Bendigo and Adelaide Bank has delivered a small rise in cash earnings but softer housing volumes, as it leans harder into a deposit‑led strategy and pulls back from legacy third‑party channels.
For the six months to 31 December, cash earnings came in at $256.4 million, up 2.8% on the previous half but 3.3% below the prior corresponding period. Statutory NPAT was $230.6 million. The board declared a fully franked interim dividend of 30 cents per share, unchanged on a year earlier.
Managing director and CEO Richard Fennell (pictured) said the result reflected progress on the group’s strategy despite deliberate choices that weighed on loan growth in the short term.
“This result reflects good progress on our strategy over the half, with our deposit-led approach to drive sustainable loan growth gaining momentum and improving our earnings,” Fennell said.
“This improvement was largely driven by the growth in lower cost deposits benefiting margin, as well as a reduction in costs in the second quarter. In addition, we made the strategic decision to exit our legacy mortgage partner business which impacted loan growth for the half.”
He added: “We remain confident that our residential lending book will return to growth over the second half of the financial year.”
Group lending balances fell 1.9% over the half, with residential lending down 2.3%. Around two‑thirds of new home loan settlements were written via Bendigo’s branch network and digital mortgage channels, while third‑party flows were hit by the decision to shut the Mortgage Partner business.
Net interest margin improved by 4 basis points to 1.92%, supported by a 3.6% rise in lower‑cost deposits and a reduction in more expensive funding. The bank’s household deposit‑to‑loan ratio lifted to 77.1%, with low‑cost deposits rising to 53.8% of customer funding.
Up Bank continued to grow rapidly, with lending up 27% to $2.1 billion and deposits up 24% to $3.5 billion over the half. Business lending rose 2.8%, although agribusiness balances declined 6.2% as growers paid down debt after a strong season.
Bendigo confirmed it is launching a significant AML/CTF uplift program expected to run for up to three years at an initial cost of $70–90 million, with about $15 million to be spent in 2H26. This follows coordinated enforcement action by APRA and AUSTRAC over serious AML/CTF and broader non‑financial risk deficiencies at Bendigo and Adelaide Bank, including the imposition of a $50 million operational risk capital add‑on.
The bank will also begin preparatory work for migrating RACQ Bank’s loan and deposit book ahead of completion in 1H27, with around $10 million earmarked over the next six months. The RACQ deal will see around 90,000 customers migrate to Bendigo and lift its Queensland home loan market share to about 18%, underscoring the broader wave of banking consolidation.
Fennell said the bank’s balance sheet “remains strong and well positioned for a return to growth”, noting that a dividend reinvestment plan underwrite will further bolster capital as the group pursues its 2030 strategy, integrates RACQ Bank and targets a return on equity above 10% by the end of the decade.
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