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Highlights
- BEN shares have witnessed a growth of over 6% in January 2023 to-date (as of 25 January 2023).
- The bank will release its interim financial results for the half year ending 31 December 2022 on 20 February 2023.
- In FY23, BEN expects further interest rate rises to a terminal cash rate of between 3.5% and 4.0%.
Bendigo and Adelaide Bank Limited (ASX:BEN) traded in the green zone today, its stock quoting AU$10.16, up 1.19% at market close. The market capitalisation stood at AU$5.7 billion. BEN shares have witnessed a growth of over 6% in January 2023 to-date (as of 25 January 2023). Last year, the bank, with the vision to be “Australia's bank of choice”, outlined the intent to sharpen its focus and concentrate its efforts on better returns.
Recent performance
For the five months ending 30 November 2022, BEN reported unaudited cash earnings (after tax) YTD of roughly AU$245 million, up 22% on the prior corresponding period. CEO and Managing Director Marnie Baker believes that BEN’s Net Interest Margin has continued to rise as the bank prudently manages its volume growth, margins, and costs in an inflationary environment.
Image source- nappy | Pexels
Key highlights of this period were-
- Lending balances (spot) grew 5.2% over the last 12 months and fell 0.7% over the last five months.
- Deposit balances (spot) grew 8.9% over the last 12 months and 2.0% over the last five months.
- Net Interest Margin post revenue share arrangements YTD of 1.85% with an exit NIM post revenue share arrangements of 2.01%.
- Greater than 90 days’ residential arrears for the month of November 2022 stood at 41 basis points.
- Common Equity Tier 1 capital ratio on 31 October 2022 was 9.98%.
- Return on equity (cash) YTD was 8.82%.
What does BEN expect in 2023?
In 2023, BEN claims to continue on the path of prudent management of volume growth and margins, given the competitive environment in lending as well as deposits. The bank also expects further interest rate rises to a terminal cash rate in the range of 3.5% and 4.0%.
Net Interest Margin tailwinds are likely to continue into the second half of FY23. Operating expenses, some experts believe, might increase modestly on FY22 levels.
Image source- Deedster | Pixabay
Other developments
Last year, BEN combined its business and agribusiness divisions and confirmed a refreshed Executive team. FY22 was significant for the ESG and sustainability approach, as BEN made important advances with respect to its ESG agenda.
Since inception in 1998, BEN’s Community Bank partners have returned over AU$292 million to local communities and initiatives Australia-wide. Besides, BEN has significantly grown its digital customer base, says Marnie Baker. An example of BEN’s digital transformation is the swift roll out of the PayTo service, which allows customers to better manage their payments via BEN’s online banking app.
In November 2022, BEN finalised the acquisition of Ferocia, a Melbourne-based fintech, which has allowed it to consolidate ownership of Up- one of Australia’s highest rated banking apps - and deliver its flagship digital home loan product, Up Home.
In FY22, BEN Express digital home loan product settled over AU$50 million in loans. In November 2022’s Annual General Meeting, Marnie Baker stated that the bank might witness as much as AU$200 million in loans settled via this channel over the next 12 months (if this level of growth continues in FY23).
BEN plans to release its interim financial results for the half year ending 31 December 2022 on 20 February 2023.
Amidst growing inflationary anxieties, soaring interest rates and wages, a tight jobs market and general global uncertainty, it will be interesting to witness how BEN and BEN shares perform in the months to come.
