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Bendigo remaining competitive despite margin squeeze

Bendigo remaining competitive despite margin squeeze

(12 August 2015 – Australia) Bendigo and Adelaide Bank’s bottom line is being hit by low home loan rates as it pushes to compete with Australia’s bigger banks in the market.

One of the country’s biggest regional banks and Australia’s fifth-largest retain bank, Bendigo unveiled a 13.1 percent rise in annual cash earnings to A$432.4 million on 10 August.

Net profit was up 14 percent to A$423.9 million and revenue was up 7.4 percent to A$1.548 billion.

The low mortgage interest rates meant Bendigo’s interest margins contracted by four basis points.

Bendigo managing director Mike Hirst warned that home loan rates were now so low there was no scope for further reductions even if the Reserve Bank of Australia opted to cut.

"We just can't continually pass on every cut that comes along," he said.

"There is a certain equity that needs to be considered between self-funded retirees and other savers who are relying on earnings through their savings accounts to be able to live and where borrowers are at, and the absolute low level of rates for borrowers at the moment is a reasonable positive for them."

Bendigo is expected to become more competitive in the next year as the big banks are required to increase their capital buffers.

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