9% to over 2.7 million, with digital bank Up surpassing 1 million customers and a Net Promoter Score 31.1 points above major banks.

• Transformation program advanced, nearing completion, focusing on digital and risk management enhancements, including digital platform rollout and sale of Bendigo Superannuation Pty Ltd.

• Maintained strong regional presence, with more than half of branches in regional and rural locations.

Financial highlights

• Net interest margin declined 6 bps over the half to 1.88%, impacted by higher funding costs and adverse deposit mix.

• Cash earnings for the half were $265.2 million, down 1.1% year-over-year and 9.7% sequentially; statutory NPAT was $216.8 million, down 17.5% sequentially and 23.2% year-over-year.

• Total income was $972.4 million, up 1.6% year-over-year but down 2.5% sequentially; net interest income (cash basis) was $834.7 million, down 2.1% sequentially but up 2.6% year-over-year.

• Operating expenses increased 5% over the half and 8.3% year-over-year, with cost to income ratio at 61.5%.

• Interim dividend of 30 cents per share, fully franked, with a 64% payout ratio.

Outlook and guidance

• CET1 ratio target remains above 10%, with current CET1 at 11.17%, well above board target.

• Expects interest rates to fall to around 3.5% by year-end 2025, with RBA rate cuts anticipated.

• Investment spend to increase by $30–40 million in FY25 and FY26, with two-thirds expensed; BAU expense growth expected to moderate and remain at or below inflation through the cycle.

• Transformation program to complete in 2025, with ongoing investment in digital and growth engines.

• Macroeconomic outlook assumes subdued GDP growth, stable interest rates until mid-2025, and gradual increase in unemployment.