Bendigo and Adelaide Bank (BEN) H1 2026 earnings summary

Executive summary

• Cash earnings after tax for 1H26 were $256.4 million, up 2.8% sequentially but down 3.3% year-over-year, with statutory profit after tax at $230.6 million, a 6.4% year-over-year increase.

• Interim dividend declared at 30 cents per share, payout ratio of 66.2%, unchanged from 1H25.

• Strategic initiatives included digital transformation, core banking simplification, and a new partnership with Google; Up digital bank achieved profitability ahead of schedule.

• Acquisition of RACQ Bank's loan and deposit books announced, expected to complete in 1H27, subject to regulatory approval.

• Self-reported AML/CTF risk management shortcomings led to an AUSTRAC enforcement investigation, a $50 million APRA capital overlay, and a comprehensive remediation program estimated at $70–90 million over three years.

Financial highlights

• Net interest income rose 3.2% half-on-half to $871.1 million, with NIM up 4bps to 1.92%; total income reached $1,009.9 million, up 3.9% year-over-year.

• Operating expenses increased 6.4% year-over-year to $636.5 million, driven by wage inflation, software amortisation, and remediation, but Q2 expenses were 6.4% lower than Q1.

• Cost to income ratio rose to 63.0%, up 30bps year-over-year.

• Net write-back of $2.4 million in credit expenses; gross impaired loans at $125.6 million (0.15% of loans).

• Dividend per share was 30c, with 66–67% payout ratio; 70% of dividend underwritten to retain capital.

Outlook and guidance

• Targeting ROE above 10% by 2030, with a dividend payout ratio of 60–80% of cash earnings.

• BAU cost growth to be contained to no higher than inflation through the cycle; H2 BAU costs targeted to not exceed H1.

• Residential loan growth expected to return to system levels; improved business and agribusiness growth in FY26.

• NIM expected to face slight pressure as lending volumes improve and funding mix shifts; asset mix benefit likely neutral in H2.

• AML/CTF remediation costs estimated at $70–90 million over three years, with $15 million in H2; further updates pending ongoing reviews.