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% from 2H24 and 23.2% from 1H24, reflecting margin pressures and increased expenses from transformation investments.

• Total assets surpassed AUD 102 billion for the first time, driven by strong demand for lending and deposit products, with customer numbers up 4.9% to 2.7 million and digital bank Up surpassing 1 million customers.

• Mortgage growth outpaced system, supported by digital platforms and Up Home, with residential lending up 5.3%–5.9% over the half.

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

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

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% from the prior half.

• Net interest margin declined 6 basis points over the half to 1.88%, reflecting higher funding costs and adverse deposit mix.

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

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

• Interim dividend of AUD 0.30 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.

• Management expects continued investment in digital and transformation initiatives, with FY25 and FY26 cash investment spend to be AUD 30–40 million higher than FY24.

• Expects interest rates to fall to 3.5% by year-end 2025, with some benefit from recent pricing changes anticipated in the second half.

• 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.