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 at 66–67%, with 70% of the dividend underwritten to retain capital.

• Strategic initiatives included digital transformation, core banking simplification, and a new 5-year partnership with Google for cloud, AI, and cybersecurity.

• Up digital bank achieved first month of profitability ahead of schedule, with 1.25 million customers and strong deposit and lending growth.

• 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 and a $50 million APRA capital overlay, with a comprehensive remediation program underway.

Financial highlights

• Total income for 1H26 was $1,009.9 million, up 3.7% half-on-half and 3.9% year-over-year.

• Net interest income rose 3.2% half-on-half to $871.1 million, with NIM up 4 bps to 1.92%.

• Operating expenses increased 4.2% half-on-half and 6.4% year-over-year to $636.5 million, but Q2 expenses were 6.4% lower than Q1 due to productivity gains.

• Cost to income ratio rose to 63.0%.

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

Outlook and guidance

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

• BAU costs expected to rise no higher than inflation through the cycle; amortisation costs to increase.

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

• AML/CTF remediation costs estimated at $70–90 million over three years, with ~$15 million expected in 2H26.